UK Court of Appeal Rules on Devas Investors’ Arbitration Case
In a significant decision, the Court of Appeal of England and Wales has turned down an appeal by Devas investors attempting to enforce an arbitral award exceeding €195 million against the Republic of India. This case, known as Devas Mauritius v. Republic of India, was adjudicated by a panel consisting of Lord Justices Lewison, Newey, and Phillips. They concluded that India’s ratification of the 1958 New York Convention on the recognition and enforcement of foreign arbitral awards did not imply submission to the jurisdiction of English courts.
Background of the Dispute
The case originates from two arbitral awards issued by a Permanent Court of Arbitration tribunal established in The Hague. These proceedings were initiated by CC/Devas (Mauritius) Limited, Devas Employees Mauritius Private Limited, and Telcom Devas Mauritius Limited under the India-Mauritius bilateral investment treaty. The roots of the dispute can be traced back to a 2005 agreement between Devas Multimedia Private Limited and Antrix Corporation Limited, an entity wholly owned by the Government of India, involving the lease of S-band spectrum on two Indian satellites.
In 2011, India annulled the Devas project, citing the necessity to reserve the spectrum for national purposes, leading to the termination of the contract by Antrix. In 2016, an arbitral tribunal dismissed India’s claim that the Devas contract did not qualify as an investment under the treaty. However, the tribunal accepted that 60 percent of India’s annulment decision was justified under the essential security interests carve-out. Despite this, the tribunal found India in breach of its obligation to provide fair and equitable treatment to the investors.
Legal Proceedings and Arguments
Following these developments, the investors sought to enforce the awards across various jurisdictions. India resisted these enforcement efforts, citing sovereign immunity. In June 2021, the UK High Court granted permission to enforce the awards as a judgment, but India subsequently moved to set aside this order, invoking sovereign immunity under the UK State Immunity Act of 1978.
The appellants argued that India’s ratification of Article III of the New York Convention signified an agreement by contracting states to recognize and enforce arbitral awards, thus submitting to the jurisdiction of English courts. However, the Court of Appeal rejected this argument.
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Court of Appeal’s Rationale
Lord Justice Phillips clarified that Article III mandates the enforcement of awards “in accordance with the rules of procedure” of the enforcing territory. He emphasized that sovereign immunity is a procedural rule under both English and international law. “In my judgment, that interpretation… entirely accords with common sense that states would not have agreed to waive immunity from the enforcement of awards against them where they have not agreed to arbitrate,” the judgment stated.
The Court also differentiated the New York Convention from the ICSID Convention, under which the UK Supreme Court had recently held that ratification could imply a waiver of immunity. Lord Justice Lewison, in his concurring opinion, noted that while the New York Convention favors arbitration and enforcement, it does so only once the jurisdiction of the English court is established. “But this argument does not deal with the prior question: is the English court’s jurisdiction engaged?” he questioned.
Consequently, the Court upheld the High Court’s decision that India’s ratification of the New York Convention did not constitute a waiver of sovereign immunity.
Legal Representation
Tom Sprange KC, Ruth Byrne KC, and Kabir Bhalla, instructed by King & Spalding International LLP, represented the appellants. On the other side, Sudhanshu Swaroop KC, with a team from White & Case LLP including partners Andrea Menakar, Emiko Singh, and associates William Obree and Kit Chong Ng, represented the Republic of India.
[Read Judgment]
