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Final Award


Agreement (or Devas Agreement) Agreement between Devas and Antrix for the lease of S-band electromagnetic spectrum on two satellites, 28 January 2005
Antrix Antrix Corporation Limited, an Indian state-owned company
BIT 1995 Agreement between Germany and India for the Promotion and Protection of Investments
BWA Broadband Wireless Access
CCS Indian Cabinet Committee on Security
CLA-[#] Claimant’s Legal Authority
Counter-Memorial Respondent’s Counter-Memorial on Quantum, dated 7 September 2018
C-CS1 Claimant’s First Cost Submission, dated 8 July 2016
C-CS2 Claimant’s Second Cost Submission, dated 30 August 2019
C-PHB1 Claimant’s First Post Hearing Brief, dated 28 June 2019
C-PHB2 Claimant’s Second Post Hearing Brief, dated 2 August 2019
DCF Discounted Cash Flow
DEMPL Devas Employees Mauritius Private Limited
Devas Devas Multimedia Private Limited
Devas System Mobile multimedia and broadband data services offered to the Indian market via a hybrid satellite-terrestrial communications platform
DOT Department of Telecommunications of India
DT or Claimant Deutsche Telekom AG
DT Asia Deutsche Telekom Asia Pte. Ltd.
ER Expert Report
Exh. C-[#] Claimant’s Exhibit
Exh. EO-[#] Econ One’s Exhibit
Exh. GH-[#] FTI’s [Greg Harman] Exhibit
Exh. R-[#] Respondent’s Exhibit
FET Fair and equitable treatment
FMV Fair Market Value
FTI FTI Consulting, Claimant’s Expert
GHz Gigahertz
Hearing Hearing on quantum held from 29 April to 3 May 2019 at the ICC Hearing Centre in Paris
ICC Award Final Award issued on 14 September 2015 in the ICC arbitration commenced on 19 June 2011 by Devas against Antrix
ILC Articles The International Law Commission Articles on State Responsibility
India or Respondent The Republic of India
INR Indian Rupee
IPTV Internet Protocol Television
IRR Internal rate of return
ISP License Internet Service Provider License
ISRO Indian Space Research Organization
LLC Limited liability company
LLP Limited liability partnership
Mauritius BIT Arbitration (or Mauritius Shareholders Arbitration) CC/Devas (Mauritius) Ltd., Devas Employees Mauritius Private Limited., and Telcom Devas Mauritius Limited. v. Republic of India, PCA Case No. 2013-09
Mauritius MeritsTranscript CC/Devas (Mauritius) Ltd., Devas Employees Mauritius Private Ltd. and Telcom Devas Mauritius Ltd. v. The Republic of India, PCA Case No. 2013-09, UNCITRAL, Jurisdiction and Liability Hearing Transcript, 1 September - 5 September 2014
Mauritius Quantum Transcript CC/Devas (Mauritius) Ltd., Devas Employees Mauritius Private Ltd. and Telcom Devas Mauritius Ltd. v. The Republic of India, PCA Case No. 2013-09, UNCITRAL, Quantum Hearing Transcript, 16 July -21 July 2018.
Memorial Claimant’s Memorial on Quantum, dated 4 May 2018
MHz Megahertz
NAFTA The North American Free Trade Agreement
NFAPs India’s National Frequency Allocation Plans
PCA Permanent Court of Arbitration
PO Procedural Order
PO8 Procedural Order No. 8, dated 7 May 2019
Rejoinder The Respondent’s Rejoinder on Quantum, dated 11 March 2019
Reply Claimant’s Reply on Quantum, dated 7 December 2018
RLA-[#] Respondent’s Legal Authority
R-CS1 Respondent’s First Cost Submission, dated 8 July 2016
R-CS2 Respondent’s Second Cost Submission, dated 30 August 2019
R-PHB1 Respondent’s First Post Hearing Brief, dated 28 June 2019
R-PHB2 Respondent’s Second Post Hearing Brief, dated 2 August 2019
Transcript Final transcript of the Hearing delivered by the court reporter on 10 June 2019
TRAI Telecom Regulatory Authority of India
Valuation Date 17 February 2011
WPC Wireless Planning and Coordination Wing of the DOT
WPC Experimental License Short Term Experiment/Trial License
WPC License License that is required from the WPC for the terrestrial re-use of the spectrum
WS Witness Statement
2010 BWA Auction BWA spectrum auctions in May 2010 that resulted in Infotel acquiring the right to use 20 MHz of spectrum to offer BWA services for 20 years


A. The Parties

1. The Claimant

The Claimant is Deutsche Telekom AG (the "Claimant" or "DT"), a company incorporated under the laws of the Federal Republic of Germany.
The Claimant was represented in the quantum phase of this arbitration by Ms. Sylvia Noury, Mr. William Thomas, Mr. Michael Kotrly, Ms. Ella Davies, Ms. Annie Pan, and Ms. Leonie Beyrle of Freshfields Bruckhaus Deringer LLP, and Mr. Aman Ahluwalia.

2. The Respondent

The Respondent is the Republic of India (the "Respondent" or "India").
The Respondent was represented in the quantum phase of this arbitration by Messrs. George Kahale III, Benard V. Preziosi, Simon Batifort, Fernando Tupa, and Fuad Zarbiyev of Curtis Mallet-Prevost Colt & Mosle LLP.

B. The Arbitral Tribunal

The Arbitral Tribunal is composed of Mr. Daniel M. Price, appointed by the Claimant; Prof. Brigitte Stern, appointed by the Respondent; and Prof. Gabrielle Kaufmann-Kohler, appointed by the Parties upon proposal of the ICSID Secretary General.2
The Tribunal appointed Dr. Michele Potestà as Secretary of the Tribunal, with the consent of the Parties.3

C. Overview of the Dispute on Quantum

This dispute arises out of India’s annulment of the agreement for the lease of S-band electromagnetic spectrum on two satellites concluded on 28 January 2005 (the "Agreement" or "Devas Agreement")4 between DT’s indirect subsidiary Devas Multimedia Private Limited ("Devas")5 and the Indian state-owned company Antrix Corporation Limited ("Antrix"). The Agreement inter alia contemplated offering mobile multimedia and broadband data services to the Indian market via a hybrid satellite-terrestrial communications platform (the "Devas System").6

On 13 December 2017, the Tribunal issued an Interim Award (the "Interim Award") in which it decided that:

"a. The Tribunal has jurisdiction over this dispute involving the Claimant and the Respondent;

b. The Respondent has breached the fair and equitable treatment standard provided in Article 3(2) of the BIT;

c. The Tribunal will take the necessary steps for the continuation of the proceedings toward the quantum phase."7

The issue now before this Tribunal is what compensation, if any, should be awarded to DT for India’s breach of the Treaty.
In sum, the Claimant submits that the annulment of the Devas Agreement by India "destroyed the entire value of Devas’s business (which rested on the valuable spectrum rights it held under the Agreement) in a single stroke", with the result that DT’s investment in Devas is now worthless.8
For the Claimant, damages should be quantified so as to put DT in the position in which it would be but for the annulment of the Devas Agreement. The quantification of damages should be based on the fair market value (the "FMV") of DT’s investment in Devas.9 According to the Claimant, the most appropriate valuation method is the Discounted Cash Flow (the "DCF") method as that is the approach a hypothetical willing buyer would have taken in valuing DT’s stake in Devas.10 On the basis of a DCF valuation, DT seeks damages in the sum of USD 270 million.11 In the alternative, the Claimant seeks a valuation according to what it calls the "Investment Plus" method. On that basis, the Claimant contends that DT’s investment in Devas amounts to between USD 207 to USD 284 million.12 The Claimant disputes the Respondent’s view that any damages should be limited to sunk costs contending that it represents an inappropriate valuation method in this case, among other reasons, because it is not a measure of the FMV of DT’s investment. In addition to the principal amount, DT seeks interest and costs.
The Respondent submits that DT should not be awarded any damages because it has failed to establish a causal link between the breach of the Treaty and its alleged loss, and it should not be entitled to compensation for rights it never had.13 More specifically, the Respondent alleges that, but for the annulment of the Agreement, (i) Devas would not have obtained the necessary licenses to enable it to roll out its proposed business, and (ii) reasonable spectrum charges would have been applied.14
For the Respondent, the DCF method is wholly inappropriate in this case as it erroneously assumes that Devas had an acquired right to engage in the Devas project and had a track record of profitability.15 In any event, the application of the DCF method based on reasonable assumptions shows that Devas had no value.16 For the Respondent, the alternative "Investment Plus" method is equally unsuitable because it is speculative and based on inaccurate premises.17 While the Respondent’s primary position is that no damages should be awarded, if the Tribunal finds against it on that point, India argues that damages should be limited to sunk costs, which it claims are no more than USD 24.1 million.18 India opposes the interest and costs claims and requests that costs be assessed against the Claimant.19

D. The Parties’ Prayers for Relief

In its Reply, the Claimant requested the following relief:

"On the basis of the foregoing, without limitation and expressly reserving its right to supplement this request for relief, DT respectfully requests that the Tribunal:

(a) ORDER India to pay DT compensation in an amount of US$270 million for its breaches of the Treaty or such other sum as the Tribunal determines will ensure full reparation;

(b) ORDER India to pay pre-award interest on (a) above calculated at the rate of LIBOR plus 4% compounded annually from the Valuation Date until the date of the Tribunal’s award, or at such other rate and compounding period as the Tribunal determines will ensure full reparation;

(c) ORDER India to pay post-award interest on the same basis as pre-award interest accruing from the date of the award until payment is made in full;

(d) DECLARE that:

(i) the award of damages and interest in (a), (b) and (c) be made net of all Indian taxes; and

(ii) India may not deduct taxes in respect of the payment of the award of damages and interest in (a), (b) and (c);

(e) ORDER India to indemnify DT:

(i) for any taxes India assesses on the award of damages and interest in (a), (b) and (c); and

(ii) in respect of any double taxation liability that would arise in Germany or elsewhere that would not have arisen but for India’s adverse measures;

(f) AWARD such further or other relief as the Tribunal considers appropriate;


(g) ORDER India to pay all of the costs and expenses of this arbitration, including DT’s legal (external and internal) and expert costs, fees, and expenses, the fees and expenses of the Tribunal, the fees and expenses of any appointing or administering authority, the fees and expenses of any experts appointed by the Tribunal and the costs and expenses of any hearings (including the costs of DT’s witnesses in preparing for and/or attending such hearings), plus interest, pursuant to the discretion granted under Article 9(2)(b)(vii) of the Treaty and Article 40 of the UNCITRAL Rules."20

In its C-PHB1, the Claimant requested the following relief:

"The Claimant relies on its Request for Relief as set out in its Reply on Quantum, subject to amending paragraph (b) such that interest is calculated at the rate of LIBOR (or any other comparable rate in case LIBOR should be discontinued in the future) plus 4% in line with the suggestion in paragraph 228 above."21

The Respondent has requested the following relief:

"For the reasons set forth above, the Tribunal should reject Claimant’s damage claim in its entirety and assess the costs of this case against Claimant."22


The procedural history leading up to the Interim Award has been summarized in that decision, to which the Tribunal refers.23
On 10 January 2018, the Claimant asked to correct the list of counsel appearing in the Interim Award. The Respondent raised no objections. On 5 February 2018, the Tribunal adopted the Corrections to the Interim Award.
On 29 January 2018, the Respondent informed the Tribunal that it had filed a request before the Swiss Federal Tribunal to set aside the Interim Award and stay the present proceedings. On 31 January 2018, the Claimant objected to the stay of this arbitration.
On 22 February 2018, after receiving the Parties’ proposals, the Tribunal issued Procedural Order No. 6 setting out the procedural calendar for the quantum phase. On 16 March 2018, following the Parties’ disagreement on the venue of the hearing on quantum, the Tribunal determined that the hearing would be held in Paris, as provided in the Terms of Appointment.24
On 4 May 2018, the Claimant filed its Memorial on Quantum ("Memorial").
On 21 May 2018, the Respondent asked the Tribunal and the Claimant whether:

i. the so-called "DT quantum papers" (i.e. DT’s Memorial on Quantum, supporting witness statements, expert report and documentary evidence) may be used in the Mauritius BIT Arbitration;

ii. the evidence presented in the Mauritius BIT Arbitration may be used in the present proceedings; and

iii. the Respondent may call as a witness in either case any witness who had submitted a witness statement on behalf of either the Mauritius claimants or DT in the quantum phase.

