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Lawyers, other representatives, expert(s), tribunal’s secretary

Award on Quantum

LIST OF DEFINED TERMS

Antrix Antrix Corporation Ltd, an Indian corporation wholly owned by the Government of India that is under the administrative control of DOS and purports to operate as the commercial marketing arm of ISRO and DOS. Antrix was created to promote the commercial exploitation of India's space program.
AV Audio-video.
Award on Jurisdiction and Merits or Partial Award Award on Jurisdiction and Merits issued by the Tribunal on July 25, 2016.
Bazelon I Expert Report of Mr. Coleman Bazelon, dated January 16, 2017.
Bazelon II Reply Expert Report of Mr. Coleman Bazelon, dated July 31, 2017.
Bazelon III Third Expert Report of Mr. Coleman Bazelon dated November 29, 2017.
Bazelon IV Fourth Expert Report of Mr. Coleman Bazelon, dated April 26, 2018.
Bhagirath I Direct Testimony of Mr. M. Bhagirath, dated May 15, 2017.
Bhagirath II Supplemental Direct Testimony of Mr. M. Bhagirath, dated 19 October 2017.
BIT(s) Bilateral investment treaty (or treaties).
BLS U.S. Bureau of Labor Statistics.
Build-Out Requirement Assumed obligation to provide services in the prescribed coverage areas.
BWA Broadband wireless access.
CAPM Capital Asset Pricing Model.
CC/Devas CC/Devas (Mauritius) Ltd., the first Claimant, which was formed in 2006 and has its registered office in Port Louis, Mauritius. It is affiliated with Columbia Capital LLC, a venture capital firm based in Alexandria, Virginia, USA. Shareholder of Devas.
CCS The Indian Cabinet Committee on Security, a select Cabinet committee that, among other matters, deals with all defence related issues, issues relating to law and order, and internal security and economic and political issues impinging on national security. It is composed of the Prime Minister, the Minister of Home Affairs, the Minister of External Affairs, the Minister of Finance, and the Minister of Defence.
CGC Complementary Ground Components, which would constitute the terrestrial segment of the hybrid communication system planned by Devas. Also referred to as ATC (Ancillary Terrestrial Components).
Claimants' Comments on Alternative Valuation Calculations Claimants' Comments on Alternative Valuation Calculations and Response to New Points and Authorities Raised for the First Time in Rejoinder, dated April 26, 2018.
Claimants' Comments on Respondent's May 8, 2020 Costs Submission Claimants' Comments on Respondent's May 8, 2020 Costs Submission, submitted on May 22, 2020.
Claimants' Reply on Quantum Claimants' Reply on Quantum, submitted on July 31, 2017.
Claimants'Submission on Fees and Costs Claimants' Submission on Fees and Costs, submitted on May 8, 2020.
Claimants' Submission on Quantum Claimants' Submission on Quantum, submitted on January 16, 2017.
DCF Discounted Cash Flow.
DEMPL Devas Employees Mauritius Private Limited, the second Claimant, which was formed in 2009 and has its registered office in Port Louis, Mauritius. It is a subsidiary of Devas Employees Fund US, LLC, a Delaware limited liability company with membership units owned by certain non-Indian Devas employees pursuant to an Equity Incentive Plan. Shareholder of Devas.
Devas Devas Multimedia Private Limited, an Indian company incorporated in Karnataka, Bangalore, India on December 17, 2004, with its registered office at 2nd Floor, Prema Gardenia, 357/6, 1st Cross, I Block, Jayanagar, Bangalore, India. The three Claimants hold shares in Devas and made their alleged investments in India through this company.
Devas Agreement Agreement for the Lease of Space Segment Capacity on ISRO/ANTRIX S-band Spacecraft between Antrix Corp. Ltd. and Devas Multimedia Private Ltd. (Agreement No. ANTX/203/DEVAS/2005), dated January 28, 2005.
DOS The Indian Department of Space, the government department responsible for the development of India's space policy and the implementation of the decisions of the Space Commission. Since its establishment in 1972 under Prime Minister Indira Ghandi, DOS has formed part of the Prime Minister's portfolio and has reported to the PMO.
DOT The Indian Department of Telecommunications.
DT Group of companies including Deutsche Telekom AG and any affiliate companies.
DT Asia Deutsche Telekom Asia, shareholder of Devas and a subsidiary of Deutsche Telekom AG.
DT Arbitration Deutsche Telekom AG v. Republic of India, PCA Case No. 2014-10.
DT Award Interim Award on jurisdiction and merits issued on December 13, 2017, in the case of Deutsche Telekom AG v. the Republic of India.
ERP Market equity-risk premium.
FET Fair and Equitable Treatment.
Flores I Expert Report of Mr. Daniel Flores of Econ One Research, dated May 15, 2017.
Flores II Second Expert Report of Mr. Daniel Flores of Econ One Research, dated October 20, 2017.
Flores III Supplemental Expert Report of Econ One Research, Inc. prepared by Mr. Daniel Flores on November 29, 2017.
Flores IV Second Supplemental Expert Report of Econ One Research, Inc. prepared by Mr. Daniel Flores, dated April 26, 2018.
FMV Fair market value.
GSLV Geosynchronous Satellite Launch Vehicle.
Hearing on Quantum Hearing on Damages held in The Hague, The Netherlands, from July 16 through and including July 21, 2018.
ICC International Chamber of Commerce.
ICC Arbitration Arbitration under the rules of the International Chamber of Commerce captioned Devas Multimedia (Private) Limited v. Antrix Corp. Ltd. (No. 18051/CYK).
ICC Award Devas Multimedia Private Limited v. Antrix Corporation Limited, ICC Case No. 18051/CYK, Final Award, September 14, 2015.
ICC Tribunal Tribunal in the ICC Arbitration.
ILC Articles International Law Commission, Articles on Responsibility of States for Internationally Wrongful Acts 2001, Yearbook of the International Law Commission (2001), Vol. II, Part Two.
IPTV Internet Protocol Television.
ISP Internet Service Provider.
ISRO The Indian Space Research Organization, a body of the Government of India under the direction of DOS and the Space Commission that engages in research and testing in order to encourage the rapid development of activities connected with space science, space technology and space applications with responsibility in the entire field of science and technology of outer space. ISRO builds, launches, operates and leases satellites for various uses, including telecommunications, television and radio broadcasting.
Jain I Direct Testimony of Mr. Nitin Jain, dated May 15, 2017.
Jain II Supplemental Direct Testimony of Mr. Nitin Jain, dated 19 October 2017.
Larsen I Witness Statement of Mr. Kim Kyllesbech Larsen, dated January 13, 2017.
Larsen II Reply Witness Statement of Mr. Kim Kyllesbech Larsen, dated 28 July 2017.
MFN Most Favored Nation.
MHz Megahertz.
Original Spectrum Scenario Alternative valuation approach, calculating 40% of the value of the investment as it was actually made by the Claimants, i.e. in consideration of all rights and obligations set out in the Devas Agreement, including access to 63 Mhz of S-band spectrum.
Parikh I Direct Testimony of Mr. K. S. Parikh, dated May 15, 2017.
Parikh II Supplemental Direct Testimony of Mr. K. S. Parikh, dated October 19, 2017.
Parsons III Third Witness Statement of Mr. Gary Parsons, dated January 13, 2017.
Parsons IV Fourth Witness Statement of Mr. Gary Parsons, dated July 31, 2017.
Pre-Revenue Adjustment or PRA Pre-revenue adjustment to the cash flows.
Reduced Spectrum Scenario Valuation of an investment that the Claimants might have made, had they been able to secure only 25.2 Mhz of spectrum.
Renegotiation Risk Risk that the Indian government would not have renewed the Devas Agreement on commercially viable terms upon expiry of its two twelve-year terms.
Respondent's Comments on Claimants' Submission on Costs Respondent's Comments on Claimants' Submission on Costs, submitted on May 22, 2020.
Respondent's Counter-Memorial on Quantum Respondent's Counter-Memorial on Quantum, submitted on May 15, 2017.
Respondent's Cost Submission Respondent's Cost Submission, submitted on May 8, 2020.
Respondent's Rejoinder Respondent's Rejoinder, submitted on July 1, 2014.
Respondent's Rejoinder on Quantum Respondent's Rejoinder on Quantum, submitted on October 20, 2017.
Respondent's Submission of April 26, 2018 Respondent's letter of April 26, 2018, where, inter alia, the Respondent provided supplemental comments on alternate calculation.
Revathi I Direct Testimony of Smt. M. Revathi, dated May 15, 2017.
Revathi II Supplemental Direct Testimony of Smt. M. Revathi, dated October 19, 2017.
Sacks I Expert Report of Mr. Benjamin Sacks, dated January 16, 2017.
Sacks II Reply Expert Report of Mr. Benjamin Sacks, dated July 31, 2017.
Sacks III Third Expert Report by Mr. Benjamin Sacks dated November 29, 2017.
Sacks IV Fourth Expert Report of Mr. Benjamin Sacks, dated April 26, 2018.
Sethuraman I Direct Testimony of Mr. K. Sethuraman, dated December 2, 2013.
Sethuraman II Supplemental Direct Testimony of Mr. K. Sethuraman, dated June 30, 2014.
Sethuraman III Second Supplemental Direct Testimony of Mr. K. Sethuraman, dated May 15, 2017.
Sethuraman IV Third Supplemental Direct Testimony of Mr. K. Sethuraman, dated October 19, 2017.
Sharony I Technical Report of Mr. Jacob Sharony, dated May 15, 2017.
Sharony II Second Technical Report of Mr. Jacob Sharony, dated October 20, 2017.
Statement of Claim Claimants' Statement of Claim, submitted on July 1, 2013.
Statement of Defence Respondent's Statement of Defence, submitted on December 2, 2013.
Statement of Reply Claimants' Statement of Reply on Jurisdiction and Liability, submitted on March 18, 2014.
Telcom Devas Telcom Devas Mauritius Limited, the third Claimant, which was formed in 2006 and has its registered office in Port Louis, Mauritius. It is affiliated with Telcom Ventures LLC, a United States venture capital firm owned by Dr. Rajendra Singh. Shareholder of Devas.
TRAI Telecom Regulatory Authority of India.
Treaty or Mauritius-IndiaTreaty Agreement Between The Government of The Republic of Mauritius and The Government of The Republic of India for the Promotion and Protection of Investments, signed on September 4, 1998 and entering into force on June 20, 2000.
UNCITRAL Rules The Arbitration Rules of the United Nations Commission on International Trade Law 1976.
Viswanathan I First Witness Statement of Mr. Ramachandran Viswanathan, dated June 29, 2013.
Viswanathan IV Fourth Witness Statement of Mr. Ramachandran Viswanathan, dated June 26, 2018.
WPC Wireless Planning and Coordination Wing, an organ of DOT.
WPC License Operating license issued by the WPC to operators of terrestrial electromagnetic spectrum.

 

DRAMATIS PERSONAE

Anand,Mr. A. Vijay Joint Secretary of Department of Space and Chief Vigilance Officer beginning July 2009 (subsequently became Additional Secretary of Department of Space). Has submitted witness statements in support of Respondent's Statement of Defence and Respondent's Counter-Memorial on Quantum.
Bazelon, Mr.Coleman Principal at The Brattle Group. Has submitted expert reports in support of Claimants' Submission on Quantum and Claimants' Reply on Quantum, as well as a third and fourth expert reports pursuant to the Tribunal's request of November 13, 2017.
Bhagirath, Mr. M. Senior Deputy Wireless Advisor to the Government of India in the Wireless Planning & Coordination Wing. Has submitted witness statements in support of Respondent's Counter-Memorial on Quantum and Respondent's Rejoinder on Quantum.
Flores, Mr. Daniel Managing Director of Econ One Research Inc. Has submitted expert reports in support of Respondent's Counter-Memorial on Quantum and Respondent's Rejoinder on Quantum, as well as two supplemental expert reports pursuant to the Tribunal's request of November 13, 2017.
Jain, Mr. Nitin Deputy Director General in the Data Services Wing of the Department of Telecommunications. Has submitted witness statements in support of Respondent's Counter-Memorial on Quantum and Respondent's Rejoinder on Quantum.
Kim, Mr. Larsen Senior Vice President within the Group Technology Department of DT in Bonn office (Germany). Has submitted witness statements in support of Claimants' Submission on Quantum and Claimants' Reply on Quantum.
Parikh, Mr. K. S. Deputy Director of the Satellite Communication and Navigation Payload Area of the Space Application Center, Ahmedabad, ISRO. Has submitted witness statements in support of Respondent's Counter-Memorial on Quantum and Respondent's Rejoinder on Quantum.
Parsons, Mr. Gary Founder of SkyTerra LP and XM Satellite Radio Holdings, Inc. Former CEO and President of American Mobile Satellite Corporation, which had a number of subsidiaries, including TerreStar Networks, Inc.. Devas board member from September 2007 and shareholder in Devas. Has submitted witness statements in support of Claimants' Statement of Claim, Claimants' Statement of Reply, Claimants' Submission on Quantum and Claimants' Reply on Quantum.
Revathi, Smt. M Senior Deputy Wireless Advisor in the Wireless Planning & Coordination Wing of the DOT. Has submitted witness statements in support of Respondent's Counter-Memorial on Quantum and Respondent's Rejoinder on Quantum.
Sacks, Mr.Benjamin Principal at The Brattle Group. Has submitted expert reports in support of Claimants' Submission on Quantum and Claimants' Reply on Quantum, as well as a third and fourth expert reports pursuant to the Tribunal's request of November 13, 2017.
Sethuraman,Mr. K. Associate Director, Satellite Communication Program at the Satellite Communication and Navigation Program Office, ISRO (from April 6, 2009). Has submitted witness statements in support of Respondent's Statement of Defence, Respondent's Rejoinder, Respondent's Counter-Memorial on Quantum and Respondent's Rejoinder on Quantum.
Sharony, Mr.Jacob Principal Consultant at Mobius Consulting. Has submitted technical reports in support of Respondent's Counter-Memorial on Quantum and Respondent's Rejoinder on Quantum.
Viswanathan, Mr.Ramachandran CEO of Devas. Has submitted witness statements in support of Claimants' Statement of Claim, Claimants' Statement of Reply and Claimants' Reply on Quantum.

I. INTRODUCTION

A. THE PARTIES

1.
The Claimants in this arbitration are CC/Devas (Mauritius) Ltd. ("CC/Devas"), Devas Employees Mauritius Private Limited ("DEMPL") and Telcom Devas Mauritius Limited ("Telcom Devas"), each incorporated in Mauritius. The Claimants bring their claims under the Agreement between the Government of the Republic of Mauritius and the Government of the Republic of India for the Promotion and Protection of Investments entering into force June 20, 2000.
2.
The Claimants are represented in this arbitration by Mr. John L. Gardiner, Mr. Timothy G. Nelson, and Ms. Betsy A. Hellmann, of Skadden, Arps, Slate, Meagher & Flom LLP, One Manhattan West, New York, NY 10001-8602, United States of America, and by Mr. David Kavanagh, of Skadden, Arps, Slate, Meagher & Flom LLP, 40 Bank Street, Canary Wharf, London E14 5DS, United Kingdom.
3.
The Respondent in this matter is the Republic of India.
4.
The Respondent is represented in this arbitration by Mr. George Kahale III and Mr. Benard V. Preziosi, Jr., of Curtis, Mallet-Prevost, Colt & Mosle LLP, 101 Park Avenue, 35th Floor, New York, New York 10178, United States of America.

B. THE ESSENCE OF THE CLAIMANTS' CASE ON DAMAGES

5.

The Claimants assert that "the only remaining issue in this case is the amount of compensation that the Claimants are entitled to receive from the Respondent arising out of the Respondent's multiple treaty violations, as set out in the Tribunal's July 25, 2016, Award."1

6.

The Claimants contend that the determination of compensation due is governed by the principles put forward by the Permanent Court of International Justice in the Chorzów Factory case, and that compensation should restore them to the situation which would have existed if the unlawful acts had not been committed.2

7.
The Claimants recall that the Tribunal held in the Award on Jurisdiction and Merits "that the protection of essential security interests accounts for 60% of the Respondent's decision to annul the Devas agreement, and that the compensation owed by the Respondent to the Claimants for the expropriation of their investment shall therefore be limited to 40% of the value of that investment."3 Accordingly, the Claimants primarily calculate their compensation claims on the basis of 25.2 Megahertzs ("MHzs") of available spectrum (which corresponds to 40% of the 63 MHzs of initially envisaged available spectrum).4 In other words, they present the valuation of an investment that the Claimants might have made, had they been able to secure only 25.2 Mhz of spectrum ("Reduced Spectrum Scenario").
8.
In a Reduced Spectrum Scenario, the Claimants contend that Devas Multimedia Private Ltd. ("Devas") would have made use of only one satellite and worked with new technology for its ground network to maximally use the limited available spectrum. They argue that with these changes Devas would still have been able to deliver the same broadband wireless access ("BWA") and audio-video ("AV") services in the urban areas from which most of its revenue is originated.5
9.
The Claimants criticize as "hopelessly implausible, and, indeed, mak[ing] sense only if one were deliberately seeking to undermine Devas's value"6 the Respondent's contentions that in a "but for" world the Respondent's military would have commandeered both satellites and would have interleaved its 60% of appropriated spectrum with Devas' spectrum across each of the transponders, so that both sides' spectrum would have been divided in small slices.7
10.
The Claimants' experts, Mr. Benjamin Sacks and Mr. Coleman Bazelon, Principals of The Brattle Group ("Mr. Sacks" and "Mr. Bazelon," respectively), apply the Income and Market approaches to determine the fair market value of Devas as of a valuation date of February 17, 2011—the day on which the Agreement for the Lease of Space Segment Capacity on ISRO/ANTRIX S-band Spacecraft between Antrix Corporation Ltd. ("Antrix") and Devas ("Devas Agreement") was annulled.8
11.
Pursuant to the Tribunal's request of November 13, 2017, they also address an alternative valuation approach, calculating 40% of the value of the investment as it was actually made by the Claimants, i.e. in consideration of all rights and obligations set out in the Devas Agreement, including access to 63 Mhz of S-band spectrum ("Original Spectrum Scenario").

