The Republic of India v Deutsche Telekom AG

• Jurisdiction: Singapore
• Judge: Sundaresh Menon CJ
• Judgment Date: 15 December 2023
• Neutral Citation: [2023] SGCA(I) 10
• Hearing Date: 17 August 2023,30 June 2023
• Docket Number: Civil Appeal No 1 of 2023
• Citation: [2023] SGCA(I) 10
• Court: Court of Appeal (Singapore)
• Year: 2023
• Subject Matter: Arbitration,Enforcement,Foreign award,Award,Recourse against award,Conduct of arbitration,Estoppel,New York Convention,Res Judicata,Issue estoppel
• Published date: 16 December 2023

[LawNet Admin Note: The following judgment is displayed as received from source]

Sundaresh Menon CJ (delivering the judgment of the majority consisting of Judith Prakash JCA, Steven Chong JCA, Robert French IJ and himself): Introduction

In HC/SUM 155/2022 (“SUM 155”), the Republic of India (“India”) applied to set aside an order obtained by the respondent, Deutsche Telekom AG, that permitted it to enforce a foreign arbitral award made against India. This application, together with various other applications, was transferred to be heard and determined by the Singapore International Commercial Court (“SICC”) as SIC/OS 8/2022 (“OS 8”). The SICC disposed of OS 8, and among other things, it dismissed SUM 155. The present appeal, CA/CAS 1/2023 (“CAS 1”), is India’s appeal against that decision.

The appellant resists enforcement of the arbitral award in Singapore principally based on its contention that the arbitral tribunal lacked jurisdiction. This is raised before us in our capacity as a court of enforcement of the arbitral award. Among the difficulties faced by the appellant is that it had earlier applied unsuccessfully to the seat court in Switzerland to set aside the award and had canvassed before that court a number of the arguments that it raises before us on appeal. The seat court in Switzerland dismissed the setting-aside application and in effect affirmed the tribunal’s jurisdiction and the validity of the award. A threshold issue in this appeal is whether the appellant is precluded from re-litigating those points that have already been raised and determined between these parties by the seat court. This raises the question of how an enforcement court should treat an earlier decision of the seat court that pertains to the validity of an arbitral award.

That question has yet to be resolved under Singapore law (see CZD v CZE [2023] SGHC 86 at [32]–[36]), although some observations were made by this court a decade ago in PT First Media TBK (formerly known as PT Broadband Multimedia TBK) v Astro Nusantara International BV and others and another appeal [2014] 1 SLR 372 (“Astro”) (at [76]–[77]) suggesting that an enforcement court should generally follow a seat court’s decision to set aside an arbitral award. Those observations in Astro were not a dispositive part of the court’s judgment and did not address some conceptual questions such as whether the enforcement court should accord primacy to a determination of the seat court as a principle specific to the context of international arbitration, and/or whether existing domestic conflict of laws rules or doctrines such as transnational issue estoppel should govern the enforcement court’s treatment of a prior decision of the seat court. The point is of importance to legal practitioners and would have a significant impact on the development of international arbitration law and practice, and has also attracted some extra-judicial observations on the part of two members of this court: Sundaresh Menon, “The Role of the National Courts of the Seat in International Arbitration”, Keynote address at the 10th Annual International Conference of the Nani Palkhivala Arbitration Centre (17 February 2018), (the “New Delhi Address”); Jonathan Hugh Mance, “Arbitration – a Law unto itself?”, 30th Annual Lecture organised by The School of International Arbitration and Freshfields Bruckhaus Deringer (4 November 2015), (the “30th Annual Lecture”).

In our judgment, as a matter of Singapore law, transnational issue estoppel does apply in the context of international commercial arbitration and its effect is to prevent the parties to a prior decision of the seat court, in certain circumstances, from re-litigating points that were previously raised and determined. In CAS 1, we are satisfied that the appellant is precluded by transnational issue estoppel from raising several of the grounds it relies on in this appeal. This suffices to dispose of the appeal as we explain below. It is therefore not necessary for us to come to a determination of whether there exists a separate rule as a matter of international arbitration law and practice that requires an enforcement court to accord primacy to a prior determination of the seat court on certain types of issues. Nonetheless, as the point was quite fully argued, we offer our view, which is that where the enforcement court is not precluded by transnational issue estoppel from considering an issue going to the validity of an arbitral award, it may nonetheless be appropriate for the enforcement court to grant primacy to a prior decision of the seat court. We explain these conclusions in this judgment and begin by setting out the key facts, in particular, in relation to the rather involved path of the various proceedings.