On 27 May 2018, the Respondent brought to the Tribunal’s attention a procedural order issued by the Mauritius BIT Arbitration tribunal, whereby that tribunal invited Mr. Scheuermann, one of the Claimant’s witnesses in this arbitration, to appear to testify at the hearing in that arbitration. Moreover, the Mauritius BIT Arbitration tribunal also allowed the Respondent to submit the DT quantum papers into evidence in the Mauritius BIT Arbitration and requested that such evidence be produced by 1 June 2018, calling the Respondent to use its best efforts to make the evidence available, including by applying to this Tribunal if necessary.
On 29 May 2018, the Claimant objected to the Respondent’s requests.
Having reviewed the Parties’ positions, on 30 May 2018, the Tribunal authorized the introduction of the DT quantum papers into the Mauritius BIT Arbitration, subject to confidentiality being preserved in relation to those documents.
On 7 September 2018, the Respondent filed its Counter-Memorial on Quantum (the "Counter-Memorial").
On 27 September 2018, the Claimant asked the Tribunal to order the Respondent not to submit the evidence obtained through the Mauritius BIT Arbitration in the present arbitration for reasons of confidentiality. On 23 October 2018, after having received the Respondent’s comments, the Tribunal decided that the Respondent could rely on relevant information from the quantum record of the Mauritius BIT Arbitration, provided that the Claimant could address that information in its forthcoming written and oral submissions.
On 7 December 2018, the Claimant filed its Reply on Quantum ("Reply").

On 11 December 2018, the Tribunal was informed that the Swiss Federal Tribunal had denied the application to set aside the Interim Award.

On 11 March 2019, the Respondent filed its Rejoinder on Quantum ("Rejoinder").
On 1 April 2019, the Tribunal and the Parties held a telephone conference to discuss the outstanding issues pertaining to the organization of the hearing on quantum. On 8 April 2019, the Tribunal adopted Procedural Order No. 7 on the Organization of the Hearing on Quantum, incorporating the Parties’ comments on the draft order which had been previously circulated by the Tribunal and having due regard to the discussions during the pre-hearing telephone conference.
The hearing on quantum took place from 29 April to 3 May 2019 ("Hearing") at the ICC Hearing Centre in Paris. The following people attended the Hearing.

a. For the Claimant:

• Sylvia Noury, William Thomas, Michael Kotrly, Annie Pan, Leonie Beyrle, Stephanie Mbonu and Madeleine Wall, of Freshfields Bruckhaus Deringer LLP, and Aman Ahluwalia;

• Claudia Bobermin and Ina Roth, Deutsche Telekom AG, Brian Thompson, Immersion Legal Graphics, Lau Nilausen and Mark Bosley, FTI Consulting ("FTI");

• Oliver Tim Axmann, Kim Kyllesbech Larsen, Gary Parsons and Axel Scheuermann, called as witnesses;

• Greg Harman, FTI Consulting, called as an expert.

b. For the Respondent:

• George Kahale III, Benard V. Preziosi Jr., Fernando Tupa, Simon Batifort, Fuad Zarbiyev, Gloria Diaz-Bujan and Abbey Li, Noémie Solle and Vincent Bouvard, of Curtis, Mallet-Prevost, Colt & Mosle LLP;

• Kalyani Sethurman, Misa, UR Rao Space Centre, Praveen Karanth and M S Krishnan, Department of Space, Prabeen Nair, Embassy of India, Paris, Krishna Mohan Arya, Ministry of Law and Justice, Raman Gupta, Enforcement Directorate, Ivan Vazquez, Quadrant Economics LLC;

• Bhagirath, Nitin Jain and Smt. M. Revathi, called as witnesses;

• Dr. Jacob Sharony, Mobius consulting, and Dr. Daniel Flores, Econ One Research Inc., called as experts;

On 7 May 2019, the Tribunal issued Procedural Order No. 8 on post-hearing matters ("PO8").
On 15 May 2019, following the Respondent’s request and the Claimant having raised no objection, the Tribunal allowed the Respondent to produce the testimony of Mr. Harman in the Mauritius BIT Arbitration.
On 10 June 2019, the court reporter delivered the final transcript of the Hearing ("Transcript"), which included the revisions proposed by the Parties.
On 19 June 2019, the Respondent sent a letter addressing certain questions raised by Prof. Stern at the end of the Hearing. Shortly thereafter, the Claimant objected to the Respondent’s letter on the basis that it was contrary to the procedure set out in PO8. The Claimant suggested that the Respondent incorporate the letter and evidence attached thereto in its first post-hearing brief on quantum and the Claimant provide its comments in its second post hearing brief. The Respondent agreed to the Claimant’s proposal.
On 28 June 2019, the Parties filed their PHBs on Quantum (i.e. the Claimant’s first post hearing brief ("C-PHB1") and the Respondent’s first post hearing brief ("R-PHB1")).
On 2 August 2019, the Parties filed their second PHBs on Quantum (i.e. the Claimant’s second post hearing brief ("C-PHB2") and Respondent’s second post hearing brief ("R-PHB2")).
On 30 August 2019, the Parties filed their submissions on costs ("C-CS2" and "R-CS2").25
On 5 November 2019, the Tribunal provided a progress report to the Parties.
On 9 March 2020, the Respondent provided "an update regarding the confirmation proceedings of the award rendered in the case Devas Multimedia Private Limited v. Antrix Corporation Limited, ICC Case No. 18051/CYK (the "ICC Award"), in France".
On 12 March 2020, the Tribunal invited the Claimant’s comments, if any, on the Respondent’s letter of 9 March 2020, by 19 March 2020. No comments were received by the time limit set by the Tribunal.
On 27 March 2020, the Tribunal provided another progress report to the Parties, indicating that it would issue the award in May.
On 18 May 2020, in response to a question from the Tribunal, both Parties requested a 3-day notice of the issuance of the award and confirmed the details of their counsel.


A detailed overview of the facts underlying the dispute was provided in Section III of the Interim Award, to which this Award refers. This section only sets out the main facts relevant to issues of quantum.26

A. The Agreement and the Relevant Terms Governing RegulatoryApprovals

On 28 January 2005, Antrix and Devas entered into the Agreement. The Agreement provided for the lease of S-band capacity on two satellites, PS-1 (also known as GSAT-6) and PS-2 (also known as GSAT-6A) to be manufactured and launched by the Indian Space Research Organization ("ISRO"). The total amount of S-band capacity leased to Devas was 70 MHz, out of which 60 MHz were of Broadcast Satellite Services spectrum and the remaining 10 MHz were of Mobile Satellite Services spectrum.27
The Agreement included the following provisions allocating the burden of obtaining regulatory approvals:

• Pursuant to Article 3(c), Antrix was "responsible for obtaining all necessary Governmental and Regulatory Approvals relating to orbital slot and frequency clearances, and funding for the satellite to facilitate Devas services. Further, Antrix shall provide appropriate technical assistance to Devas on a best effort basis for obtaining required operating licenses and Regulatory Approvals from various ministries so as to deliver Devas services via satellite and terrestrial networks. However the cost of obtaining such approvals shall be borne by Devas";

• Further, under Article 12(a)(ii), Antrix, through ISRO/the Department of Space (the "DOS"), was "responsible for obtaining clearances from National and International agencies (WPC, International Telecommunications Union, etc.) for use of the orbital slot and frequency resources so as to ensure that the spacecraft is operated meeting its technical characteristics and provide the Leased Capacity as specified";

• Finally, according to Article 12(b)(vii), Devas was "solely responsible for securing and obtaining all licenses and approval[s] ([s]tatutory or otherwise) for the delivery of Devas Services via satellite and terrestrial network".

B. DT’s Involvement in Devas

In October 2007, Devas’s representative, Dr. Rajendra Singh, first approached Mr. Hamid Akhavan, then CEO of T-Mobile International AG, a DT subsidiary, to discuss a possible partnership.28 By that time, Devas had already secured equity investments from Columbia Capital LLC and Telecom Ventures LLC, who had both invested in Devas through their Mauritian subsidiaries.
The Claimant submits that the Devas project matched DT’s strategy to invest in early-stage players in emerging markets to which it could add value through its expertise in planning and designing terrestrial networks.29 DT thus undertook a review of Devas’s business plan and financial model.30 From late 2007 to early 2008, DT’s representative, Dr. Kim Larsen (one of the Claimant’s witnesses), worked with Devas to review Devas’s business plan and financial model.31 Additionally, in December 2007, Devas organized several meetings between DT and the representatives of ISRO, the Department of Space and the Space Commission on ISRO’s premises in Bangalore. At this time, Mr. Scheuermann (another one of the Claimant’s witnesses) was preparing DT’s internal enterprise valuation of Devas32 by reference to cash flows drawn from the business plan and financial model and incorporating DT’s own valuation assumptions in view of the risks associated with investing in Devas.33 The valuation at which Mr. Scheuermann arrived amounted to USD 1.78 billion.
On 19 February 2008, DT’s Management Board discussed the prospects of investing in Devas and reviewed the related valuation. The Board considered such investment in line with DT’s business strategy, but identified risks, such as the start-up nature of the business, the unclear status of the WPC License and the limited nature of DT’s corporate governance rights.34 To minimize the risks, the Management Board approved an initial equity investment of USD 75 million instead of USD 150 million as previously contemplated.35
On 19 March 2008, DT’s wholly-owned Singaporean subsidiary Deutsche Telekom Asia Pte Ltd ("DT Asia") signed a share subscription agreement with Devas.36 The agreement contemplated that DT Asia would acquire class C shares in Devas in exchange of a USD 75 million equity contribution. On 18 August 2008, DT Asia closed the share purchase by paying the agreed USD 75 million and acquiring 28,349 class C shares in Devas, i.e. 17.2% of Devas’s paid up share capital.37
In the middle of 2009, Devas sought an additional capital contribution from DT. In assessing the proposed further investment, DT and Devas updated Devas’s business plan and financial model.38 Applying further assumptions to the cash flows of the updated model, Mr. Scheuermann calculated that Devas’s enterprise value amounted to USD 1.15 billion.39
On 10 August 2009, DT’s Management Board approved a further capital contribution of USD 40 million based on an enterprise value of USD 375 million, as did DT’s Supervisory Board on 28 August 2009.40 Devas then reduced its capital call to USD 25 million.41
On 29 September 2009, DT Asia agreed to make a further equity contribution in Devas in the amount of USD 22.2 million.42 Consequently, DT Asia acquired 8,400 additional class C shares in Devas and increased its shareholding to 20.73% of Devas’s paid up share capital.43 Following subsequent minor changes in Devas’s shareholding, DT Asia’s shareholding decreased to 19.62%.44

C. Events prior to Annulment

On 18 August 2008, Devas received its Internet Service Provider License ("ISP License") as well as approval from the Foreign Investment Promotion Board.45
On 20 August 2008, Devas applied for a temporary experimental license from the Wireless Planning and Coordination Wing (the "WPC") of India’s Department of Telecommunications (the "DOT") in order to test its system using the S-band spectrum terrestrially.46 On 7 May 2009, the "Short Term Experiment/Trial" License was granted for a small fee ("WPC Experimental License").47
On 31 March 2009, Devas was granted permission from the DOT to supply Internet Protocol Television ("IPTV") services through its ISP License which enabled Devas to deliver internet services as provided in the Devas Agreement.48
In September 2009, Devas conducted experimental trials in Bangalore which were successful,49 and in August 2010 it completed the second phase of trials.50
After the completion of this phase, Devas and its advisors began preparing a draft application for a particular license which it required from the WPC to reuse Devas’s spectrum terrestrially (the "WPC License").51
In May 2010, terrestrial Broadband Wireless Access ("BWA") spectrum auctions took place in India, which resulted in the company Infotel acquiring the right to use 20 MHz of spectrum to offer BWA services for 20 years ("2010 BWA Auction").
The WPC License application was never filed due to the annulment of the Devas Agreement on 8 February 2011, when Secretary Radhakrishnan and Dr. Kasturirangan, a former ISRO Chairman and the DOS Secretary, announced at a press conference the decision to terminate the Devas Agreement. On this occasion, Devas learned for the first time about the purported termination of the Agreement. On 25 February 2011, Antrix notified Devas of the termination of the Agreement due to a force majeure event, by reference to the decision of the Indian Cabinet Committee on Security ("CCS").52


Prior to considering the merits of the Parties’ positions on quantum, the Tribunal will address the applicable laws (infra at IV.A),53 and the Claimant’s objection to the evidence of India’s damages expert (infra at IV.B).