C. THE ESSENCE OF THE RESPONDENT'S CASE ON DAMAGES

12.
The Respondent asserts that the Claimants' calculation of Devas business' fair market value bears no relationship to reality.9
13.
The Respondent criticizes that the Claimants purport to obtain in this case a value which is almost identical, despite relevant differences, to the value put forward in a parallel arbitration conducted before the International Court of Arbitration of the International Chamber of Commerce ("ICC" and "ICC Arbitration," respectively), in which a final award was issued in 2016. In the present case, the Respondent recalls, the Claimants have assumed the use by Devas of only 40% of the spectrum that was assumed to be available in the ICC Arbitration and the payment of a fee for terrestrial use of spectrum which is twelve times the amount used in the ICC Arbitration.10 The Respondent contends that the Claimants obtain essentially the same value for Devas' business, despite the spectrum reduction and the payment of a much higher re-use fee, by manipulating projected cash flows to match a target value.11
14.
Furthermore, the Respondent argues that, as is reflected in contemporaneous documentary evidence and the testimony of Government officials, it is stated Indian policy to charge a fee for the use of spectrum which is commensurate with the spectrum's auction value.12 The application of the auction price as re-use fee would suffice to cause Devas' business to have a negative value of USD 549 million, even without any other adjustment to the Claimants' model.13
15.

The Respondent disagrees with the relevance for the present case of the test set out in the Chorzów Factory judgment, as it considers that the Tribunal held that the Claimants are entitled to compensation under Article 6 of the Treaty, not on the basis of any other theory or measure.14

16.
In any event, even if Chorzów Factory were relevant, the Tribunal would be required to award compensation that would re-establish the situation which would, in all probability, have existed, had the unlawful act not been committed. The Respondent claims that Devas would "definitely" have been subject to all of India's policies and procedures, which indicates that "in all probability" Devas would not have been granted a licence; and if a change in policy allowed terrestrial use of such spectrum, spectrum fees to be charged would have been commensurate with auction prices.15
17.
The Respondent does not agree with the distribution of spectrum in the Reduced Spectrum Scenario advanced by the Claimants as it considers that their assumption of a contiguous spectrum allocation not only overstates Devas' spectrum entitlement but also adversely impacts the deployment of spectrum allocated for its essential security interests.16
18.
The Respondent also criticizes the lack of consideration for the allegedly inevitable delay in the launch of the satellites which, as military satellites, would have needed to be launched using India's indigenous Geosynchronous Satellite Launch Vehicle ("GSLV") and required further testing. The Respondent claims that if such delays were considered, the value of Devas would be significantly reduced.17
19.
The Respondent regards the use of discounted cash flow ("DCF") valuation methodology as inappropriate for this case and raises concerns with its implementation by the Claimants, which it considers to have "overstated revenues and understated costs by using assumptions that are unwarranted."18
20.
Pursuant to the Tribunal's request of November 13, 2017, the Respondent also addresses an alternative valuation approach for the Original Spectrum Scenario. The Respondent's position is that Devas' business was non-viable as of the valuation date,19 and requests the Tribunal to conclude that it had no value as of the valuation date and to award no damages.20

II. PROCEDURAL HISTORY

A. COMMENCEMENT OF THE ARBITRATION

21.
The following constitutes an abridged summary of the course of the proceedings. A more detailed account of the procedural history preceding the issuance by the Tribunal on July 25, 2016 of an Award on Jurisdiction and Merits may be found within that award.
22.

By Notice of Arbitration dated July 3, 2012, the Claimants commenced arbitration proceedings against the Respondent pursuant to Article 3 of the Arbitration Rules of the United Nations Commission on International Trade Law (1976) (the "UNCITRAL Rules") and Article 8 of the September 4, 1998, Agreement Between the Government of the Republic of Mauritius and the Government of the Republic of India for the Promotion and Protection of Investments, which entered into force on June 20, 2000 (the "Mauritius-India Treaty" or the "Treaty").

23.
On July 1, 2013, the Claimants submitted their Statement of Claim (the "Statement of Claim").
24.
On October 16, 2013, the Tribunal issued Procedural Order No. 1.
25.
On December 2, 2013, the Respondent submitted its Statement of Defence (the "Statement of Defence").
26.
On January 31, 2014, the Tribunal issued Procedural Order No. 2 Concerning the Parties' Document Production Requests of January 14, 2014.
27.
On March 18, 2014, the Claimants submitted their Statement of Reply on Jurisdiction and Liability (the "Statement of Reply").
28.
On June 16, 2014, the Tribunal issued Procedural Order No. 3 Concerning the Claimants' Document Production Request of May 16, 2014.
29.
On July 1, 2014, the Respondent submitted its Rejoinder (the "Respondent's Rejoinder").
30.
On August 4, 2014, the Parties and the Tribunal held a telephone conference in preparation for the Hearing on Jurisdiction and Liability to be held between September 1 and September 5, 2014.
31.
On September 1-5, 2014, a Hearing on Jurisdiction and Merits was held at the Peace Palace in The Hague, the Netherlands.
32.
On January 18, 2015, the Tribunal issued Procedural Order No. 4 Concerning the Respondent's Documents Submitted on December 20, 2014.
33.
On September 21, 2015, the Tribunal issued Procedural Order No. 5 Concerning the Submission of Information Regarding the Launch of GSAT-6.

B. AWARD ON JURISDICTION AND MERITS

34.

On July 25, 2016, the Tribunal issued the Award on Jurisdiction and Merits (the "Award on Jurisdiction and Merits" or "Partial Award"), the dispositive part of which provides:

501. For the reasons set out above, the Tribunal decides and awards as follows:

(a) Unanimously, that the Claimants' claims relate to an "investment" protected under the Treaty;

(b) Unanimously, that the notice of termination of the Devas Agreement sent by Antrix to Devas constituted an act of State attributable to the Respondent.

(c) By majority, that the Tribunal lacks jurisdiction over the Claimants' claims insofar as the Respondent's decision to annul the Devas Agreement was in part directed to the protection of the Respondent's essential security interests;

(d) By majority, that the Respondent has expropriated the Claimants' investment insofar as the Respondent's decision to annul the Devas Agreement was in part motivated by considerations other than the protection of the Respondent's essential security interests;

(e) By majority, that the protection of essential security interests accounts for 60% of the Respondent's decision to annul the Devas Agreement, and that the compensation owed by the Respondent to the Claimants for the expropriation of their investment shall therefore be limited to 40% of the value of that investment;

(f) Unanimously, that the Respondent has breached its obligation to accord fair and equitable treatment to the Claimants between July 2, 2010 and February 17, 2011.

(g) Unanimously, that the Claimants' other claims shall be dismissed;

(h) Unanimously, that any decision regarding the quantification of compensation or damages, as well as any decision regarding the allocationof the costs of arbitration, shall be reserved for a later stage of the proceedings.21

35.
Arbitrator David Haigh appended a dissenting opinion, in which he notably disagreed with the majority's conclusions that the Respondent's decision to annul the Devas Agreement was in part directed to the protection of the Respondent's essential security interests, and that the protection of essential security interests accounted for 60% of the Respondent's decision to annul that Agreement.

C. WRITTEN PROCEEDINGS ON DAMAGES

36.
Following several unsuccessful attempts since August 2, 2016 by the Parties to consult bilaterally on the further timetable of the proceedings, the Tribunal, on September 5, 2016, formally invited the Parties to initiate consultations in respect of a procedural calendar for the quantum phase without delay and to inform the Tribunal of the results of such consultations by September 27, 2016. In default of agreement, the Tribunal proposed several possible dates to hold a telephone conference with the Parties, following which the Tribunal would determine the procedural timetable by way of a procedural order.
37.
On September 15, 2016, the Parties informed the Tribunal that they had reached agreement in principle on a briefing and hearing timetable assuming the availability by the Tribunal on specific dates.
38.
On September 22, 2016, the Tribunal notified the Parties of its availability for a hearing on quantum.
39.
On September 27, 2016, the Parties informed the Tribunal about their agreement on the timetable for the written submissions and the hearing on quantum on the basis of the Tribunal's availability.
40.
On September 29, 2016, the Tribunal issued Procedural Order No. 6 Concerning the Procedural Calendar for the Quantum Phase, which memorialized the Parties' agreed proposal regarding the procedural calendar.
41.
On October 27, 2016, the Respondent submitted a letter informing the Tribunal that on August 11, 2016, India's Central Bureau of Investigation had filed charges against Devas and a number of its present and former officers and directors, as well as a number of former Indian Government officials with crimes under the Indian Penal Code and the Prevention of Corruption Act. The Respondent further contended that if such charges were upheld, the Devas Contract would be void ab initio under Indian law and the Tribunal's determination that it was a valid and binding agreement and an "investment" under the Treaty could not be sustained. Accordingly, the Respondent requested the stay of arbitral proceedings pending the resolution of the criminal charges, and asked that the case be dismissed if those charges were upheld. The Respondent further indicated that it was moving to set aside the Award on Jurisdiction and Merits on a number of grounds under the Dutch Code of Civil Procedure relating to these illegalities, "essential security interests" and certain "pre-investment" issues.
42.
On November 21, 2016, the Claimants opposed the Respondent's requests. The Claimants argued that the purported recent developments pre-dated the agreement between the Parties on a procedural calendar for the quantum phase, which was memorialized in Procedural Order No. 6. Therefore, the Respondent should be held to such agreement. Furthermore, the Claimants contended that the findings in the Award on Jurisdiction and Merits, as a partial award, were final and binding within the meaning of Article 32(2) of the UNCITRAL Rules.
43.
On December 21, 2016, the Tribunal issued Procedural Order No. 7 Concerning the Respondent's Request for Suspension of the Proceedings. The Tribunal noted that "[t]he Partial Award on Jurisdiction and Merits (…) was final and binding under Article 32(2) of the UNCITRAL Arbitration Rules in respect of the matters decided in it by the Tribunal." Moreover, "the CBI investigation was initiated in 2014 and its Charge Sheet was issued on 11 August 2016. The Respondent was therefore aware of its contents when it agreed to the timetable for the determination of damages as contained in Procedural Order No. 6 of 29 September 2016." The Tribunal thus concluded that "[i]n the present circumstances, (…) the Respondent's application for a stay must be denied, and that this arbitration shall proceed on the basis of the timetable set forth in Procedural Order No. 6."
44.
On December 28, 2016, the Respondent submitted a letter confirming that it was prepared to proceed in accordance with the briefing schedule but making clear that it reserved the right to raise this issue and to challenge any future award which may be rendered in this case.
45.
On January 16, 2017, the Claimants submitted their Submission on Quantum ("Claimants' Submission on Quantum").
46.
On May 15, 2017, the Respondent submitted the Counter-Memorial on Quantum ("Respondent's Counter-Memorial on Quantum").
47.
On the same date, the Respondent requested the production of certain documents by the Claimants and further requested that the process of document production be handled by an "exchange of correspondence" instead of a "formal process involving a 'Redfern Schedule'."
48.
On June 2, 2017, the Claimants provided their comments and requested that the Respondent's document production request be denied in full on the basis that Procedural Order No. 6 did not contemplate a phase for document production and because the Respondent's requests did not meet the UNCITRAL Rules or the IBA Rules standards. In any event, if the requests were granted, the Claimants requested that a Redfern Schedule be used.
49.
On June 12, 2017, the Respondent submitted its comments and contended that the fact that Procedural Order No. 6 did not contemplate a document production phase was irrelevant since, under Article 24(3) of UNCITRAL Rules, an arbitral tribunal may order the production of documents "at any time during the arbitral proceedings." The Respondent further contended that its document production requests met the applicable legal standards.
50.
On June 21, 2017, the Claimants submitted further comments contending the scope, relevance and materiality of the Respondent's document production requests.
51.
On July 19, 2017, the Tribunal issued Procedural Order No. 8 Concerning the Respondent's Request for the Production of Documents Pertaining to Quantum. The Tribunal denied the Respondent's request but invited the Claimants to instruct their experts to address four points identified by the Respondent within Request 4 in their Reply Expert Report: "(i) the alternatives for the split of the spectrum resulting from the Tribunal's decision regarding India's essential security interests; (ii) the impact on Devas' purported 'first mover' status of a delay in satellite launch and/or a delay in the implementation of Devas services by reason of the status of the terrestrial technology that is assumed; (iii) the impact on Devas' business of its inability to provide mobile telephony services; and (iv) the 6 July 2010 letter from the Secretary of the DOT to the Department of Space (Ex. R-138) and the 28 July 2010 letter from the Wireless Advisor to the Department of Space (Ex. R-139)."
52.
On July 31, 2017, the Claimants submitted the Reply on Quantum ("Claimants' Reply on Quantum").
53.
On September 20, 2017, the Respondent informed the Tribunal that, at its request, the Parties had agreed to an extension of the time by which the Respondent was to submit its Rejoinder on Quantum from October 16 to October 20, 2017. On the same date, the Tribunal approved the extension agreed between the Parties.
54.
On October 10, 2017, in preparation for the damages hearing, the Tribunal invited the Parties to confer and provide their views, if possible jointly, on a draft Procedural Order No. 9 addressing logistical and procedural aspects of the quantum hearing by October 20, 2017.
55.
On October 13, 2017, the Claimants' counsel informed the Tribunal that they had conferred with the Respondent's counsel in view of the fact that the Respondent's Rejoinder on Quantum was due on October 20, 2017, and had agreed to request the Tribunal that the Parties be permitted to provide their comments on draft Procedural Order No. 9 by October 27, 2017.
56.
On October 16, 2017, the Tribunal granted the extension requested by the Parties of the time limit for the submission of comments on draft Procedural Order No. 9.
57.
On October 20, 2017, the Respondent submitted the Rejoinder on Quantum ("Respondent's Rejoinder on Quantum").
58.
On October 27, 2017, the Parties submitted their comments on draft Procedural Order No. 9. The Parties agreed on all but one procedural issue.
59.
On October 31, 2017, the Tribunal issued Procedural Order No. 9 Concerning the Hearing on Quantum.
60.
On November 13, 2017, the Tribunal requested the Parties to ask their experts to provide by November 29, 2017 a calculation of the amount of compensation based on the following alternative approach: "What is 40% of the value of the investment as it was actually made by the Claimants, i.e. in consideration of all rights and obligations set out in the Devas Agreement including access to 63 Mhz of S-band spectrum?."
61.
On November 29, 2017, the Parties submitted their expert reports providing a calculation of the amount of compensation based on this alternative approach.
62.
By letter of December 1, 2017, the Tribunal informed the Parties that due to an unexpected health issue affecting a member of the Tribunal the hearing was postponed to a date to be determined in due course.
63.
On December 5, 2017, the Respondent informed the PCA that, in light of the unforeseen developments resulting in the postponement of the Hearing on Quantum, the Parties had agreed to delay the submission of preliminary comments concerning the alternative damages calculations presented by the experts on November 29, 2017, at least to January 19, 2018. On the same date, the Tribunal confirmed that the requested submission extension was granted and noted that, should the Parties require further time beyond January 19, 2018 to submit their comments, the Tribunal would be open to considering any request for a further postponement in due course.
64.
On January 9, 2018, the Respondent conveyed the Parties' agreement that the submission date of January 19, 2018 should be extended sine die and informed the Tribunal that the Parties would revert as soon as possible on a new agreed date or on alternative dates in the absence of agreement.
65.
On January 11, 2018, the Tribunal confirmed that it was agreeable to extending the date for the Parties' comments on the alternative quantum calculations sine die. The Tribunal also informed the Parties that it looked forward to hearing from the Parties at their early convenience in respect of a new due date for such comments, if possible agreed between the Parties.
66.
On February 27, 2018, the Tribunal wrote to the Parties recalling its January 11, 2018 communication, advising that it would hope to receive the Parties' comments no later than in the course of the month of April, and renewing its request to the Parties to consult with each other with a view to agreeing on a due date for such comments.
67.
On March 20, 2018, the Tribunal requested the Parties to revert by March 26, 2018, with an agreed due date for the Parties' comments on the alternative quantum calculations in the course of April, noting that should no such date be agreed by that date, it intended to set a due date without further consultation of the Parties.
68.
On March 21, 2018, the Claimants informed the Tribunal that the Parties had exchanged proposals and planned to update the Tribunal in this matter by March 23, 2018.
69.

On March 23, 2018, the Claimants informed the Tribunal that the Parties had agreed on a submission date of April 26, 2018 at 10 p.m. United States Eastern Daylight Time. The Claimants also expressed their understanding as to the content of such submissions, and noted that they intended to seek permission from the Tribunal to submit a copy of the Deutsche Telekom AG v. India interim award on jurisdiction and merits (the "DT Award") into the evidentiary record and to make written observations on its relevance to this proceeding as part of their April 26, 2018 submission.

70.
On the same date, the Respondent provided its views as to the content of the April 26, 2018 submissions as well as its intention to seek the Tribunal's permission to submit the application to set aside the DT Award that was filed with the Swiss Federal Tribunal.
71.
On March 26, 2018, the Claimants confirmed the Parties' agreement to the submission in this arbitration of the DT Award and India's set aside application before the Swiss Federal Tribunal, and that the Parties should be permitted to comment on the relevance (if any) of both documents in their forthcoming April 26, 2018 submissions. The Claimants also set out the Parties' disagreement as to the admissible content of such submissions.
72.
On March 27, 2018, the Respondent provided its comments on the Claimants' communication of March 26, 2018 regarding the admissible content of such submissions.
73.
On April 3, 2018, the Tribunal issued Procedural Order No. 10 Concerning the Contents of the Parties' April 26, 2018 Submissions.
74.
By letter dated April 10, 2018, the Respondent informed the Tribunal that GSAT-6A, the second satellite, had been launched on March 29, 2018 and had encountered technical problems immediately after launch.
75.
On April 26, 2018, both sides submitted comments on alternative valuation calculations that had been requested by the Tribunal, enclosing supplemental expert reports; and both sides also submitted comments on the relevance (if any) of the DT Award and on India's set aside application before the Swiss Federal Tribunal.
76.
As part of its April 26, 2018 submission, the Claimants requested the Tribunal to order the Respondent to "(i) immediately produce [Appendix] VA-10 in unredacted form, together with all other documents previously redacted by India (as logged in the February 14, 2014 and July 11, 2014 redaction logs); and (ii) immediately produce in unredacted form all documents disclosed by it in [Deutsche Telekom AG v. Republic of India, PCA Case No. 2014-10 (the "DT Arbitration")]. Claimants reserve the right to request further relief once the full contents of such documents are disclosed to Claimants."22
77.

On May 2, 2018, the Respondent submitted a Reply to Claimants' Observations on the Impact of the DT Award in this Arbitration.