Background facts

The appellant is the State of India. The respondent is Deutsche Telekom AG (“DT”), a multinational company incorporated under the laws of the Federal Republic of Germany. DT became a shareholder in an Indian company known as Devas Multimedia Pte Ltd (“Devas”) through its wholly-owned subsidiary, Deutsche Telekom Asia Pte Ltd (“DT Asia”). DT Asia is a Singapore-incorporated company. Devas in turn entered into an agreement (the “Devas-Antrix Agreement”) with an Indian state-owned entity, Antrix Corporation Ltd (“Antrix”).

The dispute, and the arbitration it gave rise to between India and DT, stemmed from the termination of the Devas-Antrix Agreement. DT claimed that this breached the provisions of the bilateral investment treaty that was in place between India and Germany and thus commenced the arbitration seeking compensation.

Bilateral Investment Treaty between India and Germany

On 10 July 1995, India and Germany entered into the “Agreement between the Federal Republic of Germany and the Republic of India for the Promotion and Protection of Investments” (the “India-Germany BIT”). Article 2 of the India-Germany BIT provides that the agreement would apply to all investments made by the investors of either party in the territory of the other party. The term “investment” is defined in Art 1(b) as “every kind of asset invested in accordance with the national laws of the Contracting Party where the investment is made”.

Under Art 3(1) of the India-Germany BIT, each contracting party is required to “encourage and create favourable conditions for investors of the other Contracting Party and also admit investments in its territory in accordance with its law and policy”. Further, Art 3(2) provides that each contracting party is to accord “fair and equitable treatment and full protection and security in its territory” to investments and investors. However, Art 12 provides that nothing in the India-Germany BIT prevents a contracting party from applying prohibitions or restrictions “to the extent necessary for the protection of its essential security interests”.

Article 9 of the India-Germany BIT provides that disputes between an investor from one contracting party and the other contracting party in connection with an investment made in the territory of the other contracting party are to be settled amicably through negotiations, failing which the dispute may be referred to arbitration.

The Devas-Antrix Agreement

We briefly outline some key events surrounding the Devas-Antrix Agreement.

Since 1983, India’s Department of Space (“DOS”) has been responsible for allocating India’s S-band spectrum. This is a portion of the electromagnetic spectrum that can be used to send and receive signals using small units such as mobile phones and laptop computers, without requiring their antennas to be pointed directly at the satellite.

In mid-2003, an American consultancy firm named Forge Advisors LLC (which would later establish Devas) commenced negotiations with the Indian space authorities on the potential commercialisation of some of India’s S-band spectrum. Following these negotiations, Devas was incorporated in India on 17 December 2004.

On 28 January 2005, Devas and Antrix entered into the Devas-Antrix Agreement. Antrix was the marketing arm of India’s DOS and the entity through which the Indian Space Research Organisation engaged in commercial activities. Pertinently, the Devas-Antrix Agreement stated that: Devas had requested from Antrix space segment capacity for the provision of certain services such as delivering multimedia and information services to mobile receivers through satellite and terrestrial systems (the “Devas Services”); Antrix had agreed to lease space segment capacity to Devas; and Devas and Antrix had agreed to collaborate to build, launch and operate satellites, and provide the Devas Services.

DT’s investment in Devas via DT Asia

DT subsequently invested in Devas through its subsidiary, DT Asia, acquiring shares in Devas. At about the same time, Devas applied to and obtained government approvals from the Indian Foreign Investment Promotion Board (“FIPB”) for DT Asia’s share acquisition.

Termination of the Devas-Antrix Agreement and commencement of arbitral proceedings

It appears that India started to revisit the arrangements reflected in the Devas-Antrix Agreement from sometime in or around 2009. On 16 February 2011, the DOS Secretary wrote a note to India’s Cabinet Committee on Security in which it was suggested that there was an “imminent need to preserve the S-band spectrum for vital strategic and societal applications” and proposed the annulment of the Devas-Antrix Agreement. Shortly after, on 17 February 2011, the annulment of the agreement was confirmed by the Cabinet Committee on Security on the basis that the S-band spectrum should not be provided to Antrix for commercial activities. Subsequently, on 25 February 2011, Antrix notified Devas of the termination of the Devas-Antrix Agreement.

The arbitration between DT and India

On 2 September 2013, DT commenced arbitration (the “Arbitration”) against India contending that India’s...