A. Applicable laws

1. Applicable procedural law


In the Terms of Appointment signed on 3 June 2014, the Parties agreed on the law governing the procedure of this arbitration as follows:

"40. In order of priority, the procedure in this arbitration shall be governed by the mandatory provisions of the law of the seat on international arbitration, these Terms of Appointment, the rules on procedure contained in Article 9 of the BIT and the 1976 UNCITRAL Arbitration Rules.

41. If the provisions therein do not address a specific procedural issue, the applicable procedural issue shall be determined by agreement between the Parties or, in the absence of such agreement, by the Arbitral Tribunal."54

Under Paragraph 37 of the Terms of Appointment, the Parties agreed to set the seat of this arbitration in Geneva, Switzerland, with the result that this arbitration is subject to Chapter 12 of the Swiss Private International Law Act.

2. Applicable substantive law

a. Law governing the merits of the dispute


In respect of the law applicable to the merits, the BIT contains the following provision (Article 9(2)(b)(ii)):

"The arbitral award shall be made in accordance with the provisions of this Agreement, the relevant national laws including the rules on the conflict of laws of the Contracting Party where the investment dispute arises as well as the generally recognised principles of international law."55

Therefore, in addition to the BIT, the Tribunal will apply Indian national law and generally recognized principles of international law whenever appropriate. Where necessary, it will determine whether an issue is subject to national or international law depending on the nature of the issue.56

b. Jura novit arbiter

When applying the governing law, be it international or national, the Tribunal is not bound by the arguments and sources invoked by the Parties. Under the maxim jura novit curia - or, better, jura novit arbiter- the Tribunal is required to apply the law of its own motion, provided it seeks the Parties’ views if it intends to base its decision on a legal theory that was not addressed and that the Parties could not reasonably anticipate.57

B. The Claimant’s objection to the evidence of India’s damages expert

It is the Claimant’s submission that the evidence of India’s damages expert, Dr. Flores, should be completely disregarded. According to DT, it became clear at the Hearing that Dr. Flores’ expert testimony was based on a counterfactual that incorrectly interpreted the Tribunal’s liability findings, or on evidence that should, in DT’s view, not be considered in the counterfactual.58 Dr. Flores’ conclusions were based, so says DT, on his "own economic interpretation of the Interim Award".59 DT further contends that Dr. Flores did not perform the role of an independent expert in this arbitration, but rather acted as an advocate for India.60
The Tribunal has taken note of the Claimant’s criticisms of Dr. Flores. Having reviewed his evidence (both as contained in his two reports and as presented at the Hearing) against the Claimant’s allegations, the Tribunal considers there is no ground to disregard Dr. Flores’ evidence entirely, a conclusion that would be disproportionate having regard to the criticisms made. Rather, the Tribunal will deal with the adequacy of Dr. Flores’ evidence as a matter of probative value as and when such evidence becomes relevant in the course of its analysis.


In this section, the Tribunal first discusses the standard of proof applicable to causation, loss and quantification of damages (infra at V.A). In that context, it also addresses the uncertainty surrounding the issuance of the requisite licenses, in particular the WPC License (infra at V.A.1.b). Thereafter, it examines the various valuation methods discussed by the Parties (infra at V.B). Finally, it addresses interest and tax (infra at V.C) and the effect of the ICC Award (infra at V.D).

A. Causation, Valuation, and the Licensing Issues

1. The Claimant’s position

a. The standard of proof

It is beyond doubt, so says the Claimant, that the annulment of the Agreement resulted in the destruction of the value of DT’s investment in Devas. The only question that remains to be resolved is the precise amount of damages to be awarded.61
For the Claimant, the uncertainty which Devas faced around obtaining the necessary licenses is an issue relevant to the quantification of damages and not a matter relevant to the fact of loss "because what DT lost was the FMV of its investment in Devas as at the Valuation Date pre-licensing".62 The licensing uncertainty must, therefore, be accounted for when assessing the FMV of DT’s investment in Devas by factoring into the value the risk of the license not being granted.63

In this regard, it is the Claimant’s contention that the decision in Bilcon v. Canada64 on which the Respondent relies does not support the latter’s argument that DT must prove "with virtual certainty" that it would have been granted the WPC License.65 According to the Claimant, the finding in Bilcon hinged on "a pure lost profits valuation".66 It is for that reason that the Bilcon tribunal held that the claimant was required to prove "with a certain level of probability" that it would have obtained the necessary regulatory approvals in order to establish that "future profits were indeed lost".67 By contrast, in this case the loss sought is the FMV of the asset prior to the annulment of the Agreement. The licensing uncertainty in this situation goes to the amount of the loss, not to its existence. The Claimant finds support for this argument in the concurring opinion of Prof. Schwartz in Bilcon.68

Thus a "proper reading" of Bilcon, so says DT, supports the Claimant’s primary argument that the licensing uncertainty is a risk to be factored into the FMV of DT’s investment in Devas.69 The Claimant further contends that Bilcon is easily distinguishable on the facts.70
In the alternative, if the Tribunal were to determine that a certain standard of proof must be applied in assessing the licensing risk, it is the Claimant’s argument that the appropriate standard is whether "in all probability" the requisite licenses would have been granted, which must be read to mean "‘probable’, and not merely ‘possible’".71 This follows from Lemire v. Ukraine where the tribunal held that:

"Given the characteristics of the Ukrainian process for the awarding of licences, it is impossible to establish, with total certainty, how specific tenders would have been awarded if the National Council had not violated the FET standard. The best that the Tribunal can expect Claimant to prove is that through a line of natural sequences it is probable - and not simply possible -that Gala would have been awarded the frequencies under tender."72

The Claimant does not dispute that it bears the burden of establishing causation and the value of the loss allegedly suffered. In terms of standard of proof, it distinguishes, however, between the standard applied to the fact of the loss and the standard applied to the quantification.73 As concerns the former, the Claimant argues that the relevant standard to be applied is one of "balance of probabilities", or, in other words, "such loss must be shown to be ‘probable’ and not merely ‘possible’".74 With regard to the latter, relying again on Lemire, the Claimant argues that it need only "provide a basis upon which the Tribunal can, with reasonable confidence, estimate the extent of the loss".75 The lower standard for proving the amount of the loss, so says the Claimant, is all the more appropriate when the Claimant faces evidentiary challenges in proving the precise amount of loss as a consequence of the Respondent’s wrongful conduct,76 as is the case here.

b. The licensing issues and the counterfactual

(i) General remarks

The Claimant contends that, in order to ensure full reparation, compensation must be awarded so as to put DT in the position in which it would be if the Agreement had not been annulled.77 The most appropriate way to achieve this, according to DT, is to take the FMV of DT’s investment in Devas as the starting point for assessing damages. In this regard, FMV is defined as:

"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."78

In determining the FMV of DT’s investment, the Tribunal should apply a counterfactual which assumes that Devas would have received all the necessary licenses. This, so says DT, is a well-settled principle of international law,79 as set out by the tribunal in Burlington v. Ecuador.

"In the Tribunal’s view, when quantifying the value of the expropriated assets, the Tribunal must proceed on the basis that Burlington is entitled to exercise all of the contractual rights it would have had but for the expropriation, and that Ecuador would have complied with its contractual obligations going forward. In other words, when building the counterfactual scenario in which the expropriation has not occurred, the Tribunal must assume that Burlington holds the rights that made up the expropriated assets and that those rights are respected."80

In this case, this means removing all consequences of the breaches found by the Tribunal81 and assuming a counterfactual scenario in which:

a) the launch of the GSAT-6 satellite would have taken place in April 2011;

b) India would have acted "fairly and reasonably" in treating Devas’s application for the WPC License to permit terrestrial reuse of its spectrum; and

c) if needed, Devas would have acquired any service license in addition to the ISP and the IPTV licenses it already held.

In applying the correct counterfactual, the Tribunal should, so says DT, disregard "[all] documents produced in the course of the flawed process that culminated in the annulment of the Devas Agreement".82

(ii) The launch of the GSAT-6 satellite would have taken place in April 2011

DT recalls that the Devas Agreement required ISRO/Antrix to launch the GSAT- 6 by the end of June 2009.83 The launch of the GSAT-6 satellite was delayed a number of times for operational reasons, such as lack of a launch vehicle due to the explosion of a newly-designed ISRO vehicle for an unrelated satellite.84 However, DT contends that all major operational issues had been resolved by December 2010 and that in April 2011, at the latest, the GSAT-6 satellite would have been launched.85
For the Claimant, April 2011 is a conservative estimate for the launch date. As such, it is the appropriate counterfactual date because it removes most of the wrongful delay attributable to the Indian authorities’ "slow-rolling" of the GSAT-6 project as a consequence of the decision to annul the Agreement made by July 2010.86

(iii) India would most probably have granted the WPC License for a reasonable fee