78.
On May 7, 2018, the Claimants provided observations on the Respondent's Reply dated May 2, 2018, and "request[ed] that the Tribunal grant the relief requested at paragraph 104 of Claimants' April 26, 2018 submission and thus order the production of all documents, within three (3) business days, produced in the DT case along with complete copies of all documents that were produced in this arbitration in redacted format."23
79.
By letter of the same date, the Respondent noted, inter alia, that it would respond to the Claimants' new submission at the hearing; it also requested the Tribunal's permission to introduce a new document relevant to discount rates for the valuation of venture capital projects into the record.
80.
On May 10, 2018, the Respondent provided observations on the Claimants' letter of May 7, 2018; and enclosed "a copy of the final version of the document [Appendix VA-10] produced in the DT case, where it was marked as Ex. C-252."
81.
On May 11, 2018, the Tribunal issued Procedural Order No. 11 Concerning the Claimants' Requests for Additional Document Production and the Respondent's Request for Leave to Introduce New Evidence. Pursuant to this Procedural Order, "[t]he Respondent [wa]s requested to produce to the Claimants and the Tribunal, in the same form as they were produced in the DT Arbitration, all other documents on the record of the present arbitration which were produced in the DT Arbitration in more complete form." Moreover, "[t]he Respondent's request for leave to introduce into the record the document described in its letter dated May 7, 2018 [wa]s granted."
82.
By e-mail of May 15, 2018, the Respondent alleged that Deutsche Telekom's ("DT")24 Memorial on Quantum in the DT Arbitration, together with accompanying witness statements and expert report, "contains positions that are materially inconsistent with those of the Claimants in this case," evincing "fundamental factual discrepancies that go to the heart of Claimants' valuation exercise." The Respondent noted in particular that the evidence in the DT Arbitration raised questions as to whether the cash flows in certain models prepared by Devas between 2007 and 2009, referred to as the Series-C Model, the Bravo Model and the Darwin Model, were expressed in real or nominal terms; and requested "a telephone conference with the Tribunal at the earliest possible time."
83.
By correspondence of May 17, May 18, May 19, May 20, May 21, May 23 and May 24, 2018, the Claimants and the Respondent exchanged views on ways in which the purported discrepancies between the evidence submitted in the present arbitration and the evidence submitted in the DT Arbitration might be addressed.
84.
On May 18, 2018, the Respondent produced to the Claimants and the Tribunal certain documents pursuant to the Tribunal's decision in Procedural Order No. 11, and introduced into the record a new document with leave of the Tribunal.
85.

On May 25, 2018, the Tribunal issued Procedural Order No. 12 Concerning Quantum Evidence Tendered in Proceedings Instituted by Deutsche Telekom. Pursuant to this Procedural Order, the Respondent "[wa]s requested, in accordance with Article 23(4) of the UNCITRAL Rules, to produce the DT quantum papers, including but not limited to witness statements by DT's (former) Head of Corporate Finance and Vice President in Mergers and Acquisitions, to the Claimants and the Tribunal by 1 June 2018. (…) The Claimants [we]re invited to provide any preliminary comments on the DT quantum papers that they may have by 15 June 2018, without prejudice to the right of both sides to address the matter further at the Hearing." Moreover, the Tribunal considered "that it would assist the Tribunal's task if DT's (former) Head of Corporate Finance and Vice President in Mergers and Acquisitions, who seems to have submitted a statement in the DT Arbitration, were willing to testify before the present Tribunal as witness. The Tribunal accordingly invite[d] him to appear as witness at the forthcoming hearing on quantum (…)."

86.
On June 1, 2018, counsel for DT informed the Tribunal that Mr. Axel Scheuermann, DT's former Head of Corporate Finance and Vice President in Mergers and Acquisitions ("Mr. Scheuermann"), had declined the Tribunal's invitation to attend the Hearing on Quantum.
87.
On the same date, the Respondent submitted, pursuant to Procedural Order No. 12, the "DT quantum papers," noting that DT and the DT tribunal had no objections to their provision to the present Tribunal, subject to their being held in confidence.
88.
On the same date, the Claimants submitted, pursuant to Procedural Order No. 11, their initial comments on the documents newly-produced by the Respondent on May 18, 2018.
89.
On June 12, 2018, the Tribunal conveyed to the Parties its intention to seek the technical assistance of Professor Alix Mandron, former professor of finance at the École des hautes études commerciales in Montréal, Canada, as an expert advisor, who "would (…) provide technical support to the Tribunal throughout the quantum phase of these arbitral proceedings, as directed by the Tribunal, in relation to the valuation of the Claimants' investment." The Tribunal enclosed draft terms of reference for the expert advisor and her curriculum vitae, and requested the Parties to provide any comments thereon by June 18, 2018.
90.
By letter dated June 15, 2018, the Claimants requested leave to introduce seven new exhibits into the record.
91.
By letter dated June 15, 2018, the Claimants submitted, pursuant to Procedural Order No. 12, their Preliminary Comments on India's Submission Concerning Documents from the DT Proceeding.
92.
By letter dated June 15, 2018, the Respondent provided a submission pursuant to paragraph 9(iii) of Procedural Order No. 11.
93.
By e-mail of June 18, 2018, the Respondent informed the Tribunal that it might wish to refer to the award in the Bear Creek Mining Corporation v. Republic of Peru during the hearing as well as to Devas' submissions relating to quantum in the ICC Arbitration, requesting the Tribunal's permission should the Claimants have any objection.
94.
On June 18, 2018, the Tribunal noted the Respondent's conclusion in its June 15, 2018 submission and invited the Claimants to inform the Tribunal of their position in respect of the Respondent's conclusions, including whether they agreed to the conditions set out in paragraph 4 of such submission, by June 21, 2018.
95.
By letter dated June 18, 2018, the Claimants provided their comments on the proposed terms of reference for Professor Mandron as expert advisor.
96.
By letter of the same date, the Tribunal addressed the Parties in respect of the arrangements for the upcoming hearing.
97.
By letter dated June 20, 2018, the Claimants provided comments in response to the Respondent's e-mail of June 18, 2018.
98.
By e-mail of June 20, 2018, the Tribunal noted that, having received no comments from the Respondent on the proposed appointment of Professor Mandron, the draft terms of reference, or the amendments thereto proposed by the Claimants, the Tribunal assumed that the Respondent did not have any objections. The Tribunal invited the Respondent to provide comments thereto, if it so wished, by June 21, 2018.
99.
By e-mail of June 21, 2018, the Respondent advised that it had no comments on the proposed appointment of Professor Mandron, the draft terms of reference, or the Claimants' proposed modifications.
100.
On the same date, the Claimants submitted their Position in Respect of the Conclusions Set Forth in the Respondent's June 15, 2018 Submission.
101.
By e-mail of June 22, 2018, the Respondent confirmed that it did not object to the admission into the record of the documents announced in the Claimants' letter of June 15, 2018 provided that the documents mentioned in the Respondent's e-mail of June 18, 2018 were also admitted.
102.
By e-mail of the same date, the Respondent provided comments in response to the Claimants' correspondence of June 21, 2018.
103.
On June 25, 2018, the Tribunal issued Procedural Order No. 13, Concerning Requests for the Disclosure, or Admission into the Record, of Additional Evidence.
104.
On June 25, 2018, a final and signed version of the Terms of Reference of Professor Mandron as Expert Advisor to the Tribunal was circulated to the Parties.
105.
By letter dated June 25, 2018, following Procedural Order No, 13, the Respondent requested permission to introduce certain documents into the record.
106.
By e-mail of the same date, the Tribunal invited the Claimants to provide comments on the Respondent's request by June 27, 2018.
107.
By letter dated June 27, 2018, the Claimants submitted a response to Procedural Order No. 13 and provided comments to the Respondent's letter dated June 25, 2018.
108.
By letter of the same date, the Respondent requested permission to introduce another document into the record.
109.
On June 29, 2018, the Tribunal issued Procedural Order No. 14, Concerning Requests for Leave to Introduce New Evidence.
110.
By letter dated June 29, 2018, the Claimants confirmed that there were no modifications to their witness list except the order of presentation of their experts.
111.
By e-mail of the same date, the Respondent submitted, pursuant to Procedural Order No. 13, the award in Bear Creek Mining v. Peru as Exhibit R-224, confirmed that it would produce to the Claimants the testimony of Messrs. Sethuraman and Anand in the DT Arbitration, and confirmed that it did not have any changes to its list of witnesses to be examined at the hearing.
112.
On July 3, 2018, pursuant to Procedural Order No. 14, the Respondent submitted Exhibits R-225-236.
113.
On July 3, 2018, the Tribunal informed the Parties that it had requested the expert advisor to be present at the hearing during the examination of both sides' experts and during the closing statements.
114.
By letter dated July 4, 2018, the Claimants expressed the view that the Respondent's production of the testimony of Messrs. Anand and Sethuraman in the DT Arbitration was not complete and requested the Tribunal to order the Respondent to produce complete copies of their witness statements (including annexes) and all documents which were the subject of testimony of these witnesses at the hearing (including in cross-examination).
115.
By letter of the same date, the Claimants submitted, pursuant to Procedural Order No. 14, an additional exhibit (C-304) in response to the submission by the Respondent of Exhibit R-225.
116.
By e-mail of July 5, 2018, the Respondent was invited to comment on the Claimants' correspondence of July 4, 2018 by July 9, 2018.
117.
On July 6, 2018, the Parties reverted to the Tribunal in relation with certain hearing arrangements.
118.
On July 9, 2018, the Respondent provided its comments on the Claimants' letter of July 4, 2018.
119.
On July 10, 2018, the Tribunal issued Procedural Order No. 15, Concerning the Claimants' Requests for Production of Further Documents.
120.
On July 12, 2018, pursuant to Procedural Order No. 15, the Parties provided their respective consolidated list of exhibits.

D. HEARING ON DAMAGES

121.
Pursuant to Procedural Orders No. 6 and 9, the Tribunal was to hold a Hearing on Quantum (the "Hearing on Quantum") from December 12 to December 18, 2017 at the Peace Palace in The Hague, The Netherlands.
122.
As noted above, on December 1, 2017, the PCA informed the Parties on behalf of the Arbitral Tribunal that due to an unexpected health issue affecting a member of the Tribunal the Hearing on Quantum was postponed to a date to be determined in due course.
123.
On December 13, 2017, the Tribunal consulted with the Parties in respect of alternative dates for the Hearing on Quantum. Both sides confirmed that they were agreeable to holding the Hearing on Quantum from July 16 through and including July 21, 2018.
124.
On January 2, 2018, the Tribunal fixed the dates of the Hearing on Quantum from July 16 through and including July 21, 2018, to be held, as previously agreed, in The Hague, The Netherlands.
125.
The following were present at the Hearing on Quantum:

For the Claimants:

Counsel and Advisors

Mr. John L. Gardiner
Mr. Timothy G. Nelson
Ms. Betsy A. Hellmann
Ms. Sharmistha Chakrabarti
Mr. Gunjan Sharma
Ms. Jennifer Huang
Mr. Aaron Shorr
Ms. Emma Keldsen
Ms. Amanda Esteves
Ms. Paulina Pavese
Skadden, Arps, Slate, Meagher & Flom LLP

Mr. Harish Salve
Mr. Ciccu Mukhopadhaya
Mr. Syed Omar Balil Ahmad

Indian Counsel

Witnesses and Client Representatives

Mr. Coleman Bazelon
Mr. Benjamin Sacks
Mr. Lucrezio Figurelli
Mr. Florin Dorobantu
Mr. Ramachandran Viswanathan
Mr. Kim Larsen
Mr. Gary Parsons
Mr. Arun Gupta
Mr. Serge Martin

For the Respondent:

Counsel and Advisors

Mr. George Kahale, III
Mr. Benard Preziosi
Mr. Fernando Tupa
Mr. Fuad Zarbiyev
Mr. Simon Batifort
Ms. Gloria Diaz-Bujan
Mr. Christopher Grech
Curtis, Mallet-Prevost, Colt & Mosle LLP

Mr. Suresh Chandra
Secretary to Government of India, Ministry of Law and Justice, Government of India

Mr. P.S. Narasimha
Additional Solicitor General of India, Government of India

Mr. K.M. Arya
Additional Legal Advisor, Ministry of Law and Justice, Government of India

Mr. K. Parameshawar
Advocate, Junior to Additional Solicitor General of India

Mr. Anoop Srivatsava
Joint Secretary and Financial Advisor, Department of Space, Government of India

Mr. Praveen Karanth
Director, Department of Space, Government of India

Mr. M.S. Krishnan
Officer on Special Duty, Department of Space, Government of India

H.E. Mr. Venu Rajamony Ambassador of India to the Kingdom of the Netherlands

Dr. Kajal Bhat
Counsellor (Legal), Embassy of India, the Netherlands
Witnesses and Experts

Mr. A. Vijay Anand
Mr. K. Sethuraman
Mr. K.S. Parikh
Mr. Nitin Jain
Smt. M. Revathi
Mr. M. Bhagirath
Mr. Jacob Sharony
Mr. Daniel Flores
Mr. Ettore Comi
Mr. Ivan Vazquez
Ms. Eleanor Coates

Arbitral Tribunal

Hon. Marc Lalonde, P.C., O.C., Q.C. (Presiding Arbitrator)
Mr. David R. Haigh, Q.C.
Hon. Shri Justice Anil Dev Singh

Expert Advisor to the Tribunal

Prof. Alix Mandron

Registry

Mr. Dirk Pulkowski
Ms. Elena Laura Álvarez Ortega
Permanent Court of Arbitration

126.
On July 16, 2018, both sides submitted an electronic copy of their respective opening presentations at the Hearing on Quantum.
127.
On July 22, 2018, both sides submitted electronic copies of the slides used by their experts during the Hearing on Quantum, and the Claimants submitted an electronic copy of their closing presentation.

E. POST-HEARING PROCEEDINGS

128.
By letter dated July 25, 2018, the Respondent submitted, pursuant to the Tribunal's request on the last day of the Hearing on Quantum, the specific sheets and cells of the Darwin Model to which Mr. Flores took the Tribunal during the Hearing.
129.
On October 24, 2018, the Respondent submitted a letter from the tribunal in the DT Arbitration directing India to "take the necessary steps, if any, vis-à-vis the Mauritius BIT tribunal to allow for filing of the entire quantum record of the Mauritius BIT arbitration."
130.
On the same date, the Claimants were invited to provide their comments, if any, on the Respondent's letter.
131.
On October 26, 2018, the Claimants indicated that they did not object to the submission of the entire quantum record of this arbitration in the DT Arbitration.
132.
By letter dated October 30, 2018, the Tribunal confirmed that it did not have any objection to India filing the quantum record of this arbitration in the DT Arbitration and, for the sake of good order, requested the Respondent to provide the Claimants with an electronic copy of that filing.
133.
By letter dated November 25, 2018, the Claimants informed the Tribunal that, on November 14, 2018, the District Court in The Hague had issued a judgment rejecting the Respondent's petition to set aside the Award on Jurisdiction and Liability, and requested leave from the Tribunal to submit an English translation of the judgement into the record.
134.
On November 27, 2018, the Tribunal granted the Claimants' request for leave to submit an English translation of the above-mentioned judgement into the record, to which the Respondent had consented.
135.
On March 4, 2019, the Respondent seek leave from the Tribunal to submit into the record two awards which had been published recently with a short explanation of their relevance.
136.
On the same day, the Claimants requested that the Respondent be directed to disclose the awards to the Claimants to evaluate them and respond accordingly.
138.
On March 5, 2019, the Claimants objected to the Respondent briefing the Tribunal on such awards, arguing that this would result in post-hearing briefs by default, and expressed their view that the Tribunal should not entertain any form of submissions that could delay the issuance of the award.
139.
On the same date, the Responded provided its comments on the Claimants' views and suggested merely to provide references to the relevant paragraphs from the awards and dispense with the short explanation of their relevance.
140.
On March 6, 2019, the Tribunal authorized the Respondent to produce the two awards and give them an exhibit number. Each side was authorized to add a reference to the sections of such awards to which they wished to draw the Tribunal's attention, without any further comment.
141.

On March 7, 2019, the Respondent submitted into the record the Bilcon et al v. Canada (Ex. R-237) award and the South American Silver v. Bolivia award (Ex. R-238), indicating the paragraphs to which it called the Tribunal's attention.

142.

On March 12, 2019, the Claimants indicated the paragraphs of the Bilcon et al v. Canada and the South American Silver v. Bolivia awards to which the Claimants drew the Tribunal's attention.

143.
On May 5, 2019, the Respondent requested leave from the Tribunal to submit into the record the transcript of Mr. Scheuermann's testimony at the hearing on quantum in the DT Arbitration.
144.
On May 6, 2019, the Tribunal invited the Claimants to comment on the Respondent's request by 10 May 2019.
145.
On May 8, 2019, the Claimants submitted that they were not in a position to provide a substantive response to the Respondent's request until the Respondent provided them with a copy of the quantum hearing transcript in the DT Arbitration, designating the portions it proposed to submit into the record.
146.
On May 9, 2019, the Tribunal informed that the due date for the Claimants' comments on the Respondent's request was suspended pending further direction from the Tribunal.
147.
On the same date, the Respondent provided its views in relation to the Claimants' correspondence of May 8, 2019.
148.
By letter dated May 13, 2019, the Tribunal requested the Respondent to transmit to the Claimants the full transcript of the quantum hearing in the DT Arbitration by May 17, 2019, indicating the portions that it proposed to submit into the record. The Claimants were invited to comment on the Respondent's request by May 24, 2019, and the Tribunal would decide thereafter by Procedural Order.
149.
On May 15, 2019, the Respondent informed that it had transmitted the transcript to the Claimants.
150.
By letter dated May 23, 2019, the Claimants indicated that they did not object to the submission of the designated page of Mr. Scheuermann's testimony provided that they had the right to comment thereon. The Claimants objected to the submission into the record of the designated portions of Mr. Harman's testimony.
151.
On the same date, the Respondent submitted its views in relation to the Claimants' comments.
152.
On May 27, 2019, the Tribunal issued Procedural Order No. 16,25 Concerning Requests for Leave to Submit Portions of the Transcript of the DT Arbitration into the Record.
153.
On May 30, 2019, the Respondent sought clarification as to the meaning of the Tribunal's direction in Procedural Order No. 16.
154.
On the same date, the Claimants submitted comments in relation to the Respondent's request for clarification.
155.
On May 31, 2019, the Respondent submitted further comments in response to the Claimants' comments.
156.
On the same date, the Tribunal clarified its request pursuant in Procedural Order No. 16.
157.
By letter dated June 3, 2019, the Respondent submitted into the record the designated portion of Mr. Scheuermann's testimony at the quantum hearing in the DT Arbitration and expressed its views as to its relevance.
158.
By letter dated June 10, 2019, the Claimants provided their comments thereon.
159.
On June 11, 2019, the Respondent provided comments regarding the scope of the above-referenced letter from the Claimants.
160.
On March 9, 2020, the Respondent transmitted to the Tribunal copy of a decision of the French Court of Cassation26 together with a copy of the text of the "rapporteur" of the Court. That decision annulled a previous Paris Court of Appeal decision and returning it to a different formation of the Paris Court of Appeal. That decision essentially deals with matters having to do with the jurisdiction of the ICC to authorize the Antrix case to be heard under its rules and procedures. As such, the Tribunal considers that it does not need to address this matter in the present case.
161.
By letter dated April 9, 2020, the Tribunal invited the Parties to submit two simultaneous rounds of costs submissions and requested the Parties to detail separately the costs incurred during the jurisdiction and merits phase, and the costs incurred during the quantum phase.
162.
By letter dated April 10, 2020, the Claimants gave notice of a change of address of their counsel's office.
163.
On May 8, 2020, the Parties simultaneously submitted their submissions on costs (the "Claimants' Submission on Fees and Costs" and the "Respondent's Cost Submission").
164.
On May 22, 2020, the Parties simultaneously submitted their comments on the other side's submission on costs (the "Claimants' Comments on Respondent's May 8, 2020 Costs Submission" and the "Respondent's Comments on Claimants' Submission on Costs").
165.
On June 1, 2020, the Respondent requested permission of the Tribunal in accordance with Article 29(2) of the UNCITRAL Arbitration Rules to submit a copy of the Deutsche Telekom AG v. The Republic of India final award dated May 27, 2020.
166.
On June 15, 2020, the Claimants objected to the production of the said award.
167.
On June 26, 2020, the Tribunal issued Procedural Order No. 17, Concerning a Request for Leave to Submit the DT Quantum Award into the Record, whereby it authorized the production of the said award with the provision that each Party would have the right to submit comments that could not exceed three pages.
168.
On June 29, 2020, the Respondent produced the said award as Ex. R-240 together with its comments.
169.
On July 13, 2020, the Claimants submitted their comments.