It is the Claimant’s submission that, upon fixing a firm launch date for GSAT-6, Devas would have promptly finalized its application for the WPC License (which had been prepared prior to the annulment of the Agreement) and submitted it to the WPC.87 Following the submission, had it not been for India’s Treaty breaches, Devas would most probably have been granted the WPC License for a reasonable fee.88
More specifically, in the Claimant’s view, it must be assumed that the DOT or any other governmental authority would not have acted "arbitrarily, irrationally or capriciously" and that India would thus not have denied Devas the WPC License or levied "a prohibitive fee in exchange".89 Such assumption, so says the Claimant, is consistent with the approach adopted by numerous investment tribunals that have awarded damages to an investor in a situation where a State sought a reduction in damages based on the investor’s need to obtain a license, permit or other government approval.90
DT admits that it had no contractual right or government assurance to be granted the WPC License. However, according to the Claimant, this is legally irrelevant because the Tribunal is simply being asked to consider the likelihood that the WPC License would have been granted. Furthermore, India’s erroneous suggestion that Devas had no value without the WPC License contradicts the Tribunal’s finding in the Interim Award that, regardless of the WPC License, Devas had "a binding agreement contemplating the lease of valuable satellite spectrum".91
Against that background, DT argues that Devas would have been granted the WPC License for terrestrial use for a reasonable fee. Devas had acquired "non-preemptible" contractual rights in relation to the spectrum. Thus, Devas only required "procedural clearance" from the WPC to reuse terrestrially the frequencies already allocated to Devas by the DOS, as opposed to allocation of fresh spectrum from the DOT. As such, the role of the WPC would be "purely operational".92 While the Claimant accepts that no WPC License had ever been granted before, "it was not without regulatory precedents".93 In particular, in 2009, the WPC had already issued Devas an experimental license for the conduct of trials of its hybrid satellite and terrestrial system "for a nominal fee".94 All that was needed for Devas’s terrestrial reuse permission was the application for the WPC License and authorization, in line with India’s 2008 National Frequency Allocation Plans ("NFAPs"), rather than a change in the band allocation policy.95
If any substantive review had been required, such that the application for the WPC License was referred to the Telecom Regulatory Authority of India (the "TRAI"),96 the latter would have taken into account relevant international precedent, which, according to the Claimant, overwhelmingly supported terrestrial reuse of spectrum by an incumbent satellite operator.97 The most likely outcome of such review would have been the grant of the WPC License on reasonable terms.98 This is so because the spectrum was already allocated to Devas; all other operators had been "boxed out"99 of its spectrum; and Devas’s services would actually implement India’s public policy objectives.100 Indeed, the services offered by Devas were in the public interest and would have provided "truly universal, nationwide AV coverage to all of India, including its vast rural areas".101 Moreover, Devas had the full support of the DOS.102
In this regard, for the Claimant, the Respondent’s "regulatory" witnesses, namely Mr. Nitin Jain, Mr. Bhagirath and Smt. M. Revathi, were not credible since they merely put forward their personal opinions about a regulatory licensing process that was unclear.103 Moreover, says DT, they "sit several rungs below the levels of Secretary or Minister at which actual policy decisions would be taken",104 they lacked contemporaneous involvement with and knowledge of the relevant facts, and they were "partial and lacking in objectivity".105
As to the fee charged for the WPC License, contrary to the Respondent’s allegation, such fee would not have been commensurate with the 2010 BWA Spectrum Auction price set in accordance with India’s so-called "level playing field policy" (i.e. a policy said to be designed to ensure a level playing field for the other services providers using terrestrial spectrum). DT identifies several reasons for this.
First, India’s ultimate decision to annul the Agreement in order to vacate the spectrum demonstrates that the spectrum was not capable of being auctioned while Devas’s contractual rights were in force.106
Second, Devas’s position is different from the holders of rights in the 2010 BWA Spectrum Auction, because Devas had exclusive use of the spectrum, was primarily a satellite spectrum holder seeking to reuse its spectrum terrestrially, rather than primarily a terrestrial spectrum holder, and it intended to provide different services (including AV services).107 Furthermore, there has never been a terrestrial spectrum auction fee placed on a terrestrial reuse license, which is fundamentally different from a pure terrestrial use of the spectrum.108 That fundamental difference is evident from the fact that Devas would have had to launch a satellite in order to be able to reuse the spectrum for terrestrial purposes.109
Third, even if the regulators were required to consider India’s level playing field policy, they nevertheless would have to balance that policy against other public policy objectives.110 As a result, they would have charged an affordable fee given the public benefits which Devas would have provided.111
Finally, the Claimant submits that the ISP and IPTV Licenses that it already held were sufficiently flexible for the provision of Devas’s services.112 These licenses did cover the provision of BWA and AV services.113 In any case, India would be reasonably expected to put in place licenses for the operation of BWA and AV services and in the meantime permit the launch of such services by Devas, as it had done in similar circumstances.114 In other words, even if additional necessary licenses did not exist, they would have been created.115 Thus, any delay to the start of Devas’s services would have been minimal.116

2. The Respondent’s position

a. The standard of proof

According to India, the "threshold question" before the Tribunal is whether, but for the annulment of the Agreement, (i) Devas would have obtained the necessary licenses to enable it to roll out its proposed business, and (ii) reasonable spectrum charges would have been applied.117

Thus, for the Respondent, the core licensing issues in dispute are matters that need to be proven in order to establish a causal link between the breach of the Treaty and the loss.118 In assessing those core licensing issues, the applicable legal standard is one of "in all probability" or "with a sufficient degree of certainty". In support of this contention, the Respondent relies on Bilcon, where the tribunal held:119

"Authorities in public international law require a high standard of factual certainty to prove a causal link between breach and injury: the alleged injury must "in all probability" have been caused by the breach [...] or a conclusion with a "sufficient degree of certainty" is required that, absent a breach, the injury would have been avoided.


In this regard, the test is whether the Tribunal is "able to conclude from the case as a whole and with a sufficient degree of certainty" that the damage or losses of the Investors "would in fact have been averted if the Respondent had acted in compliance with its legal obligations" under NAFTA."


The Respondent stresses that Bilcon applies to "all aspects of the Tribunal’s finding of liability, including non-transparency in the decision-making process and the annulment itself".120 In this regard, India draws the Tribunal’s attention to the fact that in Bilcon the tribunal "went on to note that various outcomes of a ‘NAFTA-compliant process’ were ‘reasonably conceivable’, including a refusal to approve the project based on socio-economic considerations and an approval ‘with conditions that would render [the project] economically unviable’".121 The Bilcon tribunal thus concluded that "[w]ithout a high degree of certainty as to regulatory approval, it goes without saying that no damages based on the profitable operation of the quarry can be awarded".122 Contrary to the Claimant’s submission, according to the Respondent, there is "no meaningful distinction between Bilcon and this case".123

Finally, in support of its argument that this is the appropriate standard of proof to be applied to the licensing issues, the Respondent submits that, until the hearing, the Claimant accepted that the relevant standard was "in all probability". It was only when the Claimant realized that this burden was insurmountable that it started arguing that the Tribunal should consider the core licensing issues as part of the FMV of its investment. In the alternative, it also submitted that "in all probability" should be interpreted as meaning "probable, not possible".124

b. The licensing issues and the counterfactual

For the Respondent, the Claimant’s counterfactual is entirely misplaced because it is based on the assumption that Devas had a right to be granted all of the "first-of-their-kind" licenses needed at a cost that guaranteed economic success. According to India:

a) As DT was aware, India had no obligation to grant the WPC License and DT should not be able to claim for a right it never had (infra at V.A.2.b(i));

b) DT fully understood that there was significant risk that the licenses would not be granted (infra at V.A.2. b(ii)-(iii)); and

c) DT has failed to prove that the spectrum fees would have been set at a level that would have enabled Devas to be profitable (infra at V.A.2.b(iv)).

(i) India had no obligation to grant the WPC License and DT should not be able to claim for a right it never had

The Respondent submits that there was no obligation on India to grant the WPC License to Devas. As set out in the Agreement, both the responsibility and the risk associated with obtaining the WPC License fell exclusively on Devas.125 In fact, the Government retained the right "to declare that there would be no commercial use of S-band spectrum without auction".126 For the Respondent, the value of Devas is to be assessed on the basis of the rights that it had, as opposed to rights that it did not have.127
Furthermore, the Respondent contends that any misunderstanding about the conditions for acquiring the WPC License on the part of DT can only be attributed to Devas. In this regard, the Respondent refers to the negotiating history of the share purchase agreement between DT Asia and Devas in 2008, where Devas did not make DT fully aware of all licenses required for the rolling out of the Devas business.128

(ii) The requisite licenses would not have been issued

India argues that the documentary and testimonial evidence on record shows that the required licenses, and in particular the WPC License, would not have been issued.129 There is an abundance of evidence, so says India, demonstrating that DT would not have received the relevant licenses.
First, the terrestrial reuse of Devas’s S-band spectrum, via either the terrestrial repeaters of AV content or the terrestrial network for BWA services, was not permitted absent a "change in policy", as such spectrum had not been authorized for terrestrial use previously.130 The licenses required by DT were "first-of-a-kind" licenses; they did not exist and the grant of such licenses necessitated a change in policy and in India’s band segmentation.131 The need for a change in policy and the novelty of terrestrial reuse would have required a reference to the TRAI. The consultative process before the TRAI would have involved considering the views of all of the stakeholders.132 It was "reasonably conceivable" that the outcome of the TRAI consultation would have been unfavorable to DT.
In response to DT’s contention that a policy change could have been made in accordance with international precedents, India argues that (i) DT has mischaracterized the international precedents on which it relies; and (ii) "while the TRAI may look to international precedents in regard to certain matters, it reaches conclusions that are in its judgment specific to the Indian situation"133 and the Government is not required to follow TRAI’s conclusions.134 In any event, to suggest that India could have changed its policy falls short of DT satisfying its burden of proof that India would have done so and that Devas would have been granted the licenses.135
Second, at the 2 July 2010 meeting of the Space Commission - during which the Space Commission recommended the annulment of the Agreement - numerous concerns were aired about (i) the anticipated terrestrial use of the spectrum for the purposes of hybrid services, (ii) the fact that the DOT needed to be consulted, (iii) Devas’s foreign ownership, and (iv) awarding the use of the spectrum in a manner inconsistent with the level playing field policy. All of these factors would have weighed against the granting of the license.136
Third, Mr. Jain, the DOT’S Deputy Director General for Data Services, Ms. Revathi and Mr. Bhagirath, both Senior Deputy Wireless Advisors, have testified that it was unlikely that the requisite change in policy would have been made.137 The Respondent refutes DT’s arguments in relation to the weight that should be attached to the witness testimony of the regulators. It also points to the fact that DT has failed to call (and to provide any explanation for its failure) any Indian regulatory witness, any individual in charge of regulatory matters on DT’s due diligence team or its Indian lawyers or advisors consulted in relation to the licenses.138 It presumably failed to do so, says India, because their testimony would have been detrimental to DT’s case.
Furthermore, there is no merit in the Claimant’s position that the failure to grant the WPC License would have been "arbitrary, irrational and capricious", as the possibility of denial of the requisite licenses was acknowledged even in DT’s internal documents.139 Moreover, according to India, it would have been perfectly valid for the Government to deny the licenses on the basis that terrestrial use of the spectrum could not be granted without an auction. It is untenable to argue that such conduct is "arbitrary, irrational or capricious" or otherwise contrary to the Treaty.140

(iii) DT fully understood that there was significant risk that the licenses would not be granted

In India’s submission, it is clear from the contemporaneous documents that DT was well aware of the risk that the requisite licenses would not be granted. India argues that, during its due diligence, DT identified the need to acquire the WPC License and recognized the risks associated with the issuance of that license.141 These facts are established, inter alia, by the following elements in the record:

• DT’s internal documents record DT’s reservations about the grant of the license, including after DT’s officials met with India’s Wireless Advisor to discuss this matter;142

• The uncertainty surrounding the grant of the WPC License was factored in by DT itself when it invested in Devas, as is shown by (i) DT’s decrease of the valuation of Devas and its proposal for a staged investment, and (ii) the fact that it obtained priority shares ensuring that in the event of a liquidation or sale of the company, DT Asia would receive preferential treatment vis-à-vis holders of ordinary shares;143

• In the lead up to its second investment in Devas, DT continued to take note of the licensing risks.144

According to the Respondent, the Claimant admitted that it was fully cognizant of the licensing risk145 and Mr. Harman of FTI testified at the Hearing that DT was well aware of the significant uncertainty surrounding the WPC License.146 Such statements are irreconcilable with the Claimant’s position that the requisite licenses would have been granted in all probability.

(iv) DT has failed to prove that the spectrum fees would have been set at a level that would have enabled Devas to be profitable

The Respondent argues that even if the licenses had been issued, the regulators would have charged fees for the use of the spectrum commensurate with auction values in accordance with India’s level playing field policy,147 which would have meant that the project would have been economically unviable. For India, the level playing field policy remains "the core of India regulatory policy to this day". It invokes a number of documents from its regulators as well as statements of its witnesses to this effect,148 in particular:

• As confirmed by Ms. Revathi, the level playing field policy "means exactly what it says - that companies using the same (or similar) spectrum or desiring to provide the same types of services are required to endure the same fees and charges, and the Government is not permitted to regulate in a manner that would give one an advantage over the others [...]";149

• Second, "no one in India provides BWA services, and no one has ever been authorised to provide BWA services, without paying auction prices", even existing service providers would have been required to pay a fee to upgrade their services "commensurate with auction prices".150 The granting of such a license would have required a fundamental change in Indian regulatory policy and the evidence before the Tribunal is that such a change would not have taken place;151

• Third, the July 2010 DOT Letters made it clear that spectrum charges in line with auction values would be assessed for the proposed satellite-terrestrial business.152 There is no reason to disregard this letter, as there is nothing unlawful about the Secretary of the DOT reminding the DOS that, in accordance with the level playing field policy, the spectrum charges would have to equate auction fees.153

According to India, any alleged "overriding public interest" that may have existed (such as providing telecom services to rural areas) could not have compelled the issuance of the WPC License contrary to India’s level playing field policy.154 As confirmed by Ms. Revathi and Mr. Bhagirath, public interest has never prevailed over public policy.155
The Respondent further refutes the Claimant’s position that Devas had a "box-out" position. It explains that Devas would not have such a position of 60 MHz all over India, in particular because any box-out "would have been limited to the two 10-MHz blocks directed at the specific footprints on the surface",156 and it would have been a dereliction of duty if it operated (as the Claimant contends) to prevent the application of the level playing field policy.157
For the Respondent, these arguments are bolstered by the fact that in its damage calculations the Claimant’s quantum expert, FTI, assigns a one-third weight to the scenario with auction-level fees, which shows that such a hypothesis is "eminently plausible".158
In sum, DT has not met its burden of proving that India would have departed from its level playing field policy when assessing fees for the use of the spectrum in the event that it had granted the requisite licenses. Because such fees would have been equivalent to auction fees, so says India, the proposed Devas business would not have been viable.
Finally, India submits that Devas only had an ISP/IPTV License that did not permit the provision of the purported AV or BWA services.159 More specifically, the ISP/IPTV license that Devas had could not be used for wireless ISP services except in the 2.7-2.9 GHz and 3.3-3.4 GHz bands and in unlicensed spectrum, as opposed to the S-band spectrum at issue here; additionally, the ISP license only permitted transmission to fixed receivers and not to mobile devices.160 In fact, India did not even have service licenses for AV satellite services to mobile devices or for BWA services in the portion of S-band in question.161

3. Analysis

The Tribunal discusses first the standard(s) of proof for issues of causation, loss, and quantification of damages (infra at V.A.3.a). Thereafter, in light of that discussion, it addresses the uncertainty regarding the licenses (infra at V.A.3.b).

a. Requirements for damage award and standard of proof

The Parties do, however, disagree on the standards for causation and loss. They equally diverge on whether the licensing uncertainties which DT faced (i.e. whether Devas would have obtained the WPC License needed to roll out its business at a reasonable fee) are matters that go to causation or valuation.

The Tribunal begins its analysis by recalling that, in accordance with Article 31 of the ILC Articles, the determination of damages under international law implies a three-step process:

i. establishing a breach;

ii. ascertaining that the injury was caused by that breach (causation); and

iii. determining the amount of compensation due for the injury caused (valuation or quantification of damages).164


The first step was taken in the Interim Award, in which the Tribunal held that India’s conduct, ultimately culminating in the Devas Agreement being annulled, constituted a breach of the fair and equitable treatment ("FET") standard.165 In particular, the Tribunal found that "the decision to annul the Agreement was arbitrary and unjustified inasmuch as it was manifestly not based on facts, but on conclusory allegations, and was the product of a flawed process".166 The Tribunal concluded that "[a]s a consequence of the acts which the Tribunal deemed contrary to FET, the Devas Agreement was annulled".167


The second step requires showing a causal link between the breach and the alleged injury. In this respect, the Tribunal agrees with the tribunal in Bilcon that "[a]uthorities in public international law require a high standard of factual certainty to prove a causal link between breach and injury: the alleged injury must ‘in all probability’ have been caused by the breach (as in Chorzów), or a conclusion with a ‘sufficient degree of certainty’ is required that, absent a breach, the injury would have been avoided (as in [the] Genocide [case decided by the ICJ])".168

In this case, unlike what the Respondent appears to suggest, the causation issue is not whether, but for India’s unlawful conduct, Devas would have obtained the requisite licenses; rather, the relevant question is whether there is a causal link between India’s unlawful conduct resulting in the annulment of the Agreement and the loss in the value of DT’s investment in Devas. The Tribunal is of the view that, in this case, there can be no doubt that the annulment of the Agreement caused the diminution in the value of DT’s investment.
Indeed, on 17 February 2011, when the CCS made its final decision to annul the Devas Agreement, which the Parties agree to treat as the date of valuation (the "Valuation Date"),169 the value of Devas was derived from Devas’s proposed business. It should be recalled that Devas was incorporated for the very purpose of entering into the Devas Agreement.170 Furthermore, the key asset held by Devas on the Valuation Date was the right to lease the spectrum. Under the circumstances, there can be no doubt that by annulling the Agreement, India’s conduct negatively impacted, if not entirely destroyed, the value of DT’s investment in Devas, by depriving Devas of the key asset required to roll out its proposed business.

Bearing in mind the Chorzów and Genocide standards of proof mentioned above,171 in the Tribunal’s view, the Claimant has thus established that the loss (i.e. the diminution of value of its investment in Devas) has "in all probability" (pursuant to the Chorzów standard) or to "a sufficient degree of certainty" (pursuant to the Genocide standard) been caused by India’s conduct.172 Hence, the Tribunal considers that causation between the breach and the (fact or existence of the) loss has been established.


The Tribunal turns now to the third step, i.e. the valuation or quantification of damages. As also recalled in Bilcon,173 investment treaty case law draws a distinction between the causation aspect just examined and quantification of the amount of the loss, for which a lower standard of proof is required.


The tribunal in Lemire, for instance, noted that:

"[o]nce causation has been established, and it has been proven that the in bonis party has indeed suffered a loss, less certainty is required in proof of the actual amount of damages : for this latter determination Claimant only needs to provide a basis upon which the Tribunal can, with reasonable confidence, estimate the extent of the loss."174


Other tribunals have come to the same conclusion. For instance, the tribunal in Crystallex v. Venezuela, referring to Lemire, held:

"the fact (i.e., the existence) of the damage needs to be proven with certainty. In that sense, there is no reason to apply any different standard of proof than that which is applied to any other issue of merits (e.g., liability).

Second, once the fact of damage has been established, a claimant should not be required to prove its exact quantification with the same degree of certainty. This is because any future damage is inherently difficult to prove."175


As the tribunal in Vivendi II further observed in respect of quantification, "approximations are inevitable; the settling of damages is not an exact science".176 Tribunals thus "retain a certain margin of appreciation" in the quantification of the damage, as noted by the tribunal in Rusoro v. Venezuela.177


This point was clearly articulated in Gold Reserve v. Venezuela, in which the tribunal held:178

"while a claimant must prove its damages to the required standard, the assessment of damages is often a difficult exercise and it is seldom that damages in an investment situation will be able to be established with scientific certainty. This is because such assessments will usually involve some degree of estimation and the weighing of competing (but equally legitimate) facts, valuation methods and opinions, which does not of itself mean that the burden of proof has not been satisfied. Because of this element of imprecision, it is accepted that tribunals retain a certain amount of discretion or a "margin of appreciation" when assessing damages, which will necessarily involve some approximation. The use of this discretion should not be confused with acting on an ex aequo et bono basis, even if equitable considerations are taken into account in the exercise of such discretion. Rather, in such circumstances, the tribunal exercises its judgment in a reasoned manner so as to discern an appropriate damages sum which results in compensation to Claimant in accordance with the principles of international law that have been discussed earlier."


Hence, once it is proven that the Claimant did suffer a loss, and that loss was caused by the breach, the question is whether the Claimant has "provided the Tribunal with a reasonable basis to assess" that loss179 or "a basis upon which the Tribunal can, with reasonable confidence, estimate the extent of the loss".180

This being so, the Tribunal can move to assessing the extent of the loss. It is at this step of the valuation exercise that it must factor in the probability (whatever that probability is) of the relevant licenses being received. Thus, far from being an element interrupting the causal chain, the risk concerning the licensing issues that existed at the Valuation Date is a factor that must be taken into account -among other elements - in the third step of the Tribunal’s analysis, i.e. the quantification of the loss. This is consistent with the Tribunal’s observation in the Interim Award whereby "[t]he absence of the WPC License may have made DT’s investment less valuable and may thus have an impact on quantum".181

Still in respect of risk, the Tribunal observes that it is correct that, as the Claimant submits, the applicable counterfactual must assume that India would have acted in accordance with its Treaty obligations.182 It also does not escape the Tribunal that India’s breach deprived Devas of the opportunity to apply for the WPC License. However, this does not mean that the Tribunal should disregard the risks or uncertainties facing Devas irrespective of the Respondent’s breach. Hence, for purposes of valuing the Claimant’s loss, it is important to assess the risks, especially the regulatory risks on which the Parties have mainly focused, that Devas and its business would have faced even if the Agreement had not been annulled.

In the next section, the Tribunal addresses the uncertainty regarding the licensing issues. It discusses them at this juncture and in a certain detail given the emphasis that both Parties have placed on this question in both their written and oral submissions in this phase of the arbitration.

b. The licensing uncertainties

(i) Introductory remarks

Before turning to the evidence on these risks, the Tribunal notes that the Claimant has called no regulatory witnesses or experts to testify on the relevant licensing issues. By contrast, the Respondent has adduced evidence from three witnesses: Mr. Nitin Jain, Deputy Director General in Data Services Wing of the DOT, Mr. Bhagirath, Senior Deputy Wireless Advisors to the Government of India in the WPC Wing of the DOT, and Smt. M. Revathi, Senior Deputy Wireless Advisors to the Government of India in the WPC Wing of the DOT.
While it is true that the Tribunal would have preferred to hear from witnesses closer to the facts and the decision-making power, the evidence of India’s "regulatory witnesses" nevertheless proved somewhat helpful. The fact that they did not have firsthand experience with the licenses at issue here, and would not have decided over the WPC License, does not make their testimony wholly "unreliable and unavailing", to use the Claimant’s words.
Against that background, the Tribunal turns to the two main issues in respect of the licensing risks, i.e. whether the WPC would likely have been granted (infra at V.A.3.b(ii)), and, if so, against which fee (infra at V.A.3.b(iii)).

(ii) Whether the WPC License would have been granted

It is common ground that Devas/DT did not have a contractual right to the issuance of the WPC license nor a concrete assurance from India that such license would be granted.183 To the contrary, as explained below, whenever Devas/DT sought to obtain assurances, the Indian authorities’ stance was non-committal.
It is further not seriously disputed that the type of license sought by Devas, which would have been required to roll out the services, had never been granted before in India. It was thus a "novel" or "first-of-a kind" license. As the Claimant itself put it at the Hearing:

"In addition to various commercial risks, such as the greenfield nature of the project and the satellite aspect of the platform, the board [of DT] was fully advised of key legal and regulatory risks, including the need for a licence from the WPC authorising terrestrial reuse of the satellite spectrum, which had never before been issued or considered in India."184

Mr. Axmann, Vice President of DT’s Mergers & Acquisition team and project manager tasked with evaluating DT’s investment opportunity in Devas, also acknowledged that the envisaged services were "a very novel concept" in India:

"MR PREZIOSI: Now, you did understand [...] this was a novel set of services in India, right?

A. In India, yes. That was our understanding.

Q. It’s correct, isn’t it, that at that time nobody had been providing AV broadcasting services to mobile devices in India?