III. THE PARTIES' REQUESTS

A. THE CLAIMANTS' REQUESTS

170.
The Claimants, in their Submission on Quantum, request from the Tribunal the following relief:

126. Each Claimant is separately and independently entitled to an award of compensation for the violation of its rights under the Mauritius-India BIT.

127. The First Claimant, CC/Devas, seeks:

(a) an award of damages in the amount of USD 283 million ;

(b) pre- and post-award interest on that sum, compounded, at LIBOR +4% ;

(c) an order that such sums be payable net of taxes, charges, or other set-offs (i.e. Respondent may not withhold or offset payment of any portion of the award based on a claim that it is subject to taxation or other deductions);

(d) an order that Respondent is to indemnify it with respect to any Indian taxes, charges, or other set-offs imposed on the compensation awarded;

(e) an award of its fees and costs in this proceeding; and

(f) such other relief as the Tribunal may deem just and proper.

128. The Second Claimant, DEMPL, seeks:

(a) an award of damages in the amount of USD 58 million ;

(b) pre- and post-award interest on that sum, compounded, at LIBOR +4% ;

(c) an order that such sums be payable net of taxes, charges, or other set-offs (i.e. Respondent may not withhold or offset payment of any portion of the award based on a claim that it is subject to taxation or other deductions);

(d) an order that Respondent is to indemnify it with respect to any Indian taxes, charges, or other set-offs imposed on the compensation awarded;

(e) an award of its fees and costs in this proceeding; and

(f) such other relief as the Tribunal may deem just and proper.

129. The Third Claimant, Telcom Devas, seeks:

(a) an award of damages in the amount of USD 283 million ;

(b) pre- and post-award interest on that sum, compounded, at LIBOR +4% ;

(c) an order that such sums be payable net of taxes, charges, or other set-offs (i.e. Respondent may not withhold or offset payment of any portion of the award based on a claim that it is subject to taxation or other deductions);

(d) an order that Respondent is to indemnify it with respect to any Indian taxes, charges, or other set-offs imposed on the compensation awarded;

(e) an award of its fees and costs in this proceeding; and

(f) such other relief as the Tribunal may deem just and proper.27

171.
In the Reply on Quantum, the Claimants request the following relief:

199. Each Claimant is separately and independently entitled to an award of compensation for the violation of its rights under the Mauritius-India BIT.

200. The First Claimant, CC/Devas, seeks:

(a) an award of damages in the amount of USD 263 million, reflecting its losses as of February 17, 2011;

(b) pre- and post-award interest on that sum from February 17, 2011 onwards, compounded annually, at the one-year LIBOR rate +4% ;

(c) an order that such sums be payable net of taxes, charges, or other set-offs (i.e. Respondent may not withhold or offset payment of any portion of the award based on a claim that it is subject to taxation or other deductions);

(d) an order that Respondent is to indemnify it with respect to any Indian taxes, charges, or other set-offs imposed on the compensation awarded;

(e) an award of its fees and costs in this proceeding; and

(f) such other relief as the Tribunal may deem just and proper.

201. The Second Claimant, DEMPL (sic.),28 seeks:

(a) an award of damages in the amount of USD 263 million, reflecting its losses as of February 17, 2011;

(b) pre- and post-award interest on that sum, compounded annually, at the one-year LIBOR rate +4% ;

(c) an order that such sums be payable net of taxes, charges, or other set-offs (i.e. Respondent may not withhold or offset payment of any portion of the award based on a claim that it is subject to taxation or other deductions);

(d) an order that Respondent is to indemnify it with respect to any Indian taxes, charges, or other set-offs imposed on the compensation awarded;

(e) an award of its fees and costs in this proceeding; and

(f) such other relief as the Tribunal may deem just and proper.

202. The Third Claimant, Telcom Devas (sic.),29 seeks:

(a) an award of damages in the amount of USD 54 million, reflecting its losses as of February 17, 2011;

(b) pre- and post-award interest on that sum, compounded annually, at the one-year LIBOR rate +4% ;

(c) an order that such sums be payable net of taxes, charges, or other set-offs (i.e. Respondent may not withhold or offset payment of any portion of the award based on a claim that it is subject to taxation or other deductions);

(d) an order that Respondent is to indemnify it with respect to any Indian taxes, charges, or other set-offs imposed on the compensation awarded;

(e) an award of its fees and costs in this proceeding; and

(f) such other relief as the Tribunal may deem just and proper.

203. In the alternative, in the event the Tribunal determines that Devas would not have received a terrestrial re-use license to offer BWA services, or would only have received such a license at an uneconomic price, each Claimant is separately and independently entitled to its damages for the loss of an AV-only business. In that event:

(a) The First Claimant seeks an award of damages in the amount of USD 74 million, reflecting its losses as of February 17, 2011, with pre- and post-award interest, and subject to the other conditions set forth in paragraph 200(b)-(f) above;

(b) The Second Claimant (sic.)30 seeks an award of damages in the amount of USD 74 million, reflecting its losses as of February 17, 2011, with pre- and post-award interest, and subject to the other conditions set forth in paragraph 201(b)-(f) above; and

(c) The Third Claimant (sic.)31 seeks an award of damages in the amount of USD 15 million, reflecting its losses as of February 17, 2011, with pre- and post-award interest, and subject to the other conditions set forth in paragraph 202(b)-(f) above.32

B. THE RESPONDENT'S REQUESTS

172.
The relief requested by the Respondent in both the Counter-Memorial and the Rejoinder on Quantum is the following:

For the reasons set forth above, the Tribunal should conclude that the Devas business had no value as of the Valuation Date and award no damages to Claimants. In addition, the costs of this case should be assessed against Claimants.33

IV. LEGAL STANDARD OF REPARATION

173.
The Parties are in disagreement as to the applicable legal standard of reparation in this case. While the Claimants affirm that the Chorzów Factory principle applies to the determination of compensation in this case, the Respondent disputes this, and considers that the only applicable standard to calculate compensation is contained in Article 6 of the Treaty.
174.
In this case, the Parties made only limited references to the consideration of sunk costs in their evidence and oral submissions. Instead, the Parties focused their attention on the DCF methodology and the comparable valuation asserted by their respective experts.

A. THE CLAIMANTS' POSITION

175.
The Claimants assert that the determination of compensation in this case, as with any violation of international law, is governed by the principles espoused by the Permanent Court of International Justice in the Chorzów Factory case,34 which establishes that "reparation must, as far as possible, wipe out all the consequences of the illegal act and reestablish the situation which would, in all probability, have existed if that act had not been committed."35
176.
According to the Claimants, "one thus compares the situation that would have existed, but for the violation, to the situation post-violation, and formulates compensation to restore Claimants to the "but for" situation."36 Applied to this case,

monetary compensation must be sufficient to restore Claimants to the position they would have enjoyed had Respondent not engaged in an unlawful expropriation of their investments in February 2011, not violated its FET obligations with respect to Claimants' investments during 2010/2011, and instead conducted itself with good faith towards Claimants and Devas Multimedia Private Limited ("Devas"), and "fully respected" the contract between Devas and Antrix Corporation Limited ("Devas Agreement"), albeit with a reduced spectrum allocation of just 40% of the originally envisioned 63 MHz of S-band spectrum that had been allocated for Devas's use.37 [footnotes omitted]

177.
The Claimants assert that the Award on Jurisdiction and Merits confirms the unlawful seizure by the Respondent of Devas' investments in 25.2 MHzs of spectrum.38 Furthermore, they claim that in cases of unlawful seizure compensation is due for the "fair market value of that investment in the situation that would have existed had the violation of international law not occurred"39 (the "but for" scenario).
178.
The Claimants assume that, consistently with Chorzów Factory and the International Law Commission Articles on the Responsibility of States for Internationally Wrongful Acts 2001 ("ILC Articles"), in a "but for" world the government would have acted reasonably and rationally with respect to Devas, would have respected the terms of the Devas Agreement and would not have been animated by plans to "annul" it.40 Moreover, the Claimants assume the fulfilment by the Respondent of its international obligations under the bilateral investment treaty ("BIT") protecting the Claimants' investments.41
179.
These assumptions are regarded by the Claimants as a simple corollary of the Chorzów Factory principle that the "consequences" of illegality must be "wiped out." Furthermore, the Claimants also invoke the principle that a respondent cannot pre-suppose in a "but for" analysis that it would have continued to violate its own contractual undertakings or subject investments to further expropriation.42 In support of their position the Claimants refer to the Azurix case, the Lemire case, and the Occidental case.43 Likewise, the Claimants also argue that this is also consistent with the principle of pacta sunt servanda,44
180.

The Claimants accepted at the Hearing on Quantum that "those principles would apply under the standard set forth in Article 6(1) of the Mauritius Treaty."45 Nevertheless, they reiterated their position and argued that "even if there's no practical distinction in this case between the treaty result (…) and the result under Chorzow factory, under customary International law,"46 the treaty standard sets a baseline below which compensation should not fall, and not an upper limit.47

181.
The Claimants, quoting CMS Gas Transmission Co. v. Argentina, also contend that the concept of "fair market value" has the following "internationally recognized" definition;

the price, expressed in terms of cash equivalents, at which property would change hands between a hypothetical willing and able buyer and a hypothetical willing and able seller, acting at arm's length in an open and unrestricted market, when neither is under compulsion to buy or sell and when both have reasonable knowledge of the relevant facts.48

182.
The Claimants further argue, relying on the Tribunal in Compañía del Desarrollo de Santa Elena, S.A. v. Costa Rica, that the fair market value of an asset should be assessed "by reference to its highest and best use."49 Accordingly, they claim to be entitled to recover the value of their respective shares of Devas' expropriated assets, including 25.2 MHz of spectrum, put to its highest and best use.50
183.
The Claimants accept that the burden of proof of the losses suffered lies on them and, following the Khan Resources tribunal, consider that the applicable standard is

balance of probabilities (…) scientific certainty is not required and it is widely acknowledged by investment treaty tribunals and publicists that the assessment of damages is often a difficult exercise and will usually involve some degree of estimation and the weighing of competing (but equally legitimate) facts, valuation methods and opinions (…).51

184.
It is the Claimants' submission that they have met their burden of proof in this case.52

B. THE RESPONDENT'S POSITION

185.

The Respondent denies the applicability of the Chorzów Factory standard of compensation to this case as it considers that the Tribunal held in the Award on Jurisdiction and Merits that the only applicable standard to calculate compensation is Article 6 of the Treaty.53

186.
While the Claimants justify the applicability of the Chorzów Factory standard on the basis that the expropriation of 40% of their investment was unlawful, the Respondent affirms that the term "unlawful" does not appear anywhere in the Tribunal's ruling.54
187.
In any event, the Respondent claims that the Treaty standard of compensation should be applicable regardless of whether the expropriation was lawful or unlawful. To this effect it relies, among others, on British Caribbean Bank Ltd. v. Government of Belize:

at no point does the Treaty, being a lex specialis, distinguish between lawful and unlawful expropriation (…) Once the violation of the Treaty provisions regarding expropriation is established, the State has breached the Treaty. Neither is the Tribunal convinced that the generally accepted fair market value standard was intended to apply only in cases of the so-called "lawful expropriation" (…).55

188.
The Respondent also quotes Guaracachi America, Inc. and Rurelec PLC v. Plurinational State of Bolivia, which held:

The BIT makes no distinction between the compensation to be provided in respect of an unlawful expropriation as opposed to a lawful one, and the Tribunal does not find any reason to believe that the illegality of the expropriation renders what the BIT deems to be "just and effective compensation" suddenly inadequate.56

189.

Moreover, the Respondent claims that the Tribunal expressly held in the Award on Jurisdiction and Merits that the Claimants are entitled to "compensation under Article 6 of the Treaty,"57 which provides that compensation for expropriation "shall amount to the market value of the investment expropriated." Accordingly, "Claimants are only entitled to claim compensation for the 'market value of the investment' as of the valuation date, February 2011, not the Chorzów Factory standard, as Claimants wrongly allege."58 [emphasis in original]

190.
The Respondent also contends that the Claimants have essentially misinterpreted the Chorzów Factory standard by assuming that "the "but for" world would be one that would cater to Devas' interests over the Government's essential security interests."59
191.
While considering the discussion of the Chorzów Factory standard's applicability purely academic in this case because the result would be the same whether or not the standard is applied;60 the Respondent further argues that the Claimants are not entitled to ignore any fact that negatively affects their value but, "rather, it requires that all factors, negative as well as positive, that "in all probability" would have been present must be taken into consideration."61 [emphasis in original] The Respondent quotes several authorities in this regard.62
192.
The Respondent also criticizes that the Claimants consider that, in their calculation, they may assume the "highest and best" use of the asset, while disregarding the Government's determination of the manner in which it would need to deploy the spectrum to protect its essential security interests.63 As the Claimants' own authorities acknowledge, the "highest and best use" is circumscribed by "all pertinent legal, physical, and economic constraints."64
193.
The Respondent states that a but-for assessment would need to take into account the Indian regulatory regime (which would have precluded the terrestrial use of the spectrum or, if such use were permitted, would require that a charge commensurate with auction prices would be levied); the Government's need for a shared satellite configuration; and the delay in the satellites' deployment.65
194.
Finally, the Respondent notes that, while the Claimants assert a breach of due process by the failure to inform them timely of the decision to reserve the spectrum for non-commercial use, they do not put forward any damage claim for that alleged breach.66
195.
In sum, the Respondent's submission is that the "claimant's burden of proof is not met merely because liability has been found"67 and criticise the Claimants' "conclusory statements that the Devas business must have had some value and that, therefore, [the Respondent's] and Dr Flores's conclusion that the DCF analysis actually results in a negative value cannot be right."68

C. THE TRIBUNAL'S ANALYSIS

196.
Establishing the valuation date in this case is relatively straight-forward. Both Parties appear to agree that the valuation date should be immediately before the announcement of the Indian Cabinet Committee on Security ("CCS") decision of February 17, 2011.
197.
Beyond the identification of the proper valuation date, however, the Claimants contend that determining the value of Devas requires the Tribunal to exclude from consideration potentially adverse effects on the value of Devas attributable to India, preceding that date. For example, it is said that the Tribunal should disregard the possibly negative impact of the February 8, 2011 press conference, at which Dr. Radhakrishnan together with Dr. Kasturirangan, announced publically the Space Commission's intention to annul the Devas Agreement.69
198.
The Tribunal has no difficulty accepting that any adverse impact on value of such governmental actions shortly ahead of any taking must be disregarded. Otherwise, a state wishing to expropriate the property of a foreign investor would only need to have one of its officials announce an intention to take over the investor's property without compensation and then delay that actual decision. In such circumstances, the value of the investment would deteriorate and would not have the same value as it would have had, but for such announcement or intervention.
199.

This approach is found specifically in Article 6(1) of the Treaty in relation to valuing property that has been expropriated. It says, in part, "[s]uch compensation shall amount to the market value of the investment expropriated immediately before the expropriation or before the impending expropriation became public knowledge." The Tribunal recognizes this provision embodies what is practically a universal principle to be applied in expropriation cases: the expropriating authority cannot take advantage of its own conduct where it may have negatively influenced or adversely affected the value of what was to be taken ahead of the valuation date.

200.
Less obviously, the Claimants say this approach may be important as well when considering the Respondent's reliance, for example, on statements made by persons whose views were solicited in 2010 by Dr. Radhakrishnan in the context of the potential annulment of the Devas Agreement, such as those of P.J. Thomas, Secretary, WPC Wing, DOT, to Secretary, DOS concerning the potential commercial use of the S-band allotted to Devas and the potential terrestrial use of the S-band.70
201.
The Claimants invoke the standard articulated in the Chorzow Factory case for compensation,71 that is, to make reparation in an amount that would, "so far as possible, wipe out all the consequences of the illegal act and re-establish the situation which would, in all probability, have existed if that act had not been committed."72 The Respondent objects to applying this standard and says the Tribunal "clearly held" that "the applicable standard to calculate compensation" in this case "is exclusively Article 6 of the Mauritius Treaty."73
202.

The Respondent says that Article 6 provides only that compensation for expropriation "shall amount to the market value of the investment expropriated" which may be something less than the fair market value that might be potentially claimed under the Chorzów Factory standard.74 Moreover, the Respondent says that the Tribunal did not make an express finding of unlawful conduct in the Partial Award and that such a finding would have been necessary in order to apply the Chorzów Factory standard.75 Despite these submissions, the Respondent concedes, however, that the discussion about the compensation standard is purely academic in this case since even under the Chorzów Factory standard, the result would be the same.76 Contrary, it says, to the Claimants' arguments, the Chorzów Factory standard does not allow the Claimants to ignore any fact that negatively affects value. "Rather, it requires all factors, negative as well as positive that 'in all probability' would have been present must be taken into consideration."77 Several authorities are cited in support. Among others, India refers to CDSE v. Costa Rica,78Phillips Petroleum v. Iran,79 and Yukos v. Russia.80

203.