A. In India, I don't believe so.

Q. And nobody, in fact, had been providing AV broadcasting to mobile devices terrestrially in India?

A. I would be able to confirm that. But it was a very novel concept, that was our understanding, yes."185

The situation in which Devas found itself as the first-of-its-kind applicant of a license for "novel services" was also clearly understood by DT at the time, as is shown by a multitude of documents in the record. It is useful to set out these documents in chronological order.
First, in the lead up to its first acquisition of Devas’s shares, which was effected in 2008, DT observed in an 11 December 2007 briefing that:

"[l]n a meeting with the head of WPC in Delhi, it became apparent that Devas’ assumption that is has secured a substantial spectrum via its contract with ISRO may not go unchallenged by authorities other than ISRO, with the WPC-Chairman indicating a need for further review."186

Two months later, in a presentation dated 11 February 2008 prepared for the meeting of the Management Board to be held on 19 February 2008, DT listed three possible scenarios in respect of the project’s "regulatory issues":

"License Requirements (cont’d):

Possible scenarios in the given context are:

A. WPC adopts the Devas position and takes the view that only procedural/technical clearances are required by Devas, possibly along with the payment of a fee for use of spectrum.

B. WPC concludes that the regulatory framework is unclear and that before it can come to a decision, relevant rules need to be framed in connection with the use by private operators of satellite spectrum in conjunction with a hybrid network.

C. WPC takes the view that Devas is required to obtain a substantive authorization from WPC in connection with the use of spectrum.

Scenario B. and C. would result in a substantial risk that the deployment of the Devas network would get delayed, and perhaps even refused in certain circumstances.

Other points of concern are that more generally, India has to be considered as a highly regulated market, and it is difficult to foresee how it will evolve over the near-to long-term."187

At the Hearing, Mr. Axmann explained that, from DT’s point of view, scenario B was in essence the most likely scenario:

"[MR AXMANN] Well, now that you mention it, scenario 1 and scenario 3 especially were given small probability. Indeed, our highest assumed probability was that it would have to run through a certain process, but it would be agreed then in the end.

Q. Okay. So just to be clear, A and C were given very small probability by DT, and scenario B was the one that you were giving higher probability to?

A. From my perspective and from the team's perspective, yes."188

It is also important to note that the same presentation records "DT[’s] position" on the fact that it understood that Devas needed a "separate specific authorization and license [...] from the WPC"189 (which was, therefore, in addition to any ISP license that would have already been granted):

"DT Position: The fundamental concern to DT in the given context is that Indian regulations explicitly stipulate that any ISP-licensee is required to obtain ‘a separate specific authorization and license [...] from the WPC’, as the responsible agency for spectrum licensing and management. In addition, guidelines for Telecom Service Providers for Satellite Communications require the licensee to approach the WPC to obtain frequency authorization."190

In a different briefing note prepared around the same time for the same board meeting of 19 February 2008, DT also noted that it had obtained only "non-committal" feedback from the WPC regarding the license, and that Devas was "reluctant" to approach the authorities to obtain a confirmatory letter on that matter despite DT’s request that it do so:

"To get clarity on the matter, DT (Kevin Copp in person, Hamid Akhavan via telephone) did meet/talk with the Chairman of the WPC. However, the feedback was non-committal. Accordingly, DT requested to eliminate any uncertainties by way of confirmatory letter either from WPC directly or from ISRO/DoS, explicitly confirming either the approval from, or the non-responsibility of WPC. This has not been obtained so far and Devas has indicated that, at least at this stage, it is reluctant to approach the authorities with the request for a formal clarification."191

Eventually, DT chose not to require a confirmation on the licensing issue as a condition to the 2008 transaction192 (a possibility previously identified in the briefing note discussed above).193 Hence, it decided to pursue the acquisition in full knowledge of the regulatory risks.
The uncertainty surrounding the WPC License resurfaced in 2009, when DT acquired the second tranche of the Devas shares. For instance, in a briefing note of 6 August 2009 to the Management Board, DT acknowledged that the acquisition "will be subject to the same risk elements stated in the Board Papers for the initial invest[ment] in 2008", in particular "the pending confirmation or license of the telecoms regulator for terrestrial usage of the spectrum".194
Similarly, DT’s submission to its Supervisory Board of 28 August 2009 provides the following information under the heading "Risks":

"Spectrum: A risk arises out of the questions surrounding the competencies of various Indian authorities in connection with the exceptionally valuable spectrum assigned to Devas. An exclusively satellite-based use of the spectrum is guaranteed by the competence of ISRO; at least in an exclusively terrestrial use of spectrum, on the other hand, a regulatory approval by the Department of Telecommunications (DoT) would be necessary. It cannot therefore be excluded that the DoT could infer a competence in case of a subsequent terrestrial expansion.


Explicit authorisations for the terrestrial use can however only be obtained once the expansion of the network renders this necessary. Up to this point it cannot be completely excluded that there will be complications. On the other hand this risk element causes a lower valuation (see also the section ‘DT investment activity’)."195

The risks of "delay" or even "refusal" of the WPC License identified by DT (see supra para. 142) were to a considerable extent linked to the multi-tier and multi-step process that would have been required for the grant of the WPC License in light of its novelty. In particular, the decision over the WPC would in all likelihood have entailed a governmental review in the form of the TRAI process.196 This is a public process.197 It involves the preparation of consultation papers describing the proposed service, which are subject to the input from stakeholders, including competitors.198 It also envisages an "open house" meeting at which the proposed services are debated.199 The recommendation of the TRAI as to the licenses (including about the conditions applicable to the licenses) is then submitted to either the DOT or the Ministry of Information and Broadcasting for approval.200
The need for a TRAI consultation process was confirmed by DT’s witnesses Messrs. Axmann and Parsons at the Hearing.201 Mr. Axmann in particular confirmed that Scenario B discussed above, requiring the "framing" of "relevant rules", would have entailed a TRAI consultation process with, in all likelihood, the involvement of all stakeholders.202
On this basis, the Tribunal considers that it has been sufficiently established that a TRAI process would have been required for the WPC License to be granted. Such multi-step public process involving consultations with key market players would undeniably have added to the license’s uncertainty.
Notwithstanding the objective uncertainty emerging from the foregoing elements, the Claimant has advanced a number of arguments whereby Devas would in all likelihood have obtained the WPC License necessary to provide the Devas services. The Tribunal is not convinced that the grant would have materialized with the level of probability that the Claimant seeks to depict.
First, the Tribunal is unpersuaded that, lacking any precedent in India on these types of licenses, the Government would have necessarily followed what the Claimant refers to as "international precedents". In the Tribunal’s view, such "precedents" would have been but one factor that the regulatory authority might have taken into consideration when assessing Devas’s application. It is also reasonable to assume that the Indian governmental authorities would have reached their own conclusions with specific regard to the Indian situation, regardless of what other governmental authorities may have decided in respect of their country-specific circumstances.203 Hence, the Tribunal is not satisfied that the resort to the "international precedents" increases the certainty that the WPC License would have been granted to Devas.
Similarly, the Tribunal is not persuaded that the grant of the WPC License for reuse of the terrestrial spectrum can be inferred from the fact that Devas had received a WPC Experimental License. The WPC Experimental License was of a different magnitude. As such, it constitutes no precedent in favor of the granting of the (full) WPC License. Importantly, the text of the agreement in principle that was issued by the WPC and of the experimental license itself made clear that the license was "for experiments only", that there could be "[n]o claim for regular use" and that the "assignment is purely temporary".204
The foregoing facts show that there was a certain degree of uncertainty around the grant of the WPC License for terrestrial reuse of the satellite spectrum. That uncertainty stemmed in large part from the fact that no such license had ever been issued in India. The Tribunal thus cannot agree with the Claimant that Devas merely required "procedural clearance" from the WPC. At a minimum, the services Devas intended to offer would have necessitated the establishment of a new licensing regime (under scenario B that DT accepted as the most likely). At a maximum, they could also have required a change in the band segmentation and in policy.205 In this latter respect, the need for a change in policy is unclear from the record, precisely because of the lack of precedent. In any event, the Tribunal can dispense with establishing this fact because the weight of the evidence supports a conclusion that there was a certain degree of risk that the license would not be granted, irrespective of a change in policy.
In sum, the record shows that there was a certain degree of uncertainty surrounding the WPC License, an uncertainty of which DT was aware when it made its investment in Devas. But in any event, as discussed below, this is ultimately not determinative of the Tribunal’s decision on quantum.

(iii) The fee for the WPC License

In addition to the uncertainty regarding whether the WPC License would have been granted, the price which Devas would have paid for such license is also uncertain.
In essence, the Parties advance opposite views in this respect. For the Claimant, the License would have been granted at "nominal" or "reasonable" fee. By contrast, the Respondent assumes that India would have charged fees commensurate to the auction charges paid by the winners of the 2010 BWA Spectrum Auction.
The lack of a "regulatory framework in India for determining the potential fees for the use of satellite spectrum for terrestrial networks in period 2008 to 2011"206 necessarily implies uncertainty about the level of the fees, as the Claimant’s damages expert accepts.207 This being said, the Tribunal considers it reasonable to assume that, had the Government decided to grant the WPC License, it would have applied the "level playing field" policy, which appears well established in India. As stated by the Indian High Court in Dual Technology, a case to which both Parties refer, "‘[l]evel playing field[’] is a concept of fairness which ensures not that each player has the equal chance to succeed, but that they all play by the same set of rules".208
The Tribunal, however, does not accept India’s position that the application of the level playing field policy would have required the automatic imposition of a fee in line with the 2010 BWA auction price. This is because, unlike the winning bidder in that auction, Devas was an incumbent spectrum-holder, seeking approval from the WPC for the terrestrial reuse of spectrum already allocated to it by the DOS, rather than an allocation of fresh spectrum. Applying similar fees to operators in such dissimilar situations would have negated rather than implemented the policy of the level playing field. That said, it is reasonable to assume that, taking into account these differences, the Indian authorities would have levied a fee to ensure that all economic actors "play by the same set of rules", which would not have been the case with a "nominal" fee.
It is of course true that the Government may have viewed the proposed Devas services with a positive eye, for instance because it may have considered that they would benefit rural communities. However, it is unlikely that this factor alone would have led the Government to charge no meaningful fees for the terrestrial reuse of the spectrum. Indeed, it should not be overlooked that any public interest benefit that the Devas services may have brought would have been balanced against other public interest objectives, including the need to avoid distortion to competition and the Government’s legitimate decision to subject the use of a scarce resource to the payment of consideration. And it barely needs mentioning that, in and of itself, a decision to condition the territorial reuse of the spectrum to a payment could not constitute a violation of the Treaty.
In light of the novelty of the licensing issues and the lack of a specific regulatory framework, the Tribunal cannot determine the precise level of the fee that the Government would have charged for the issuance of the WPC License. Yet, it need not do so for the purpose of this analysis. For the present valuation exercise, it is sufficient to conclude, based on the evidence, that "the level of the terrestrial re-use license fee was highly uncertain", to use the Claimant’s expert’s words,209 and that it was reasonably conceivable that the WPC License may have been granted on more onerous terms than those Devas/DT would have expected. As for the grant of the license, the uncertainty about the fee level is not decisive as will be further elaborated below.

(iv) Conclusion


In sum, on the Valuation Date there was an element of uncertainty as to (i) the principle of the WPC License being granted to Devas and (ii) the amount of the fee payable for such grant. This conclusion does not mean that Devas was worth zero on the Valuation Date, as the Respondent contends. Rather, the Tribunal must adopt a valuation methodology which takes account of the specific circumstances of this case and the evidence on valuation in the record, without disregarding the level of uncertainty on the licencing issues. In other words, such uncertainty is but one of the elements which the Tribunal may consider in selecting the valuation methodology that, based on the evidence in the record, provides the most appropriate "basis upon which the Tribunal can, with reasonable confidence, estimate the extent of the loss".210

B. The valuation methods proposed by the Parties

With the foregoing considerations in mind, the Tribunal now turns to the valuation methodologies proposed by the Parties. The Claimant has proposed the DCF method (infra at V.B.1) and the so-called "Investment Plus" methodology (infra at V.B.2). The Respondent, while maintaining its position that no damages should be awarded, has alternatively suggested that the only approach that is conceivably appropriate for this case is the sunk costs method (infra at V.B.3).

1. The Discounted Cash Flow Method

a. The Claimant’s position

(i) The appropriateness of the DCF method

The Claimant submits that the most appropriate valuation method to determine the FMV of DT’s investment in Devas is DCF.211 It explains that DCF is the method "which ‘businessmen and financiers apply every day in deciding how much to invest in a business’".212 It is thus the method that a willing buyer would use to determine the value of DT’s investment in Devas,213 and the only method which will ensure that DT receives full reparation for the loss it has suffered as a consequence of India’s unlawful conduct.214

The Claimant explains that the DCF method is the most appropriate in the present case for a number reasons:

• It is a valid method for evaluating start-up businesses, particularly where it is necessary to adjust for certain risks such as the licensing risks present in this case;215

• It is well-established for the valuation of businesses in the telecommunications sector generally and within DT more particularly;216

• DT has applied the DCF method in 2008 and 2009 in the ordinary course of business, when it made its investment in Devas;217

• In February 2011, it was a requirement of India’s currency laws that a foreign buyer purchasing shares in an unlisted company, such as Devas, value the company using the DCF method;218

• Devas’s primary asset, i.e. its right to lease the spectrum under the Agreement, was an income-producing asset and DCF is the only reliable method of assessing such an asset, as any other method would dramatically undervalue the asset;

• Arbitral tribunals have endorsed the use of the DCF method for the purposes of valuing a telecommunications company, even when the company was not a going concern. DT points in particular to the decision in Rumeli v Kazakhstan,219 and

• It is a well-established principle "that the FMV of an asset must be assessed by reference to its ‘highest and best use’".220

DT concedes that "substantial investment arbitration jurisprudence exists, which suggests a general - but largely historical and increasingly debated - reservation on the part of tribunals with respect to the use of income-based approaches such as DCF to value companies without an established history of profitability".221

In this regard, the Claimant contends that the absence of a track record of profitability does not automatically render the use of the DCF method overly speculative, if the investor can prove that the investment would have generated the profits claimed.222 In this regard, the Claimant cites to Vivendi II, which held that:

"a claimant might be able to establish the likelihood of lost profits with sufficient certainty even in the absence of a genuine going concern" by "presenting sufficient evidence of its expertise and proven record of profitability of [businesses] it (or indeed others) had operated in similar circumstances."223

In response to the authorities relied upon by India, DT submits that a "proper review" of those authorities confirms that the DCF was rejected on grounds specific to those cases.224 It is therefore not particularly instructive to look at the decisions of other tribunals as these necessarily involved different facts and evidence.225
While it is of course true, admits DT, that Devas had no operating history, such fact should not result in the conclusion that its business was too speculative or uncertain, because India’s "unlawful conduct prevented it from ever reaching the point of rolling out its network and services".226
For the Claimant, the following additional evidence should lead the Tribunal to apply the DCF approach:227

• Devas was well-advanced in the preparations to launch its operations. It had prepared a network roll-out plan, identified and priced network components, coordinated discussions with third party buyers, developed hand held terminals and devices, performed experimental trials, developed societal applications, and prepared the WPC License application;228

• Even though no other company had a track record of operating similar services in India, the BWA services that Devas was to offer were the "bread and butter" of DT, and for the AV services, Devas benefitted from some of the world’s foremost experts in hybrid satellite-terrestrial systems. Moreover, such services and businesses were "well known to Devas and DT" outside of India;229

• The "Darwin Model", i.e. the most up to date version of DT’s business plan developed with Devas in September 2009, "which FTI has taken as the starting point for its valuation", was developed in the ordinary course of business, not in the context of a dispute, and contained robust assumptions in relation to the Devas business;230

• DT rebuts India’s argument that its valuations played no role in the price it paid for its shares in Devas by stating that its contemporaneous valuations set a theoretical "ceiling" on the price DT would have paid for a business like Devas. The fact that DT was ultimately able to negotiate the price down does not affect its "real-time" view of the value of Devas;231

• Contrary to India’s allegations, the fact that DT’s 2008 financial statements did not include the cash flow forecasts set out in the 2008 business plan, does not mean that DT considered those cash flows unreliable. Valuations performed for accounting purposes are not the same as valuations prepared for the purposes of corporate transactions,232 and "the accounting team would not have reviewed Devas’s cash flows".233

Finally, while the Claimant acknowledges that the ICC tribunal declined to apply the DCF method because Devas had no track record of operations, the ICC tribunal held that DCF may be the appropriate method "if there is a reliable, alternative guide to what the future earnings of the business are likely to be".234 DT submits that, in this arbitration, by contrast to the ICC Arbitration, "DT is uniquely placed to give this Tribunal, with the support of its fact and expert witnesses, precisely the requisite confidence that the ICC Tribunal considered that it lacked".235

(ii) The 2010 BWA Spectrum Auction as a benchmark for Devas’s value

As an alternative market data point to its DCF analyses, FTI has compared the 2010 BWA Spectrum Auction against the Devas spectrum.236 The price paid for 20 MHz of spectrum in the context of the 2010 BWA Spectrum Auction was USD 2.75 billion (or USD 4.13 billion for 30 MHz), and FTI’s DCF value for Devas (with no license fee) amounts to USD 2.63 billion.237
This comparison, so says DT, demonstrates that FTI’s DCF analysis is conservative.238 According to DT, India accepts the relevance of this cross-check because it uses the 2010 BWA Spectrum Auction for the purposes of its arguments in relation to the WPC License fee.239 DT also considered the auction price an appropriate benchmark of value at the time, as it compared the value of the Devas spectrum with the reserve price of the (then) upcoming auction, as USD 860 million, as was noted in its Management Board papers in 2009.240

(iii) Reasonableness of FTI’s DCF Assumptions

Based on its DCF analysis, FTI has calculated that the FMV of Devas as of the Valuation Date was USD 1.618 billion. It then determined the value of DT’s investment in light of its 19.62% shareholding in Devas, which comes to USD 270 million accounting for a minority discount.
According to DT, the assumptions which FTI adopted to arrive at its DCF analysis are entirely reasonable. FTI has taken the Darwin Model and has made appropriate adjustments both up and down. By contrast, so says DT, Dr. Flores has manipulated FTI’s model with the sole aim of reducing the adjustments in order to achieve a value of zero.241 In response to Dr. Flores’ value-reducing adjustments, DT makes the following submissions.
First, FTI has priced the risk of the reuse licenses and associated fees into its DCF calculation by using three possible licensing outcomes, i.e. (i) no or nominal fees; (ii) medium level of fees; and (iii) fees based on the 2010 BWA Spectrum Auction, and then "assigned an equal one-third probability for the outcome of each of these scenarios".242 Dr. Flores’s assumption that the WPC Licensing fee would be so high that it would bankrupt Devas243 is untenable.244
Second, India’s contention that FTI failed to incorporate a build-out requirement based on the BWA Spectrum Auction is deeply flawed because the BWA would not have been the reference point adopted by a willing buyer, and any such build-out requirement would in any event not have been applied,245 not least because "the cost of a terrestrial build-out requirement into non-urban areas would not have applied to Devas".246
Third, India’s assertion that the assumptions concerning the bandwidth demand needed to be adjusted is further erroneous. India, according to DT, has also overstated the costs of doing so.247
Fourth, the Respondent’s argument that the FTI Model failed to account for the time when Devas could have launched its TD-LTE technology services is irrelevant, because "neither the Darwin Model nor the FTI Model envisaged rolling out BWA to paying customers as part of the May 2011 Bangalore launch".248 Consequently, no adjustment ought to be made to the model in this respect.
Fifth, there is no need to take into account an increase in download speeds from January 2015 to meet the TRAI 2010 recommendations. In any event, the "negative impact on value of increasing bandwidth speeds in this way would be considerably less than the [USD 1.3 billion reduction] suggested by Dr. Flores".249 Similarly, Dr. Sharony’s expert evidence that FTI "made incorrect bandwidth capacity assumptions in its modelling exercise" and criticisms in relation to spectral efficiency assumptions, were proved incorrect at the Hearing.250
Sixth, India has placed an unreasonable amount of emphasis on Devas not being able to provide mobile telephony.251 There is no data to support Dr. Flores’ significant valuation decrease.
Seventh, Dr. Flores’s criticism of FTI for assuming an extension of the project beyond the duration of 12 years, renewable once, is misplaced. FTI correctly assumed that the Agreement would be extended beyond 24 years, but accounted for any uncertainty of an extension in the discount rate.252
Finally, Dr. Flores’s calculation of the applicable discount rate as 31% is flawed as it double counts risk already included in the cash flows; reflects an internal rate of return ("IRR"), not a discount rate; and is unsuitable when compared to the discount rate applied in DT’s own DCF valuation (i.e. 20%).253 The appropriate rate, according to DT, is Mr. Harman’s rate of 19% which accounts for a "bottom-up and top-down approach, and factoring in the mitigation in risk between 2008 and the Valuation Date, as well as the fact that the global financial crisis had abated".254

b. The Respondent’s position

(i) The DCF method is inappropriate

The Respondent submits that the use of a DCF valuation method is "wholly inappropriate" in this case.255 A DCF valuation demands a degree of certainty as to future cash flows and profits,256 which did not exist here. Devas was not a going concern with a proven record of profitability, but a highly "speculative start-up".257

For India, the authorities are "virtually unanimous" in their conclusion that DCF is inappropriate in circumstances such as the present ones.258 Notably, the World Bank Guidelines on the Treatment of Foreign Direct Investment, the ILC Articles Commentary, as well as a number of authorities and investment treaty awards, have rejected the use of the DCF method to value assets that lacked an established record of profits, on the ground that the contrary approach would result in speculative valuations.259 India further underscores that the ICC tribunal also discarded the DCF method.260


It is the Respondent’s submission that the decisions relied upon by DT in support of its argument that the DCF method was applied in other disputes involving the telecommunications industry, even when the company was not a going concern, are all inapposite based on the particular facts of those cases.261 Those decisions reinforce the point that there is "no precedent of a tribunal using DCF under these circumstances, or anything remotely resembling them, absent agreement of the parties".262

In the present circumstances, using a DCF calculation would be inappropriate, so the Respondent asserts, because the (i) infrastructure needed for the proposed Devas business had not been built; (ii) Devas had no customers, and was yet to generate any revenue; (iii) the competitive, technological and commercial risks were high; (iv) the projected cash flows were "highly speculative and extremely sensitive to slight variations in assumptions"; (v) "the business would not turn cash positive until its eighth year" of operation; (vi) Devas was yet to obtain the most important licenses; and (vii) absent a change in India’s regulatory policy, the license fees would have made Devas unviable.263
The Respondent further stresses that:

• In the absence of the critical WPC License, the Claimant is wrong to suggest that "Devas’s primary asset, being its right to ‘the lease of valuable satellite spectrum’ under the Agreement, was an income-producing asset";264

• DT’s reliance on its DCF computations in 2008 and 2009 is misconceived, as those valuations played no apparent role in setting the price for the acquisition of the Devas shares,265 nor were they updated to reflect fundamental changes in the market by the time of the Valuation Date;266

• DT admitted in its own 2008 Annual Report that it "did not measure the investments by discounting the expected cash flows because the cash flows could not be reliably determined".267 Even if, as the Claimant asserts, there is a difference between the valuation method used for corporate as opposed to accounting purposes, that does not explain why the cash flows could not be reliably determined, or how the language used "does not in fact reflect an opinion on the Devas cash flows".268