In response, the Claimants pointed to findings in the Partial Award in relation to breaches of Articles 4(2) and 6 of the Treaty (governing fair and equitable treatment ("FET") and expropriation, respectively), contending that these findings amounted to a finding of unlawful expropriation (as well as bad faith conduct in breach of the FET standard).81 The Claimants also argue that India has not disputed that, in principle, the relevant business asset should be valued based on its "highest and best use."82

204.
The Claimants submitted that compensation is calculated in a "hypothetical context where the State would not have resorted to such maneuvers, but would have fully respected the provision of the treaty and the contract concerned."83 They say, therefore, that both the Chorzów Factory mandate and the principle of full reparation apply, including looking to the highest and best use of the property that has been taken.
205.
The Tribunal finds that the debate over whether it must apply the concept of either market value or fair market value, as acknowledged by the Respondent, is really academic in this case. We should not overlook actions by the state that may have negatively affected the value of what was taken as a result of the decision of the CCS in February 2011. Put in affirmative terms, the Tribunal determines that it should apply the standard language of reparation as set out in the Chorzów Factory case. In particular, the Tribunal finds that the phrase, "market value" used in Article 6 of the Treaty does not preclude reliance on these well-recognized and standard descriptions of what should be determined when deciding quantum or value of what was, in this case, unlawfully taken without compensation at the time. Moreover, if it were necessary to do so, the Tribunal would affirm that Treaty breaches of FET and expropriating property without compensation were both unlawful actions for which the Claimants may seek full compensation.
206.

The Tribunal will, therefore, review the issues raised in this quantum phase of the arbitration with the objective of finding an amount that will, "as far as possible, wipe out all the consequences of the illegal act and re-establish the situation which would, in all probability, have existed if that act had not been committed."84

207.
The Tribunal has read with great attention and respect the award in the Deutsche Telekom AG v. The Republic of India submitted by the Respondent on June 29, 2020. As will be seen below, based on its own analysis of the evidence and the pleadings of the Parties in this case, the Tribunal, by majority, has come to different conclusions.

V. APPLICABLE "BUT FOR" SCENARIO

208.
The Tribunal will now consider which circumstances would have prevailed in the event that the unlawful conduct had not occurred. The Tribunal will address several defining features of the "but for" scenarios discussed by the Parties.
209.
As was noted by the Tribunal in its letter to the Parties of November 13, 2017, the Parties' discussion on the applicable "but for" scenario was based on the characterization of the damages claim by the Claimants and focused initially on the value of Devas in the hypothetical event that it had obtained only 40% of the originally allocated spectrum. In other words, the valuation concerns the value in early February 2011 of the Claimants' investment in Devas, had that company been able to secure only 25.2 Mhz of spectrum. This "but for" scenario will be referred to as the "Reduced Spectrum Scenario."
210.
As will be seen below, the main areas of discussion between the Parties in the Reduced Spectrum Scenario concern the S-band spectrum distribution and satellite capacity allocation between the Parties; the impact of satellite launch delays on Devas' value; and the likelihood of Devas obtaining, but for the decision to annul the Devas' Agreement, the relevant regulatory approvals to operate its intended BWA and AV services, notably by being granted a terrestrial re-use license from the Wireless Planning and Coordination Wing ("WPC" and "WPC License," respectively), against the payment of a fee to be established by the authorities.
211.
By the same letter of November 13, 2017, the Tribunal requested the Parties to ask their experts to provide additional reports addressing an alternative valuation approach in which they would calculate the amount of 40% of the value of the investment as it was actually made by the Claimants, i.e. in consideration of all rights and obligations set out in the Devas Agreement including access to 63 Mhz of S-band spectrum. This "but for" scenario will be referred to as the "Original Spectrum Scenario."
212.
Furthermore, under both the Reduced Spectrum Scenario and the Original Spectrum Scenario, the Parties address two possible situations with regard to the services which Devas may have been able to provide: (i) the provision of both BWA and AV services; and (ii) the provision of AV services only. Whether both types or only one type of services was to be provided has a significant impact on the value of Devas, as will be apparent in the following sections.

A. REDUCED SPECTRUM SCENARIO

213.
On the assumption that Devas would have to operate with a reduced spectrum, the Parties disagree on several aspects of the Reduced Spectrum Scenario, including: (i) the amount of spectrum entitlement and its division over one or two satellites; (ii) the satellite configuration and the impact of possible launch delays; (iii) regulatory risks; and (iv) applicable license fees. Finally, the Parties also discuss the value of an AV Services–only business in the Reduced Spectrum Scenario.

1. Spectrum Entitlement and Division

214.
On the assumption that Devas would have to operate with a reduced spectrum, the Parties disagree as to the actual amount of spectrum entitlement as well as to how such spectrum would likely have been allocated and, in particular, whether it was reasonable to assume that the entirety of the spectrum would have been allocated on one and the same satellite.

a. Contiguous 25.2 MHz Spectrum Allocation to Devas in One Satellite

215.
The Claimants argue that in a "but for" world Devas would have had 25.2 MHz of downlink spectrum available instead of the 70 MHz originally envisaged (of which 7 MHz had already been reserved for use by the Indian Space Research Organization ("ISRO"))85 and 0.2 MHz of uplink spectrum.86
216.
The 25.2 MHz of available spectrum for Devas in the Claimants' "but for" scenario is the product of multiplying the 63 MHz of spectrum which were originally envisaged for Devas' use by 40%,87 which is the extent of spectrum which, on the Claimants' interpretation, was regarded by the Tribunal in the Award on Jurisdiction and Merits to have been expropriated for purposes other than the protection of India's essential security interests.88
217.
The Claimants argue that in such a scenario Devas would have:

(a) reconfigured one of the two Satellites (and not used the other), and (b) worked with new technology for its ground network to maximally use the 25.2 MHz of spectrum available (…) with these technology changes, having 25.2 MHz of spectrum would not have materially affected Devas's ability to deliver BWA and AV services in the urban areas in India (…) from where the vast bulk of its revenues were to be generated.89 [footnotes omitted]

218.
In contrast, in the less-profitable rural areas Devas would not have built a terrestrial BWA network and would offer a reduced package of AV services.90 This would have only had a minor impact on Devas' revenues which were largely generated from customers in urban zones.91
219.
The Respondent, on the other hand, considers that the Claimants engage in a distorted analysis of the available spectrum and propose a satellite configuration that would deprive the Government of the effective use of the limited spectrum that the Tribunal had determined it would need for its essential security interests.92
220.
The Respondent contends that the spectrum split is not just a "mathematical matter," as not all of the spectrum on each of the transponders is "usable" and it is necessary to have unused "guard band" spectrum to assure the realisation of the satellite payload systems.93 By not taking this into account, the Respondent argues, the Claimants have overstated their spectrum entitlement.94
221.
Moreover, the Respondent also disagrees with the way in which the split is put forward by the Claimants, which assume a contiguous allocation and the use of one satellite only. This would leave the Government with the entirety of the second satellite and only a small portion of the first one. The split envisaged by the Claimants would thus have an adverse impact on India's ability to protect its essential security interests.95
222.
The Respondent claims that Devas would not be viable as a company with the reduced spectrum, and that the Claimants' preferred configuration is designed to make Devas viable at the expense of India's essential security interests.96

b. Non-contiguous 19.44 MHz Spectrum Allocation to Devas Divided in Both Satellites

223.
The Respondent argues that Devas would at most have had use of 19.44 MHz of downlink spectrum and 2,916 MHz of uplink.97 Furthermore, as the Tribunal found that 60% of the spectrum was to be allocated for India's essential security interests, the "Claimants cannot now assert that the Government would have been required to deploy that spectrum in a manner that best suited Devas' commercial needs."98
224.
The Respondent affirms that with a spectrum split and satellite configuration consistent with its essential security interests, Devas would have been left with "non-contiguous spectrum, usable with only smaller channel sizes supported by the LTE standard (…) that would have limited Devas' service offerings."99 The Respondent endorses the conclusion of its technical expert, Mr. Sharony (hereafter, "Mr. Sharony") that this would have had a negative impact on Devas' ability to compete effectively."100
225.
On the other hand, the Claimants' experts consider that the Respondent's proposed distribution of the spectrum "would be so grossly inefficient as to be perverse (…) the only discernable (sic) "rationale" for Mr. Parikh's suggested satellite configuration and use of S-band spectrum is that it depresses Devas's value."101 Mr. Parikh is the Deputy Director of the Satellite Communication and Navigation Payload Area of the Space Application Center (ISRO) and his testimony has been submitted by the Respondent ("Mr. Parikh"). Furthermore, the Claimants contend:

Mr. Parikh's assumptions about bandwidth and channels, and guard bands also would result in large amounts of empty, unused spectrum and would clearly hamper India's use of the S-band for military needs. These arguments are manifestly implausible, and therefore cannot be accepted for valuation purposes.102

2. Technical Risks

226.
On the assumption that Devas would have to operate with a reduced spectrum, the Parties disagree with regard to the technical risks that Devas' business would face.

a. Satellite Configuration and Launch Delays

227.
The Parties are in disagreement as to whether it was reasonable to assume that Devas would have been able to use one or two of the satellites. As a result, they take different views as to launch delays that Devas would have to factor in before being provided with satellite capacity.

i. One Dedicated Satellite for Devas Unimpeded by Delays

228.
The Claimants contend that Devas would have had the right under the Devas Agreement to delivery of two satellites, which were almost complete by June/July 2010103 and were to be launched by mid-July 2011.104 Devas would have used either of those satellites.105 In this regard, the Claimants argue that the Award on Jurisdiction and Merits did not rule that the satellites GSAT-6 or 6A were needed for military use.106 They consider that in a situation where India acted reasonably there would have been no reason why such a satellite could not have been launched for Devas in 2011.107
229.
The Claimants affirm that in a "but for" world "Devas would not be tethered to the two-satellite configuration proposed by India."108 [emphasis in original] Moreover, the Claimants consider that, since the satellite that would be dedicated for Devas' use "would not involve the military, it would not have been subject to any delays or refits associated with the military or the purported need to launch the satellite using an Indian GSLV."109
230.
The Claimants also assert that in a "but for" world Antrix would have complied with its contractual obligation to launch the satellites promptly.110 In any event, Devas had already taken the initiative to identify a third-party launch vehicle to cover for any contingency.111 They further point out that "India itself uses foreign-made launch vehicles in practice. As Mr. Sethuraman admits, India's last military satellite, GSAT-7, was not launched using the GSLV or any other Indian vehicle."112 [emphasis in original] Mr. Sethuraman is Associate Director, Satellite Communication Program at the Satellite Communication and Navigation Program Office (ISRO); his testimony has been submitted by the Respondent ("Mr. Sethuraman"). In fact, the launch was carried out by a European consortium, as reported by Indian press: "India's first exclusive defence satellite GSAT-7 was successfully launched by European space consortium, Arianespace's Ariane 5 rocket from Kourou spaceport in French Guiana."113
231.
The Claimants further argue:

In all events, even had there been some delay in launching a satellite that would allow Devas to start offering services, this would not have affected the basic viability of the business because, as Claimants have shown, they would fully have met that challenge in a manner that preserved its business, e.g. by accelerating the roll-out of its services to make up for any delay, to ensure that its rollout was not impaired.114

232.
In contrast, the Respondent argues that the spectrum split put forward by the Claimants would leave the Government with very limited capacity in one satellite which the Respondent considers as a "grave risk if Satellite 2 were to fail."115
233.
The Respondent explains that "the Government has a 24 x 7 operational philosophy for its military satellites, meaning that, in order to assure that the military requirements are covered at all times, two operational satellites in the same service are necessary."116

ii. Shared Satellites to Be Launched with Indian Autochthonous Technology

234.
The Respondent argues that it needs access to both satellites, such that if one satellite were to fail, the Government would at least have some coverage for its essential security interests.117 Pursuant to the Respondent's proposal, the Government would have at least two satellites covering the same area and, "while such a spectrum split and satellite configuration would not have been optimal for Devas, the Government's essential security interests should not be compromised in order to accommodate Devas' entertainment business."118
235.
The Respondent contends that, while the Claimants' proposal gives no consideration at all to the Government's essential security interests,119 the Respondent's proposed shared satellite configuration gives additional capacity to the Government and meets its load sharing requirements. The Respondent's approach is therefore superior to the Claimants' proposals, which the Respondent regards as based on the erroneous premise that the Claimants are entitled to define the satellite configuration in a manner that "assur[es] it the maximum benefit irrespective of the Government's essential security interests."120
236.
In the Claimants' view, "[t]here is no credible evidence that India does, in fact, approach military satellites in that fashion" and, in any event, it would be "irrelevant to the outcome of this issue."121 The Claimants also contend that "every satellite has internal redundancy built into it so that if a transponder malfunctions, coverage is not lost. Because satellites are constructed this way, there is rarely total in-orbit failure of a satellite. India's claimed "risk" of total in-orbit failure is greatly overstated."122 Moreover, according to Mr. Gary Parsons, engineer Member of the Board of Directors and shareholder of Devas, whose witness testimony has been submitted by the Claimants ("Mr. Parsons"), it is uncommon for militaries worldwide to operate a redundant satellite. He points out:

[N]one of the last three satellites that India claims were for military use have in-orbit operational back-ups nor has India launched two complementary satellites in order to "diversify" its risk of in-orbit failure. Indeed, in the two years since GSAT-6 was launched, and despite its claims of an alleged "grave risk" in not having a second satellite in orbit, India has not launched GSAT-6A, as a back-up or otherwise.123 [footnotes omitted]

237.
The Respondent addresses these assertions by stating that the Claimants do not comprehend the difference between load sharing and redundancy;124 while satellites have some internal redundancy, it relates to specific components only (those with higher failure rates). Satellites do not have redundant transponders, nor does the unfurlable antenna (the failure of which would render the satellite useless) have any redundancy.125 Furthermore, even if redundant components may remedy many potential failures, "the problems associated with the inability to load share that are inherent in the dedicated satellite configuration would remain."126
238.
Regarding the lack of back-ups, the Respondent claims that its plan was to develop experience prior to launching satellite GSAT-6A, which was scheduled for December 2017 or January 2018.127
239.
According to the Respondent, in a "but for" world both satellites would have been reconfigured to be used by the military and they would have required to have been launched using India's indigenously developed launch technology.128 Despite the Claimants' denial of relevant launch delays, the Respondent considers them inevitable to make possible:

the Government's reconfiguration of the satellites for dual military/commercial usage, the Government's assessment of the causes for the GSLV launch failures, its development of solutions and the testing of the modified launch equipment, and the Government's need to develop ground systems (including handheld devices) that were compatible with the S-band satellite signals.129

240.
The Respondent points out that satellite GSAT-6 was launched by ISRO on August 27, 2015,130 and that there is no reason to believe that the delay would have been significantly different had the Government been limited to 60% of the capacity of the satellites rather than 100%.131
241.
The Respondent also affirms that Devas had no right under the contract to obtain a third-party launch vehicle, despite the Claimants' assertions that Devas had already taken the initiative to find such a third-party.132 The Respondent affirms that "GSAT-6 and GSAT-6A, unlike GSAT-7, are not ordinary communication satellites. Rather, they contain India's state-of-the-art unfurlable antenna" and India was not prepared to share these advanced and unique features with any third-party launcher.133
242.
The Respondent criticizes the Claimants' assertion that any delay would have been mitigated "by accelerating the roll-out of its services to make up for any delay"134 as a bold statement without any evidence to support the feasibility of such acceleration.135 The Respondent argues that if an acceleration of services roll-out was possible, it would have been done in any event, since Devas was to generate negative cash flows for nine years according to the Claimants' experts.136
243.
The Respondent discards the Claimants' statement that Antrix was contractually obligated to launch satellites promptly, as Antrix could not have launched the satellite if the Government refused to permit it to be launched by a third-party in light of its essential security interests.137 Furthermore, even assuming that Antrix's delay could not be excused as force majeure, the maximum amount it would be required to pay for delay would have been USD 5 million. In the event of material breach, Devas was entitled to terminate the contract and to obtain the refund of the Upfront Capacity Reservation Fees, but nothing more.138
244.
The Respondent contends that a reasonably informed buyer in February 2011 would have known that a delay in the launch would have had an adverse effect on value. A shift of the launch date to July 2014, without any other change in the Claimants' model, would have decreased their DCF valuation from USD 1,284 million to USD 68.9 million, while a delay to July 2015 (which roughly coincides with the actual launch date of GSAT-6) would further reduce it to negative USD 234.9 million.139

iii. One Satellite Dedicated to Devas Still Affected by Launch Delays

245.
The Respondent claims that, even if Devas had been given a dedicated satellite as assumed by the Claimants (which for the reasons set out above would have been contrary to India's essential security interests), such satellite would have still needed to be reconfigured to function with a reduced spectrum. In this regard, the Respondent claims that the nine-month period which the Claimants allow for such reconfiguration is "overly simplistic."140 According to Mr. Parikh "the procurement, installation and testing of the new payload would have taken between 15 and 21 months."141
246.
Moreover, the Respondent submits that regardless of when such reconfiguration may have been finished, the "satellite would have had to have been launched from India by an indigenous Indian satellite under the watchful eye of ISRO and Indian security forces, not by a third-party."142 The Respondent suggests:

[O]nce it had been determined to use a satellite with India's state-or-the-art unfurlable antenna for the Government's essential security interests, an identical satellite would not have been permitted to have been launched with a foreign launch vehicle.143

b. Technical Challenges

247.
The Parties are in disagreement with regard to the feasibility of certain technical assumptions and the impact that technical challenges would have over the viability of Devas' business. In particular, the Respondent challenges the feasibility of the technologies which the Claimants envisage would have been used in the Reduced Spectrum Scenario and the competitiveness of the Devas' business with the assumed download speed and "oversubscription ratio."

i. Novel Technologies (LTE, DVB-SH and eMBMS)

248.
The Claimants argue that the technology adaptations required for Devas to develop its business in the Reduced Spectrum Scenario would involve the use of LTE technology and an efficient cell site configuration, which would result in higher cell capacity and reduced network costs; the use of a 20 MHz channel for BWA services (in contrast with the three 10 MHz channels previously envisaged); and the merging of Devas' terrestrial network for AV and BWA services into a single terrestrial network using "eMBMS" technology, which would result in significant cost savings.144
249.
According to the Claimants, LTE and DVB-SH technologies were in their infancy and required "an appropriate ecosystem" which, the Claimants submit, "was being accelerated for Devas" with DT's assistance.145 The Claimants also point out that Mr. Sharony opined that TD LTE technology "would be available in India in 2012, which is consistent with the valuation evidence."146
250.
With regard to eMBMS technology, in the Claimants' view, the introduction of such technology was feasible as at the valuation date, as is illustrated "by the fact that DT, Devas and Alcatel Lucent were actively engaged in developing eMBMS for use by Devas at the time the contract was annulled."147 The Claimants consider that Mr. Sharony does not question its viability from a technical perspective but rather "complains" that it was not commercially deployed until 2014.148 Nevertheless, the Claimants consider that Mr. Larsen's evidence that "there was a commercial case for eMBMS with Devas and that, before annulment, DT was driving its development" remains "unchallenged."149
251.
The Respondent contests the availability as of February 2011 of the technology relied on by the Claimants in order to develop the technological arrangements required in the "Reduced Spectrum Scenario," noting that "as of February 2011, no TD-LTE network had been commercially deployed anywhere in the world."150 The Respondent points out that TD-LTE was deployed in India for the first time in April 2012 by one of the giants of the Indian telecommunications market.151 Accordingly, the Respondent considers that the "Claimants' assumption that they could have rolled out commercial services using TD-LTE combined with e-MBMS technologies as of January 2012 is totally unsupported."152
252.
According to the Respondent, "most of the telecommunication giants considered the business case for eMBMS still not proven in 2016 (…) It is still not clear today whether it is commercially viable. DT hasn't rolled it out commercially anywhere."153 In any event, the Respondent argues that "the record shows that it would not have been ready for use by Devas until 2014 at the earliest."154

ii. Download Speed

253.
The Respondent criticizes that the Claimants have updated the download speeds for BWA services assumed in the Darwin Model to meet the requirements for broadband services recommended by the Telecom Regulatory Authority of India ("TRAI") for 2011, but have not also assumed that they would have to grow at a higher rate than envisaged in the Darwin Model in order to reach the download speed recommended by TRAI for 2016.155 In the Respondent's view, this means that "without adjustment, Devas would have had a manifestly uncompetitive business."156 According to the Respondent, if the costs necessary to achieve that were included in the Claimants' model, "the value calculated by Claimants' experts would be entirely eviscerated."157
254.
Moreover, the Respondent contends that the "[a]ctual download speeds for BWA services in India demonstrate that Devas would have been uncompetitive had it achieved the speeds based on the growth rates assumed by Claimants' experts."158 In the Respondent's view,

Devas could not reasonably expect to offset the costs associated with increasing download speeds with an increase in the price of the services, as the large Indian companies that are offering BWA services are actually charging prices that are lower than prices that Claimants' experts are projecting for Devas[…]159

255.
In response, the Claimants argue that Mr. Flores' criticism relies "on a single comment to a series of comments on proposed guidelines, and the comment he relies on was not adopted for several years after it was first made (in different market circumstances)."160 [emphasis in original] The Claimants also underscore that Mr. Bazelon met the "actual bandwidth requirements in 2011" [emphasis in original], and that the document on which –Mr. Flores relies "deals with service in rural villages and acknowledges that as of 2011 3G and BWA systems may support lesser bandwidth."161
256.
The Claimants contend that Mr. Flores refers to speeds obtained by other operators after the valuation date "but notably does not mention the substantial reduction in the costs of providing bandwidth (…) that occurred in the same period to support those increased speeds."162 According to the Claimants, Mr. Bazelon's examination at the Hearing on Quantum "dispel[ed] any doubt that the projected download speeds contained in the TRAI recommendation are not a reasonable basis for reducing value or adjusting the cash flows."163

iii. "Oversubscription Ratio"

257.
The "oversubscription ratio" reflects the number of broadband customers which have access to the same bandwidth at any particular time.164 The Respondent criticizes that the Claimants have assumed a 50:1 "oversubscription ratio" which, the Respondent submits, is too high given that in 2009 the TRAI issued guidelines limiting the oversubscription ratio for enterprise customers to 30:1 in order to ensure a higher service quality.165 The Respondent notes that Devas' expert in the ICC Arbitration adjusted the oversubscription ratio in the Darwin Model to follow TRAI's guidance, while the Claimants have not done so.166
258.
According to the Respondent, if the 30:1 ratio were applied to Devas' enterprise customers following the TRAI guidance, "the costs in the Devas model would have to be adjusted upward, having another significant negative impact on net present value."167 Furthermore, the Respondent underscores that the prices used by the Claimants' experts

are actually 69% higher than the prices Devas had in its own model. If one were to use the 30 to 1 oversubscription ratio together with the prices in the Devas model and leave all of Claimants' other untenable assumptions intact, the Devas business would have a net present value of negative US$104.5 million.168 [footnotes omitted]

259.
In contrast, the Claimants are of the view that, "even assuming that the Indian regulator would enforce uneconomic oversubscription factors on all operators," the costs which Devas would have had to incur to meet a 30:1 oversubscription ratio for enterprise users "would have been wholly mitigated by a moderate 6.6% increase in prices to those enterprise users, which appears more than achievable because quality would increase as well."169 According to the Claimants, even if Devas were to raise its prices by 9.1% or 9.2% to offset such additional costs, its business would still be competitive, as it could command a higher price.170
260.
The Respondent disputes the assertion that the Claimants could have avoided this issue merely by increasing their prices and without any adverse market consequences.171

3. Regulatory Risks

261.
The Parties disagree as to whether Devas would have obtained the necessary licenses to actually provide all the BWA and AV services which it envisaged to develop.

a. Obtainment of WPC License for Terrestrial Re-use of Spectrum

262.
The Claimants note that Devas had received Internet Service Provider ("ISP") and Internet Protocol Television ("IPTV") licenses which enabled it to roll-out satellite-only line of sight services without the need of obtaining any further licenses.172 The Claimants underscore that the Tribunal found in the Award on Jurisdiction and Merits that Devas had a right to deliver line of sight services without requiring any further license from the WPC and stress that "this is res judicata in these proceedings. It is thus inappropriate, and legally irrelevant, for India to try to re-open the debate on this subject."173
263.
However, the Claimants acknowledge that for Devas to have been able to deliver the full suite of BWA and AV services envisaged in its most recent business model, "it would have required a WPC operating license authorizing it to re-use its satellite spectrum terrestrially."174 The Claimants affirm that they demonstrated during the merits hearing that

Devas had finalized a draft WPC application for its AV/BWA business with the input of high-level Antrix/ISRO representatives and was prepared to submit the application as soon as it received a firm launch date from ISRO, a prerequisite for submission.175

264.
The Claimants refer to the Tribunal's holding in the Award on Jurisdiction and Merits that "because of problems of interference, [it] would not have been possible for competing services to operate in the same spectrum,"176 as the spectrum was allocated to Devas. The Claimants interpret this finding as recognition that Devas possessed a "box-out" position with respect to its spectrum that prevented any other commercial operator from using it.177 Furthermore, they affirm that this finding is res judicata, so the Respondent's efforts to re-open the debate in this regard are inappropriate.178
265.
The Claimants point out that a similar finding by the tribunal in the ICC Arbitration (the "ICC Tribunal") led that tribunal to conclude that this situation, which prevented the auctioning of the spectrum, incentivized any regulator to reach an agreement with Devas on reasonable licensing fees.179
266.
They also assert that these circumstances have led authorities, in every other jurisdiction where this issue has emerged, to deal exclusively with the holder of satellite spectrum.180 In this context, they submit that Devas had every reason to expect, and India every reason to grant, a full terrestrial re-use license allowing Devas to provide AV and BWA services throughout India at a reasonable fee.181
267.
Moreover, the Claimants point out that in 2009 India granted Devas all necessary licenses to develop experimental trials to conduct a full AV/BWA Business with terrestrial re-use, including not only the experimental license182 but also a license to import wireless transmitting and receiving apparatus into India,183 an extension of the original experimental license,184 and various siting clearances for AV/BWA towers.185 In this regard, the Claimants sustain that "no rational government would have lent its own time and resources to a trial program if (as it now claims) the system was never going to be and, indeed, could not be, approved."186
268.
Furthermore, they consider that with ISRO/Antrix's help, to which Devas was contractually entitled, "it was reasonable to believe that such authorization would be forthcoming."187 They also point out that the Devas Agreement envisaged the establishment of a hybrid satellite-terrestrial communications system and, accordingly:

From the outset, DOS/ISRO, therefore, at all times knew that, at the appropriate time, they would be contractually obligated to support an application by Devas for frequency authorization to operate the terrestrial component (…) It further follows that DOS was not aware of any actual prohibition on the use of the terrestrial component of the system in S-band spectrum (…) (otherwise, DOS would have had no reason to embark on this venture in the first place).188

269.
The Claimants rely on several documents put forward by the Respondent to support their claim about the likelihood of terrestrial re-use authorization. Firstly, the Claimants argue that the letter from Dr. Radhakrishan to the Law Ministry asking advice "on whether [the] ANTRIX-Devas contract need[s to] be annulled (…) to ensure a level playing field for the other service providers using terrestrial spectrum"189 belies India's case that Devas could have never received a license for BWA services. There would have been no need to question whether the Devas Agreement needed to be annulled to preserve the level playing field in the area of BWA terrestrial services, if Devas could not be a player in that area in the first place.190
270.
Second, the Claimants also contend that the two letters from the Indian Department of Telecommunications ("DOT") to the Indian Department of Space ("DOS") of July 6, 2010 and of July 28, 2010,191 on which the Respondent places great reliance, "are not competent evidence" of how Indian regulators would have acted in a "but for" scenario, as they "were written in response to a June 16, 2010 letter from Dr. Radhakrishnan"192 in which he was "seeking advice concerning the annulment [of] the Devas Agreement."193 Accordingly, the Claimants argue that

given that the primary motivation of DOT appears to have been to aid Dr. Radhakrishnan in his effort to annul the Devas Agreement (a process that was deemed unlawful by this Tribunal), these letters should be excluded from any consideration of the value of the spectrum that was lost as a consequence.194

271.
The Respondent, on the other hand, argues that the Secretary of the DOT and the Wireless Advisor did not take any position on the question of the annulment of the Devas Agreement in their letters.195 Rather, they only expressed their "firm views" that if the spectrum were to be used terrestrially for commercial services and such use were to be granted to Devas, "Devas would be required to pay a spectrum charge commensurate with the amounts paid in the 2010 auction of BWA spectrum."196 The Respondent criticizes as baseless the Claimants' argument that these communications should be disregarded in a "but for" scenario197 (see below, "India's Level Playing Field Policy").
272.
In any event, the Claimants contend that the above-referenced letters actually undermine India's position. In the Claimants' view, "they do not reflect a genuine 'level playing field' analysis; they take no account of Devas's incumbency, and they rely on a false 'auction' paradigm that could never have applied to the satellite spectrum already allocated to Devas."198 The Claimants' position is that such letters overlook the "significant difference" between an authorization to re-use spectrum and the granting of spectrum, as noted by the Indian Supreme Court in Centre for Public Interest Litigation v. Union of India et al.199 In particular, the Claimants argue that the July 28, 2010 letter actually undercuts the Respondent's position because the letter "[b]y its own terms (…) contemplates authorizing Devas's use of terrestrial components in the S-band for BWA services: the only issue the letter raises is price."200
273.
The Claimants also rely on the 2005 TRAI Recommendations which, they consider, "explicitly encouraged such re-use [of the satellite spectrum terrestrially]."201 The Claimants note that the TRAI recommended that

the licenses to be granted to potential satellite radio service providers should allow for the evolution of services from the initial simple, audio/data broadcasting to include video, internet applications and other advanced services. Such a licensing regime will encourage free growth of new applications and services which could be exploited due to the technological developments in the field of broadcasting and telecommunication. This licensing approach will also lead to flexible and efficient utilization of resources including scarce radio frequency spectrum.202

274.
In the Claimants' view, to the extent that

the terrestrial component of the satellite AV services already had been considered and approved by TRAI as part of its regular process and recommendations, the WPC could not legitimately have declined an application by Devas to provide AV services using CGC, particularly since Devas was always willing to pay the fees set out in the 2005 TRAI Recommendations.203

275.
According to the Claimants, "Indian telecom regulations are informed by international practices. TRAI looked to international practices in issuing 2005 TRAI recommendations."204 The Claimants also set forth the argument that Indian telecommunications policy requires that spectrum be put to its highest and best use and such policy has to adapt to keep pace with technological change.205 Therefore, "under its own constitution and statutes, India is not permitted to arbitrarily deny Devas an authorization to re-use its satellite spectrum terrestrially."206 [footnotes omitted]
276.
The Claimants submit that the Respondent's "licencing arguments are clearly post hoc obstacles thrown up by India for purposes of supporting its litigation position in this case."207 In the Claimants' view, the fact that the WPC did not give a negative answer to DT's approach for comfort, but "was noncommittal either way," evidences that the licensing hurdles put forward by the Respondent are a "litigation invention."208

b. Unlikelihood of Award of Terrestrial Re-use License

277.
The Respondent underscores that for Devas to be able to provide its intended services, it would have required a license from the WPC for which it had not even applied and which the Government had no obligation to grant.209 In the Respondent's submission, "[t]here's no stabilisation clause or anything guaranteeing [Devas] that a certain policy has to be adopted or that spectrum charges should be to their liking."210 Devas' investors were fully aware of the risk that such licenses might not be awarded.211 The Respondent points out:

DT (…) actually undertook due diligence with regard to the spectrum issues. DT invested in Devas knowing that there was uncertainty as to whether the required licenses to roll out the Devas services would be granted.212

278.
The Respondent further affirms that Mr. Larsen's Witness Statement does not reflect the substance of his testimony in the arbitration brought forth by DT. Mr. Larsen, whose testimony has been submitted by the Claimants, is Senior Vice President within the Group Technology Department of DT in Bonn ("Mr. Larsen"). According to the Respondent, inter alia, he does not inform the Tribunal that

DT approached WPC as part of its due diligence in order to get comfort on the licensing issue, and the WPC did not provide the desired comfort; and that DT then requested Devas to obtain comfort from the WPC in writing, but Devas never obtained that comfort and did not even want to approach the authorities at that stage.213

279.
Furthermore, the Respondent submits that Devas "flatly misrepresented the legal (…) position to DT during the negotiations, telling DT that it had (…) all the necessary approvals for the full suite of contemplated services."214
280.
The Respondent also contests the Claimants' assertion that they could not apply for a license until a firm satellite launch date was obtained215 and notes:

It was obviously the strategy of Devas and its shareholders to wait to make an application for an operating license for Devas' hybrid system until the satellite was launched (…) hoping that with the launch the Government would change its policy regarding the use to which the S-band spectrum could be put and ignore its level playing field policy.216

281.
In any event, Devas' license application would have had to be reviewed by the Apex Committee,217 which, according to the Respondent, "would reject the application because the services Devas intended to offer were not covered by an extant licensing and spectrum regime."218 The Respondent maintains that "the Government's contemporaneous view [was] that terrestrial transmissions were not permitted in the portions of S-band in which Devas hoped to operate a terrestrial business."219
282.
Accordingly, the Respondent argues that there was a substantial risk that the necessary licenses would not be granted and Devas' proposed services could never be provided, rendering the proposed business valueless.220 In the Respondent's view, the Claimants have not satisfied their burden of proving that the necessary licenses would have been granted,221 and rely on the Bear Creek case to emphasize the importance of the burden of proof.222 In any case,

the hybrid satellite/terrestrial multimedia services that Devas intended to provide would not have been permitted without review by the Apex Committee and, ultimately, a favourable recommendation by the TRAI, after its review in a transparent public process.223

283.
Ms. Revathi, Senior Deputy Wireless Advisor in the Wireless Planning & Coordination Wing, whose testimony has been submitted by the Respondent ("Ms. Revathi"), states that the Committee would have rejected any application related to Devas' services, as those kind of services had never been previously authorised: "the S-band spectrum at issue has never been designated for terrestrial use in India (…) its use terrestrially would not have been permitted in the absence of a change in policy."224
284.
Regarding the alleged "box-out" position held by Devas, the Respondent concedes that another operator could not use the same spectrum at the same time in the same location as Devas.225 However, the Respondent asserts that it was not excluded that spectrum in close proximity to the frequency range used by Devas could be used by a competitor as long as there was sufficient guard band.226 According to the Respondent, - the "so-called box-out theory (…) is bogus as a technical matter."227 In any event, the Respondent argues that if there were anything behind such theory, as explained by Ms. Revathi, "the WPC would have regulated to address it (…) there was (…) no stabilisation clause (…) nothing that would immunize Devas from such legitimate governmental action."228
285.
The Respondent argues that the Claimants have no legitimate basis to rely on the 2005 TRAI Recommendations applicable to satellite radio in the changed technological and regulatory environment of 2010-2011.229 In support of this position the Respondent relies on Mr. M. Bhagirath's testimony (Senior Deputy Wireless Advisor to the Government of India in the Wireless Planning & Coordination Wing, hereafter "Mr. Bhagirath"). Mr. Bhagirath considers that the 2005 TRAI Recommendations have no significance given that they

pre-dated its recommendations in 2007 and 2008 relating to auction (…) The 2005 recommendations, relating to a different service, were issued prior to the time that the value of spectrum was fully appreciated and would have had no effect on the amount that would have been imposed in 2011 for the use of the spectrum in S-band, which had not been designated for terrestrial use and which would have been subject to a separate TRAI consultative process.230

286.
Furthermore, the Respondent also refers to a decision by the Supreme Court of India which found as follows;

[T]echnological developments in telecommunications are taking place at an abnormal pace. Various policy decisions taken at one point of time may, therefore, require a relook (…) circumstances may even mandate change of existing policy altogether.231

287.
The Respondent further notes that the Claimants themselves have relied on this same decision of the Supreme Court. However, the Respondent contests the Claimants' view that the decision of the Supreme Court would support their argument to the effect that, if a new complementary ground component ("CGC") is introduced by an incumbent operator due to technological evolution, the government must grant an authorization at a reasonable fee.232 The Respondent argues that, under Indian law, the Government has

the exclusive privilege to establish, maintain and work the telegraphs (…) and has the right to grant licenses to others "on such conditions and in consideration of such payments as it thinks fit."233

288.
The Claimants, on the other hand, criticize that Mr. Bagirath cites no support for his position that the 2005 TRAI Recommendations had been superseded or repealed.234 The Claimants affirm that he

does not identify with any specificity, which 2007 recommendations or 2008 recommendations somehow superseded the 2005 TRAI Recommendations (…) no "hypothetical buyer" would somehow intuit, as India suggests, that the 2005 TRAI Recommendations silently had been overridden.235

289.
Likewise, the Claimants contend that Mr. Bhagirath "accepted in cross-examination that in 2009, [the 2005 Recommendations] were under consideration. So neither the TRAI nor did the government think that they should be binned, because now we have the 2007 and 2008."236 The Claimants also note that Mr. Bhagirath said in cross-examination that "he had not seen any document confirming that the 2005 recommendations had indeed not been accepted."237
290.
Furthermore, the Claimants note that the characterization of the 2008 TRAI Recommendations as a "value-destroying" event was rejected by the ICC Tribunal.238 The Claimants submit that the ICC Tribunal found that such Recommendations "only applied to the S-band allocated to DOT for terrestrial use. They did not apply to satellite spectrum allocated to the Department of Space for satellite use."239
291.
The Respondent contends that if the Government had authorised the terrestrial use of the spectrum, it would have regulated it in a manner consistent with its level playing field policy.240 It would thus have made sure that Devas could have used spectrum for transmitting satellite signals without interference, while allowing the same spectrum to be used terrestrially in other regions where Devas operated with different satellite spectrum.241

4. Applicable License Fees

292.
On the assumption that Devas would have to operate with a reduced spectrum, and on the further assumption that Devas would be granted by the relevant authorities the necessary licenses to provide all services that it intended to provide, the Parties disagree as to the amount of the fees that would have been levied.

a. Establishment of a "Reasonable" Fee

293.
Concerning AV services, the Claimants affirm that the TRAI had already addressed in June 2005 the question of the issuance of a terrestrial repeater license and suggested that such license should be provided to satellite operators for a fee of 4% of gross revenue.242 Therefore, the Claimants consider that the "WPC, acting fairly and rationally, as it must be assumed to act in a "but-for" world, would have permitted Devas to operate an AV satellite with repeaters business."243
294.
Concerning BWA services, the Claimants endorse Mr. Bazelon's view that "Devas should have obtained a full re-use license enabling it to provide full BWA services at a reasonable fee, and certainly substantially less than fees paid at auction for unencumbered spectrum."244 In support of their position, the Claimants rely on a recent judgment by the Supreme Court of India, in Centre for Public Interest Litigation v. Union of India,245 which provided:

[T]he issuance of licenses is different from the granting of spectrum, and that the (…) fee paid for Infotel for authorization to provide new services was not inadequate as Infotel had already been allocated spectrum and was not looking for more spectrum in order to provide these additional services.246

295.
Similarly, according to the Claimants, Devas had already been allocated spectrum under the Devas Agreement and also had obtained an ISP license to provide certain services. Thus, the Claimants contend:

If anything, Devas (like Infotel) required an additional authorization from the WPC to re-use its allocated satellite spectrum terrestrially to provide additional services, in its case BWA services. Just as Infotel received permission to provide mobile voice telephony services by the payment of an incremental license fee, Devas equally should have received permission for terrestrial re-use to provide BWA services (…) To suggest that Devas would have been required to pay auction-level prices for this additional WPC authorization to use its already-allocated spectrum is unsupportable.247

296.
According to the Claimants, in a "but for" world the letter by the Secretary of the DOT of July 6, 2010 and the letter by the Wireless Advisor to the Government of July 28, 2010 concerning the application of prices commensurate with auction rates should be disregarded because they were produced "in direct response to Dr. Radhakrishans's request for advice on the "annulment" of the Devas Agreement, and thus are not competent evidence of how a regulator, acting reasonably and fairly (and not animated by an annulment agenda) would have acted."248 The Claimants endorse Mr. Bazelon's position that "the rationalizations in those letters for charging "auction" rates do not, as an economic matter, make sense when applied to Devas, which already was the incumbent in that S-band spectrum."249
297.
Furthermore, the Claimants consider that the Respondent cannot construct its but-for scenario on the assumption that it would have committed additional Treaty violations,250 which is the case here, as the Respondent's position to the effect that

the Indian government was at liberty (through the WPC) to levy a fee that effectively prohibited Devas from operating a business (…) surely would have given rise to further BIT violations, either on the basis that the purported "fee" amounted to a confiscatory measure in violation of Article 6, or that it constituted a breach of the FET or MFN provisions in Article 4.251

298.
The Claimants note that their experts have based their calculations of Devas' fair market value on the assumption that Devas would have been charged an annual Terrestrial Re-Use Fee commensurate with the highest internationally reported terrestrial fee applied in the world in 2011 (which is the fee applied in Slovenia),252 the application of which to the case would result in an annual fee of USD 361.7 million in the Reduced Spectrum Scenario.253
299.
The Respondent's expert, Mr. Flores, Managing Director of Econ One Research Inc. ("Mr. Flores"), disputes the selection of Slovenia's fees as the highest internationally observable fee and proposes the fee of Italy as a benchmark.254 While such fee is still not indicative of what India would have charged (see below), Mr. Flores considers the selection of Slovenia's fee incorrect and claims that Italy's fee is more appropriate as it applies "'[i]f CGCs constitute an independent terrestrial network,' as in the case of Devas."255 [footnotes omitted] The application of Italy's fee to this case would result in a drop of Devas' valuation from USD 1,495 million to USD 941 million, all else being equal.256
300.
Nonetheless, the Claimants point out that Mr. Flores does not specify which fee was finally agreed with the Italian authorities and contend that "the limited publicly-available data" suggests that it differs from the "proposed" fee discussed above.257 Accordingly, they argue that Slovenia's fee remains the "highest actualized and evidenced fee."258

b. India's Level Playing Field Policy

301.
The Respondent contends that "even if Devas would have obtained the requisite licenses, which is highly unlikely on the record of this case, the spectrum charges it would have had to pay would have rendered the proposed Devas business economically non-viable."259 According to the Respondent, the evidence demonstrates that India would have applied its level playing field policy, which would involve charging Devas a spectrum fee commensurate with auction prices.260
302.
The Respondent points to the testimony of "senior Indian regulators" introduced by the Respondent,261 whom the Respondent characterizes as "the senior government officials responsible for administering these regulations and implementing the policy on a daily basis."262
303.
Likewise, the Respondent relies on "contemporaneous documents," in particular a letter from the Secretary of the DOT of July 6, 2010 and a letter from the Wireless Advisor to the Government of July 28, 2010, "which express the firm views that if the spectrum were to be used terrestrially for commercial services and use such were to be granted to Devas, Devas would be required to pay a spectrum charge commensurate with the amounts paid in the 2010 auction of BWA spectrum."263
304.
According to the Respondent, "the level playing field policy was so essential to the regulatory structure that it would never be cast aside in the manner hypothesised by Claimants."264
305.
The Respondent refuses the Claimants' assertion that the Chorzów Factory principle requires disregarding such letters in a "but-for" world. First, the Respondent considers that the principle is irrelevant to the case as the Tribunal determined in the Award on Jurisdiction and Merits that the Claimants are entitled to compensation under Article 6 of the Treaty, not on any other basis.265 In any event, even assuming its relevance, the Respondent claims that Chorzów Factory "does not dictate that the policies of India should be ignored."266
306.
The Respondent also addresses the Claimants' contention that applying a level playing field policy would result in further Treaty violations by pointing out that "the precedents are unanimous that such policy decisions do not constitute treaty breaches (…) it is not the function of an arbitral tribunal to make policy for India."267
307.
The Respondent argues that the Claimants stretch Chorzów Factory beyond recognition because, if the fee on which they have based their calculations (the equivalent to the one used in Slovenia) were replaced by an amount equivalent to auction prices following India's level playing field policy, the value of Devas' business under their own modelling assumptions would be negative.268 The Respondent notes:

The upfront spectrum charge for the use of 25.2 MHz of S-band spectrum based on the price obtained in the June 2010 auction of BWA spectrum in the 2300-2400 GHz band would be US$ 3,428 billion.269

308.
The Respondent contends that, "even at the ridiculously low 10.3% discount rate Claimants' experts have used (…) the value that would result from that substitution would be negative US$ 741 million, without making any other adjustments to Claimants' cash flows."270
309.
In the Respondent's view, the reason why the Claimants have assumed that this policy, which is at the heart of the Indian regulatory regime, would not be applicable to Devas in a "but-for" world, is that Devas could not compete on a level playing field.271
310.
In response to these views, the Claimants maintain that the Respondent's argument that Devas would never have received authorization for the terrestrial component of its system is invalid.272 According to the Claimants, the Respondent "points only to a hodgepodge of things as 'evidence' of this policy,"273 and none of the documents relied on by the Respondent "actually addresses the position of a satellite operator seeking to re-use terrestrially satellite spectrum to which it already has access."274
311.
In the Claimants' view, the "level playing field" theory has a "key flaw" in that "it falsely treats a satellite operator who already has spectrum rights as an entry-level BWA 'player' who has no rights at all unless it wins those rights at auction."275
312.
Accordingly, they consider that the Respondent's argument that any spectrum fees would be commensurate to auction pricing

does not withstand objective scrutiny because it fails to take into account: (a) the significant policy differences between the re-use of satellite spectrum and the auctioning of terrestrial spectrum; (b) the fact that, far from being a new entrant, Devas was the S-band spectrum incumbent (…) by virtue of the "box-out" position held by Devas, there was no terrestrial competitor capable of bidding for spectrum (thus making the auction paradigm irrelevant).276

5. Viability of an "AV Services-Only Business" in the Reduced Spectrum Scenario

313.
On the assumption that Devas would have to operate with a reduced spectrum, the Parties also address the possibility that Devas would only be able to provide AV services. As the following paragraphs set out, the Parties disagree as to what would be the value of Devas in such circumstances.
314.
The Claimants assert that even in default of obtainment of a WPC License for BWA services (i.e. if WPC refused to grant the license or put forward an unreasonable fee), Devas could still provide AV services, as they could be delivered directly from the satellite in areas with a clear line of sight and "through the use of a Complementary Ground Component ('CGC') in areas where a direct line of sight to the satellites was unavailable" (i.e. using terrestrial towers to repeat the signal on the ground).277
315.
The Claimants contend that, given the specific provisions of the 2005 TRAI recommendations,

India's claim that the WPC would have rejected an application by Devas to use CGC as part of its AV-only business is disingenuous – particularly given that its witnesses elsewhere acknowledge that TRAIs pronouncements play a significant role in the telecommunications arena in India.278

316.
In this scenario, Devas would have followed a different tower network configuration to optimize its AV services.279 Mr. Bazelon indicates that such network would be built more efficiently as Devas would use higher towers that would cover a wider area, thereby reducing the number of towers and associated costs, without creating any interferences with the BWA network.280
317.
The Claimants affirm that the Respondent's expert, Mr. Flores, "fails to supply any proper basis for disregarding Brattle's independent valuation of an AV-only business as being worth USD 434 million."281
318.
In contrast, the Respondent argues that "an AV-only business would require a separate licence from the Ministry of Information and Broadcasting"282 and notes that "no such service has ever been licenced in India."283
319.
Mr. Flores suggests in his second expert report that there would be three possible regulatory scenarios in an AV-only business. Namely, (i) that Devas would be only permitted to transmit over a satellite ("satellite-only" scenario); (ii) that Devas would be permitted to use a terrestrial network as a gap filler in areas with line-of-sight issues (i.e. urban areas) but only to broadcast the same content that was broadcast over the satellites (the "gap-filler" scenario); and (iii) that Devas could broadcast extra content over its terrestrial network (the "extra-content" scenario).284
320.
Mr. Flores points out that the Claimants do not engage with scenarios (i) and (ii) supposedly because they would lead to a negative valuation, but rather only engage with the third possible regulatory scenario, although that scenario would be inconsistent with regulatory policy in India.285 In contrast, the Claimants argue that their account of the AV-only business "assumes that only content that was available on the satellite would be re-transmitted through its terrestrial repeaters; no 'new' (i.e. not carried on the satellite) content would have been transmitted through its repeaters."286
321.
In any event, Mr. Flores argues that, even assuming that terrestrial use of the spectrum were authorised, the 2005 TRAI recommendations only support, at most, the gap filler scenario.287 Mr. Flores refers to his First Report, where he showed that under a gap filler scenario which aligns with the 2005 TRAI recommendations "Brattle's FMV of Devas' AV-only business of US$ 434.3 million would become negative, all else being equal."288 [emphasis in original] The Respondent underscores that "[t]here is no commercial satellite to mobile AV business anywhere"289 in the world which has been successful and concludes that "there is no basis whatsoever for any compensation based on the purported AV-only business."290

B. ORIGINAL SPECTRUM SCENARIO

322.
On the assumption that Devas would have to operate with the same spectrum as originally envisaged in the Devas Agreement, the Parties likewise discuss (i) spectrum entitlement; (ii) business configuration, including technology arrangements and satellite launch dates; (iii) regulatory risks; and (iv) applicable license fees. The Parties also address the value of an AV Services–only business in the Original Spectrum Scenario.

1. Spectrum Entitlement and Division

323.
The Parties address Devas' spectrum entitlement on the assumption that Devas would have to operate with the same spectrum as originally envisaged in the Devas Agreement.
324.
The Claimants' expert, Mr. Bazelon, in his third expert report issued in response to the Tribunal's request to the Parties of November 13, 2017 to address an alternative valuation approach, addresses Devas' spectrum entitlement and its use in the Original Spectrum Scenario as follows:

With the full 70 MHz of spectrum available, Devas's planned AV services would be delivered nationally via satellite broadcast, and supported by a network of terrestrial towers in urban areas while Devas's planned BWA services would be offered in urban areas over a terrestrial BWA network using the same satellite spectrum that had been allocated to Devas under the Devas Agreement.291

325.
Mr. Bazelon incorporates by reference in his third report his analysis of the key market developments which purportedly made Devas' proposed BWA business "highly attractive"292 in the Indian market as of the valuation date;

4G networks, like Devas's planned BWA network, are capable of providing high throughput and download speeds in ways 2G and 3G networks cannot, so this smartphone-related demand radically increased the demand for, and value of, 4G (i.e. BWA) spectrum (…) So as of at least early 2011 there was a strong expectation of high and growing demand for 4G services in the coming years with a single private nationwide competitor for Devas (…) By 2010 the view that, eventually, every cellphone user would have a smartphone and demand lots of bandwidth had moved from a potential future to reality (…) In India, the number of mobile subscribers grew from 99 million voice subscribers by year end 2007 to 584 million by year end 2010.293 [footnotes omitted]

326.
Mr. Bazelon also regards as equally applicable to the Original Spectrum Scenario his analysis of the technological progress achieved by Devas, which by 2011 had achieved several important technological milestones.294
327.
Mr. Bazelon claims that in addition to AV and BWA services, Devas also planned to provide additional societal services under the Original Spectrum Scenario including emergency communications, disaster warning, transportation and logistics services.295
328.
The Respondent and its expert do not explicitly address this issue in their supplemental submissions or expert reports.

2. Technical Risks

329.
On the assumption that Devas would have to operate with the same spectrum as originally envisaged in the Devas Agreement, the Parties discuss certain main features of Devas' business configuration, including the appropriate technology arrangements and satellite launch dates in these circumstances.

a. Technology in Devas' Business Plan

330.
Mr. Bazelon notes in his third report that his overview of Devas' original business plan in his first report applies equally to the Original Spectrum Scenario.296 The main aspects of Devas' original business plan are the following:

Devas would broadcast the AV content using ten downlink transponders and five spot beams on two satellites in the downlink frequency bands, and have user communication to the satellites through the MSS spectrum (…) Devas's AV services would consist of basic (free-to-air) channels and premium packages as well as pay-per view services (…) Devas's original plan was to use 20 MHz of spectrum to offer the AV broadcast service and use an additional 10 MHz as a "guard band." This would allow it to utilize 20 MHz of the remaining BSS spectrum for its BWA service (with an additional 10 MHz available) (…) Devas planned to offer BWA services via a terrestrial network to fixed and mobile devices in cities with populations greater than 200,000 people. As of 2009, Devas planned to offer differentiated retail and enterprise plans (…) By at least 2010, Devas had determined it would roll out its network using LTE from the outset.297 [footnotes omitted]

331.
Nonetheless, he points out that, while in the Reduced Spectrum Scenario "Devas would integrate its planned urban AV and BWA segments into a single LTE network"298 using eMBMS technology, in the Original Spectrum Scenario this was merely a possibility. While this option would allow a reduction in network costs, it would also involve a reduction in value due to the necessary delay in AV services deployment and the payment of an additional terrestrial re-use fee for 5 Mhz of spectrum. Accordingly, assuming that Devas would have been charged the highest terrestrial re-use fee seen internationally, "the eMBMS integration is not as attractive a proposition and my cash flow projections in the Original Spectrum Case assume that Devas would not have proceeded with it."299
332.
Similarly, Mr. Flores notes that, in contrast with the Reduced Spectrum Scenario in which the Claimants' experts assume that Devas would have relied on eMBMS technology, in the Original Spectrum Scenario they assume that Devas would have delivered AV services over a separate terrestrial DVB-SH network, which would require the original equipment contemplated in the Darwin Model (increasing both OPEX and CAPEX in comparison with the Reduced Spectrum Scenario).300 The Darwin Model is a pre-dispute business plan made by Devas in the ordinary course of business in 2009, which is being used by the Claimants' experts in the present arbitration as a basis for the development of their DCF valuation of Devas.301
333.
Mr. Bazelon also notes that without spectrum constraints Devas could offer the full set of initially envisaged AV services in rural areas too, such that it could have charged the originally planned prices in rural areas (i.e. without a 50% price reduction commensurate to the limited AV services available in those areas in the Reduced Spectrum Scenario).302

b. Satellite Launch Dates

334.
Mr. Bazelon notes that the two satellites Devas would have used in the Original Spectrum Scenario were nearly completed by mid-2010 and that he is

instructed to assume that the first satellite would have been launched on July 1, 2010 and that the second satellite would have been launched six months later on January 2011. The lease term under the Devas Agreement would, accordingly, start on July 1, 2010. Roll-out of the AV terrestrial network would start in October 2010 in Devas Group 1 (Bangalore) (…) Devas would not have had to reconfigure the satellite to accommodate the reduced spectrum and therefore would not have delayed the launch date by one year, as assumed in the Reduced Spectrum Case.303 [footnotes omitted]

335.
Furthermore, the Claimants argue that in the Original Spectrum Scenario "a postponement of the launch date does not decrease value. In fact, it could add value."304
336.
Mr. Flores criticizes as illogical the Claimants' experts' assumption that in the Original Spectrum Scenario the satellites would have been launched in July 2010 (GSAT-6) and January 2011 (GSAT-6A), as opposed to the July 2011 launch date assumed in the Reduced Spectrum Scenario. He contends that no investor would have made such an assumption as of the valuation date. One cannot carry out an economic valuation as of February 2011 assuming the occurrence of events in 2010 which everyone knows did not occur.305 However, such assumption by the Claimants accelerates CAPEX, number of subscribers and roll-out of AV services, which the Claimants' experts assume to be available in urban areas from October 2010 instead of January 2012 (as they assume in the Reduced Spectrum Scenario).306 On the other hand, he notes that the launch of two satellites instead of one results in higher satellite costs.307

3. Regulatory Risks

337.
The Parties are in disagreement as to the likelihood that Devas would obtain from the relevant Indian authorities all the licenses required to provide the services envisaged by Devas, as already noted above in respect of the Reduced Spectrum Scenario.
338.
Mr. Bazelon opines that being in a "box-out" position, Devas would have reasonably expected to receive authorization for terrestrial re-use of spectrum.308 He points out that he was instructed to calculate the terrestrial re-use fee on the basis of the highest internationally observable fee.309 In the Original Spectrum Scenario,

Devas would have had available 30 MHz for its BWA network. Under the high Terrestrial Re-Use Fee I was instructed to apply, I assume that Devas would use only 20 MHz of spectrum for BWA services and leave the additional 10 MHz available as an option for future capacity expansion. This is a conservative assumption because, as I noted, Devas and the WPC would be rationally expected to reach an agreement on a reasonable fee that would allow such spectrum to be put to its highest and best use.310

339.
Mr. Flores notes that the Claimants' experts affirm that in the Original Spectrum Scenario Devas would pay a terrestrial spectrum re-use fee of USD 289.4 million (commensurate with the fee applied in Slovenia) for a 20 Mhz LTE channel, but Devas would not need an additional 5 Mhz LTE channel as would have been required in the Reduced Spectrum Scenario.311 This implies that the terrestrial spectrum fees would be lower in a scenario where Devas would have had 63 Mhz of spectrum available than in a scenario where Devas only had 25 Mhz of spectrum available.
340.
Mr. Flores also notes that Devas' expert in the ICC Arbitration assumed payment of fees for the full 70 Mhz of spectrum and that, if this approach had been followed here and the spectrum fees be updated to account for 70 Mhz of available spectrum, the Claimants' experts' valuation of Devas would be negative USD 428.9 million, all else being equal.312

4. Applicable License Fees

341.
On the assumption that Devas would have to operate with the same spectrum as originally envisaged in the Devas Agreement, and on the further assumption that Devas would be granted by the relevant authorities the necessary licenses to provide the services which it intended to provide, the Parties are in disagreement as to the amount of the fees which would have been levied.
342.
Mr. Bazelon calculates the applicable terrestrial re-use fee on 20 Mhz of spectrum on the basis of the highest internationally observable fee and obtains a fee amounting to USD 298.4 million per year.313 He points out:

[S]ince in the Original Spectrum Case the terrestrial AV retransmissions do not use the BWA network, the fee applied to the BWA spectrum in the Reduced Spectrum Case would not be appropriate in the Original Spectrum Case. Instead, recognizing that the TRAI recommended a fee for AV repeaters of 4% of AGR and that I already model Devas paying 6% of AGR, I did not include any fee for the AV portion of the terrestrial network.314

343.
On the other hand, Mr. Flores claims that, if terrestrial spectrum re-use fees were calculated using an upfront fee commensurate with the 2010 BWA auction results, as according to Indian regulators would have been the case following Indian policy, whether for 20 or for 25 MHz, the Claimants' experts' DCF valuation of Devas would turn negative, even maintaining all other assumptions.315

5. Viability of an "AV Services-Only Business" in the Original Spectrum Scenario

344.
On the assumption that Devas would have to operate with the same spectrum as originally envisaged in the Devas Agreement, the Parties also engage with the possibility that Devas would only be able to provide AV services. The Parties are in disagreement as to the value of Devas in such circumstances.
345.
The Claimants contend that, given that the 2005 TRAI Recommendations specifically contemplated such business and encouraged it, no licensing problem would arise.316 Mr. Bazelon calculates the value of an AV-only business under the Original Spectrum Scenario assuming that "Devas would have been allowed to re-use the satellite spectrum terrestrially to offer audio and video services but not to offer BWA services."317 In this case, Devas would have built the same network of terrestrial towers as he described for an AV-only business under the Reduced Spectrum Scenario.318 However, Devas would have used two satellites, so his calculation includes upfront capacity reservation fees and lease fees for both satellites.319
346.
Mr. Bazelon underscores that in the Original Spectrum Scenario Devas would have been able to deliver its AV services as originally planned, so he does not assume a 50% reduction in revenues from rural areas.320 Moreover, he also assumes that AV services would have been rolled out earlier in this scenario.321
347.
On the other hand, as pointed out above in the discussion of the Reduced Spectrum Scenario, the Respondent argues that "an AV-only business would require a separate licence from the Ministry of Information and Broadcasting"322 and notes that "no such service has ever been licenced in India."323
348.
Mr. Flores notes that the AV-only business would consist of AV services delivered directly from the satellite and, if terrestrial repeating were authorized, a terrestrial DVB-SH network.324 In the Original Spectrum Scenario Devas would not have faced a 50% reduction in the number of channels available in rural areas and the corresponding decrease in price. Accordingly, the pricing for the AV plans put forward by the Claimants' experts' model matches the Darwin Model.325
349.
Mr. Flores identifies "a number of flaws"326 in the Claimants' DCF projections of Devas' AV-only business in this scenario, including:

an inappropriate terrestrial spectrum fee, roof rental costs, tower height, and the premature rollout of AV services. In addition, Devas' AV-only business would still face a number of issues, including uncertainty over obtaining authorization for a terrestrial repeater network, competition from other TV providers, and a lack of marketability.327

350.
Mr. Flores recalls his previous reports to the effect that, should Devas not obtain an authorization of terrestrial use of spectrum ("satellite-only scenario"), only customers with a direct line-of-sight to the satellite (i.e. in rural areas) would have been able to access its services. In his assessment, a satellite-only business is valueless. Even if Devas were given authorization for terrestrial re-use of spectrum, it would still have to face competition from both DTH and mobile TV operators providing services over BWA networks, and the use of a commercially unproven and unsuccessful technology, namely DVB-SH (…) Devas would also have been at a severe competitive disadvantage due to the lack of playback and on-demand services.328
351.
Mr. Flores claims that addressing such challenges would be particularly difficult for Devas because (i) the quality of the broadcast from the satellites would remain static for the 12-year lives of the satellites, and (ii) as LTE networks are more widely used than DVB-SH networks, one would expect the latter to evolve more slowly.329 He points out that no company in the world had successfully commercialized a DVB-SH-based mobile TV service and contends that Devas' AV-only business lacks viability.330 As noted above, the Respondent relies on the inexistence of any successful "commercial satellite to mobile AV business anywhere"331 in the world to conclude that "there is no basis whatsoever for any compensation based on the purported AV-only business."332

C. THE TRIBUNAL'S ANALYSIS

352.
The Tribunal is not retaining the Reduced Spectrum Scenario for the purpose of valuation of damages in this case. The Respondent, in February 2011, did take over 100% of Devas and, in its Award on Jurisdiction and Merits, the Tribunal by majority concluded that only 40% of the value of Devas was subject to compensation. A willing buyer,333 just before the Respondent's decision to takeover Devas, would have first determined the value of 100% of Devas as a whole and then decided how much it was ready to pay for the shares held by the Claimants, which were their only investment.
353.
The Tribunal's task therefore is to determine the value that a willing buyer would have been ready to pay, just before the CCS decision of February 17, 2011, for the shares in Devas held by the Claimants who, together holding 37.6% of Devas' shares, had effective control of that company and then to retain 40% of that value as subject to compensation in proportion to the Claimants' shareholding in Devas. The Tribunal sees no reason why such a buyer at that time would have limited himself to bidding for only 40% of the Claimants' shares in Devas.
354.
The Tribunal will now proceed to its analysis of the various issues raised by the Parties under the Original Spectrum Scenario.

1. Spectrum Entitlement and Division

355.
The Tribunal is satisfied that, subject to the issuance of the necessary licenses and but for the February 17, 2011 CCS decision, Devas would have operated with the same spectrum as originally envisaged in the Devas Agreement. The Tribunal is also satisfied that, subject to the same conditions, Devas would have proceeded with both planned AV and BWA services as described by Mr. Bazelon in his third report and summarized in paragraphs 325-327 above.

2. Technical Risks

356.
The Tribunal notes that the Parties are in disagreement as to whether terrestrial re-use of the spectrum would have been permitted by the Indian authorities (for further discussion on this issue, see section on Regulatory Risks below). Nevertheless, the Tribunal also notes that the Parties' respective experts agree that, in the Original Spectrum Scenario (and assuming that terrestrial re-use of spectrum were permitted), Devas would have delivered AV services over a separate terrestrial DVB-SH network and that this would require equipment contemplated in the Darwin Model.334
357.
The Tribunal also agrees with Mr. Bazelon that, in a context without spectrum constraints, Devas would have been in a position to offer the full set of initially planned services and prices in rural areas.335

a. Evolution of the Business Environment Between 2009 and 2011

358.
The Tribunal notes that Mr. Bazelon did a series of updates to the Darwin Model to reflect relevant technological developments and market changes.336 These updates notably relate to:

(a) Devas' subscriber base projection, which was updated to reflect India's population growth projections on the basis of a 2011 census;

(b) Devas' decision to roll out its network using LTE instead of WiMax by at least mid-2010;

(c) higher cell capacity and reduced network costs as a result of the implementation of a cell site configuration made possible by the use of LTE technology;

(d) lower costs of LTE radio equipment than assumed in the Darwin Model;

(e) doubling the speed initially available under the retail BWA plans that Devas expected to offer to customers (while maintaining the price), given the speed of BWA services offered by competitors as of 2011;

(f) higher costs for Devas of acquiring content for AV services.337

359.
In the Tribunal's view, however, a more comprehensive analysis is called for. In conducting a valuation of the Claimants' investment, the relevant perspective is that of a hypothetical knowledgeable, willing, and unpressured buyer in February 2011, when that investment was lost. The Tribunal has no doubt that such a buyer would have accorded considerable weight to the analysis contained in the Darwin Model; it might well have prepared a modified DCF analysis of its own based on that model. In addition, however, a knowledgeable, willing, and unpressured buyer in February 2011 would have formed its own, independent view of the business outlooks for Devas, and it would not have relied in that regard on Devas' or DTs projections made back in 2008 and 2009.

i. Positive Market Development after 2008/2009

360.
A hypothetical knowledgeable, willing, and unpressured buyer in February 2011 would have noted a number of positive developments since 2009.
361.
The most noteworthy of these factors is that DT was still a committed partner of Devas. It followed through on its promise to contribute valuable expertise, manpower, contacts, and goodwill. While the prospect of DT's immaterial contributions would have been "priced in" when Deutsche Telekom Asia ("DT Asia") contributed capital in 2008 and 2009, it clearly would have been reassuring for a buyer in 2011 to see that Devas could continue to count on DT's support.
362.
DT's continued support would also seem to increase, in the eyes of a willing buyer in February 2011, the chances of Devas' succeeding in adapting to new market needs or challenges, should it turn out (as will be addressed in the following sub-section) that aspects of the original business plan were unlikely to be adequate.
363.
A willing buyer would also have noticed that Devas was able to meet certain important milestones between 2009 and February 2011. For instance, in 2009, Devas obtained all necessary licenses from the Indian authorities to develop its experimental trials so as to conduct a full AV/BWA business with terrestrial re-use. In addition to the experimental license,338 this included a license to import wireless transmitting and receiving technology into India,339 an extension of the original experimental license,340 and various siting clearances for AV/BWA towers.341 While the Tribunal concurs with the Respondent that the grant of the trial license to Devas as such did not, under Indian law, affect the need to obtain regulatory approvals for the future, definitive terrestrial re-use of spectrum,342 the Tribunal has no hesitation to find that a willing buyer would have seen the trial license as a value-enhancing factor: it would have confirmed to it, first, that Devas was actively and successfully developing applications for its technology and, second, that Devas was capable of navigating the regulatory environment and build confidence with the Indian regulators.
364.
Finally, a willing buyer in February 2011 would have felt encouraged by the enormous success of smartphones and tablets, which by then had become apparent to industry professionals and professional investors. Neither technology was in existence in 2005, when Devas tried to convince venture capital firms of its business plan.343 In 2008 and 2009, when the Darwin Model was completed and DT Asia made its capital contributions, those technologies were in their early infancy. As the Claimants' expert points out:

Starting in mid-2008 the iPhone, and similar easy-to-use flat-screen mobile devices, known as smartphones, rapidly and substantially increased the demand for high download speeds and high throughput capacity on wireless networks. For example, in 2009, AT&T's U.S. network (then the exclusive network for iPhones in the United States) experienced severe service problems due to a "tsunami" of demand for bandwidth that "no one was prepared for"344 due to the iPhone. 4G networks, like Devas's planned BWA network, are capable of providing high throughput and download speeds in ways 2G and 3G networks cannot, so this smartphone-related demand radically increased the demand for, and value of, 4G (i.e., BWA) spectrum.345

365.
While in 2011 smartphones may not have been as widely available in India as in the United States,346 the Tribunal has no hesitation to conclude that the general environment for a technology company in the communications sector, which had secured substantial satellite bandwidth for the transmission of data for mobile BWA and AV services, was promising.

ii. Corresponding New Challenges to Devas' Technology Model

366.
At the same time, the Tribunal acknowledges that a willing buyer analysing Devas' prospects in February 2011 would also have been conscious of technological developments in the area of mobile technology that call Devas' specific business model into question.
367.
The Tribunal recalls that, in the Original Spectrum Scenario, Devas originally intended to rely on a combination of DVB-SH technology and WiMAX technology, with the latter being eventually replaced with the more advanced LTE standard;347 and it later envisaged a combination of DVB-SH technology and LTE technology.348 Yet, that technology model presented certain limitations.
368.
As regards AV services, Devas' reliance on DVB-SH technology would not have looked particularly attractive to a willing buyer in 2011, as such technology was in fact not used in the majority of smartphones.349 As a result, most smartphones would not have the capability of capturing Devas' AV signal directly. Rather, a separate receiver would be required to use Devas' services. While these external receivers, to which the mobile telephone must be connected by cable, also called "access ports,"350 were relatively handy, the need for an external access port would put Devas at a real disadvantage to competitor services offered by mobile telephone companies that could be captured directly by a smartphone. The Tribunal considers that a willing buyer in the telecommunications sector, in 2011, would have hesitated to invest in technology using an external antenna for connectivity.351
369.
As regards BWA services, a willing buyer would have been conscious of the considerable uncertainty in early-2011 surrounding the LTE technology that would be required to use Devas' services. Mobile telephones featuring such technology were only beginning to be commercialized, and that in markets other than India.352 In fact, the cost of rolling out such technology was regarded as so high that the cost of LTE devices in India was a limiting factor.353 There was no certainty in early-2011 that, or when, LTE technology would be widely used in India.
370.
Perhaps more fundamentally, the Tribunal must be cognizant of the fact that Devas' customers would not have been able to use their Devas devices for placing and receiving regular telephone calls. That is so because Devas had no license for mobile telephony.354 Accordingly, Devas' customers would not be assigned a telephone number in the Indian telephone network and would be unable to place and receive calls within that network. While the Claimants' expert notes that Devas' customers could still have used voice-over-IP services,355 it is evident to the Tribunal that such voice-over-IP services are no equivalent substitute for the attribution of a regular telephone number, enabling the user to place and receive calls within the national telephone network. As a result, the Tribunal finds the conclusion of the Respondent's expert356 that Devas' customers would in practice have had to carry two mobile devices – a mobile telephone from another operator and a Devas BWA device – to be convincing. There is indeed a real question whether customers in India would not have preferred to subscribe to both telephony services and data services from the same provider, using one and the same smartphone. Devas was thus at a disadvantage compared to competitors with a telephony license, and a willing buyer in 2011 familiar with the telecommunications market would have been acutely aware of that aspect.

iii. Conclusion

371.
The Tribunal thus concludes that a 2009 outlook on the business environment in 2011, as it underlies valuations based on the Darwin Model, both understates the market potential and overstates Devas' likely success in that market. It understates the market potential because a buyer in early-2011 would have found an investment in the Indian broadband wireless mobile telephone sector even more attractive than in 2009. It overstates Devas' likely success because a buyer in 2011 would have had doubts as to whether Devas' technology model, developed in the years before the smartphone revolution, was an adequate fit for that burgeoning market.
372.
In the Tribunal's view, it is not clear that a knowledgeable, willing, and unpressured buyer in February 2011 would have committed substantial capital to develop a mobile multi-media service that could not be accessed from a regular smartphone. At the same time, the Tribunal is not prepared to adopt a static view of Devas' likely market behaviour, as appears to underlie the Respondent's approach. It would be implausible to assume that Devas would have taken no measures to adapt to the new smartphone world.
373.
While there is no specific evidence on the record that Devas was already working toward a different technology model, with the help of DT, in particular, Devas would have had the capacity to adapt its technology model over time, including potentially by obtaining a telephony license. Devas' position in February 2011 remained a privileged one because the company had exclusive use of satellite spectrum.

b. Satellite Launch Dates

374.
The Tribunal agrees with the Respondent that one could not assume that a willing buyer in February 2011 would have based his purchase price on a satellite launch date in July 2010 which did not occur. However, the Tribunal notes the earlier assurance given to Devas to the effect that work on GSAT-6 was almost completed. The Tribunal refers in particular to the minutes of a meeting, on April 15, 2009 of the Geosat Programme Management Office, ISRO Satellite Centre, Bangalore, at which the Managing Director of Antrix "stressed that the satellite has to be launched in early 2010 for which efforts should be increased and concentrated to ready the satellite by year end."357 At another joint status review meeting of 11 and 12 November 2009, between Devas and ISRO/Antrix, an overview of the project was presented by Mr. V.R. Pratap, Project Director, GSAT-6 (Devas), ISRO Satellite Centre, Bangalore. That 34-page document demonstrated the very advanced readiness of the Satellite Realization Schedule, including a planned launch on June 19, 2010 for GSAT-6 and on March 25, 2011 for GSAT-6A.358 Even Dr. Radhakrishnan, who was by then improperly manoeuvring to annul the Devas Agreement, stated in early February 2010 that a new deadline for the launching of the satellite would be on September 1, 2010.359
375.
The Tribunal is of the view that a launch date of June 2011 for GSAT-6 and June 2012 for GSAT-6A would have been a reasonable assumption to adopt by such a willing buyer in early 2011.

3. Regulatory Risks

376.
In its Award on Jurisdiction and Merits,360 the Tribunal reached the following conclusion: "[o]n the basis of the evidence received by the Tribunal, it is satisfied that, even without a WPC license, Devas could have rolled-out satellite-only services. The Tribunal also notes that it has been satisfactorily established that, because of problems of interference, it would not have been possible for competing services to operate in the spectrum." This is what has been described as the "box-out" position of Devas. The key issue concerning regulatory risks is whether Devas would have obtained a WPC License and, if so, at what price.