(ii) 2010 BWA Spectrum Auction as a benchmark for Devas’s value

For the Respondent, the 2010 BWA Spectrum Auction is irrelevant to the FMV of Devas. The auction price merely indicates the fee to be paid to the Government for the use of India’s scarce spectrum resource. That fee would need to be paid on top of the purchase price for Devas.269
In any event, the fact that another company was prepared to pay USD 2.74 billion for 20 MHz of spectrum to operate a terrestrial BWA business does not show that a third party buyer, would be willing to purchase Devas for that same amount based on the assumption that Devas would be granted the use of 30 MHz of satellite spectrum for a terrestrial BWA business at no cost.270

(iii) Value-reducing adjustments

According to the Respondent, even assuming that Devas would have received all the necessary licenses at a reasonable cost and a DCF valuation would be suitable in the circumstances, the value of the Devas business would still be below zero based on reasonable assumptions.271
First, the Respondent highlights the fact that the FTI valuation does not include roll-out obligation costs and refutes the Claimant's position that Devas would not be required to incur such costs when these applied to every operator providing BWA services.272
Second, the FTI valuation does not account for the increase of the download minimum broadband speeds recommended by the TRAI and therefore for the broadband speeds applicable after January 2015. This failure artificially augments Devas's value by USD 1.3 billion.273
Third, India submits that technological change in the telecommunications sector would require Devas to switch to LTE technology. This would entail further costs for which FTI did not account.274

Fourth, the Respondent asserts that the 19% discount rate used by the Claimant is speculative and does not accord with the discount rate applied to a start-up. According to the literature, the average discount rate for a start-up such as Devas is in the order of 30-70% and Dr. Flores has set the correct rate here at 31%.275 India further contends that the discount rate of 20% which DT used in its internal DCF computations did not consider licensing risk, as was confirmed at the Hearing by Mr. Axmann, the Vice President of DT’s Mergers & Acquisition team and then project manager in charge of evaluating the Devas investment opportunity.276

c. Analysis

The Tribunal first addresses whether the use of the DCF method is appropriate under the circumstances of this case (infra at V.B.1.c(i)). Only if it were to give an affirmative answer to this question would the Tribunal have to assess whether any adjustments are warranted in respect of the DCF valuation presented by the Claimant’s expert (infra at V.B.1.c(ii)).

(i) Is the use of DCF appropriate in this case?

The DCF method is an accepted valuation method in both financial theory and in practice, including by arbitral tribunals. It typically involves a two-step process, as outlined by the tribunal in Amoco International Finance v. Iran:

"The first step in valuing an asset pursuant to the DCF method must be to project from the valuation date onward the most likely revenues and expenses of the ongoing concern, year by year. The revenues less the expenses will give the future cash flow. The second step will be to discount the projected net cash flow to its ‘present value’ as of the valuation date."277

The Tribunal considers that a DCF valuation may be suited to assess the FMV of a going concern with a proven record of profitability, as confirmed by the World Bank Guidelines on the Treatment of Foreign Direct Investment.278 A "going concern" is defined by these Guidelines as "an enterprise consisting of income-producing assets which has been in operation for a sufficient period of time to generate the data required for the calculation of future income and which could have been expected with reasonable certainty, if the taking had not occurred, to continue producing legitimate income over the course of its economic life in the general circumstances following the taking by the State".279
By contrast, as confirmed by a consistent line of cases, DCF is generally inappropriate if the company is not a going concern and lacks an established record of profitability. The tribunal in Metalclad v. Mexico, for instance, distinguished the two situations in the following way:

"Normally, the fair market value of a going concern which has a history of profitable operation may be based on an estimate of future profits subject to a discounted cash flow analysis.

However, where the enterprise has not operated for sufficiently long time to establish a performance record or where it has failed to make a profit, future profits cannot be used to determine going concern or fair market value. [...]

The Tribunal agrees with Mexico that a discounted cash flow analysis is inappropriate in the present case because the landfill was never operative and any award based on future profits would be wholly speculative."280


Numerous arbitral tribunals, including those in Phelps Dodge v. Iran,281Southern Pacific Properties v. Egypt,282Wena v. Egypt,283 and Tecmed v. Mexico,284 among others,285 have adopted a similar reasoning. The arbitral tribunal in Siag v. Egypt, for example, referred to "the wisdom in the established reluctance of tribunals [...] to utilise DCF analyses for ‘young’ businesses lacking a long track record of established trading", which reluctance, it said, "ought to be even more pronounced in cases [...] where the business is still in its relatively early development phase and has no trading history at all".286 In some of these cases, even where the production or business activity had already started, tribunals nonetheless declined to award damages based on forecasts of future cash flows on the ground that the track record was deemed insufficiently reliable.287 The Tribunal agrees with this well-established line of cases and considers that this jurisprudential trend is not, contrary to what the Claimant appears to suggest, outdated, but includes several recent examples, such as Caratube v. Kazakhstan288 or South American Silver v. Bolivia.289

In this Tribunal’s view, there are good reasons for not applying DCF to valuation of assets or companies that have no track record of profitability. The absence of such a record makes the estimates regarding future revenues more prone to speculations and dependent on uncertain assumptions.290 The caution that tribunals display towards DCF in those circumstances "reflects a justified reluctance [...] to get involved in what are essentially competing prophecies of often equal plausibility".291

With those principles in mind, the Tribunal considers whether DCF would be appropriate in light of the reality of the Devas business. It is common ground that Devas was not a going concern. Its proposed business had not started, it lacked any customers, its cost levels were untested, and it had not yet generated any revenues. It thus had no track record of profitability whatsoever. In the Tribunal’s view, these facts would suffice in and of themselves to discard DCF as an appropriate valuation methodology. This conclusion is reinforced by the fact that Devas lacked the WPC License,292 the issuance of which was uncertain on the Valuation Date (see supra section V.A.3.b), as was the level of the related fee.

The Tribunal considers that, given these facts, future expected profits could not be established with the required degree of certainty, as projections would be subject to many possibilities and hypotheses and, therefore, turn out to be speculative.
The Tribunal observes that the difficulty to determine Devas’s future cash flows was acknowledged in DT’s financial statements of 2008, with the following comment:

"At the balance sheet date, T-Mobile Venture Fund GmbH & Co. KG and Deutsche Telekom Asia Pte Ltd were recognized at cost. No market prices were available for the investments. Neither was it possible to derive the respective fair value in the period in question using comparable transactions.

The Company did not measure the investments by discounting the expected cash flows because the cash flows could not be reliably determined."293

For the Tribunal, it is difficult to understand how "cash flows could not be reliably determined" for accounting purposes but could instead be reliably determined for valuation purposes in this arbitration.

Finally, the Tribunal finds confirmation for its conclusion that a DCF valuation is inapposite in the decision of the ICC Tribunal in Devas v. Antrix, which viewed the DCF methodology presented by Devas as "an unrealistic and unreliable vehicle for determining its damages":

"[T]he demand for Devas’ services is unclear; the prices that it would be able to profitably charge is unclear; market(s) for multimedia broadcasting services can be highly innovative and cause (even very profitable) products and services to quickly become obsolete; and there is persuasive evidence [...] that Devas faced significant competition for the services that it proposed to provide. In other words, there is nothing that can give the tribunal sufficient confidence about the cash flows that Devas would have [...]. Further, an aspect of the DCF methodology that the tribunal finds particularly troubling in this case is that small variations in the assumptions used in the DCF methodology can dramatically and unrealistically change Devas’ value [...] The tribunal understands that the reason for the extreme sensitivity of the DCF methodology in this case is the length of the period that it would take for Devas to become cash flow positive (nine years). In this case, in the tribunal’s view, it makes Devas’ DCF methodology an unrealistic and unreliable vehicle for determining its damages."294

In addition to the lack of "sufficient confidence about the cash flows that Devas would have", the Tribunal is unconvinced by the other elements adduced by DT in support of its proposed DCF valuation. This is particularly the case for the so-called "real world" DCF valuations that DT carried out when it decided to invest in Devas. These valuations ultimately played no apparent role when DT finally acquired its indirect shareholding in Devas. For example, DT’s first valuation performed by Mr. Scheuermann, based on the cash flows in the Series-C Model (with DT’s adjustment to the terminal growth rate), yielded a value of USD 1.78 billion for 100% of Devas using a 20% discount rate.295 By contrast, the price DT Asia actually paid for the shares was based on a value of USD 375 million, i.e. approximately 80% lower than the alleged DCF value.296 In other words, DT did not base the purchase price of the Devas’s shares on its DCF analysis. These "real world" DCF analyses are hence of limited value to the Tribunal when considering the appropriateness of the DCF method.

In conclusion, the lack of operating history, customers and profitability and the relatively early stage of the project lead the Tribunal to the conclusion that the DCF method cannot form the basis for the quantification of the Claimant’s damages. This conclusion takes into account but does not view as determinative the uncertainty regarding the WPC license which would have been necessary to roll out the proposed services and, therefore, generate profits. Accordingly, the Tribunal discards the DCF valuation put forward by FTI which, in light of the objective factors just mentioned, would be subject to excessive uncertainties, contingencies and hypotheses, and would not provide "a basis upon which the Tribunal [could], with reasonable confidence, estimate the extent of the loss".297

(ii) The value-reducing adjustments

As the Tribunal will not resort to a DCF valuation, it can dispense with reviewing possible adjustments to such valuation.

2. The Investment Plus Method

a. The Claimant’s position

As an alternative to the DCF method, the Claimant has put forward the so-called "Investment Plus" methodology, which is similar to the method that the ICC Tribunal has used to assess damages.298 In the Claimant’s view, several other tribunals have adopted similar approaches where they were able to rely on past transactions in the same asset.299
DT’s Investment Plus method is built on the following three steps:

a. It takes as a starting point DT’s March 2008 cash payment of USD 75 million for its investment in Devas, which is said to imply a valuation of USD 375 million for Devas at that time;

b. It adjusts that amount to reflect Devas’s FMV by factoring in DT’s in-kind contributions and bargaining power; and

c. It adds an uplift fee to reflect the progress made in developing the business between March 2008 and the Valuation Date.300

(i) The March 2008 value of Devas should be adjusted to account for DT’s bargaining power and in-kind contributions

It is DT’s contention that while it valued Devas in early 2008 at USD 1.78 billion, it was able to negotiate a substantially lower price of USD 75 million for a 20% interest, which implies a value for Devas of USD 375 million.
According to DT, in 2008, the price which DT eventually paid was reduced as compared to its DCF valuation due to the following four factors:301

a. The risks associated with investing in Devas, including the WPC Licensing uncertainty;302

b. DT’s negotiating power and leverage due to (i) the significantly lower price paid by the two venture capital funds, which acquired shares in Devas in March 2006 and 2007; (ii) the fact that Devas had relatively limited funding needs prior to the satellite launch; (iii) DT’s assumption that it was the only interested investor offering Devas strategic benefits; (iv) DT’s knowledge that, should Devas be required to search for an alternative investor, it would have incurred substantial delays;303 and (v) the fact that Devas was under a compulsion to sell due to its need to secure a strategic investor by early 2008 in order to ensure the roll out of the business;304

c. DT’s in-kind contribution, including the fact that Devas was a strategic investor bringing "technical expertise and considerable procurement leverage".305 The Claimant contends that Devas would not have accepted an investment on the same monetary terms from another investor.306 This argument is supported by the fact that from March 2008 Devas did indeed benefit from DT’s operational and technical expertise as well as "sourcing and procurement support [...] [of] network equipment at a considerably lower cost";307 and

d. DT’s concerns about its rights as a minority shareholder, particularly considering the potential for diverging interests between itself as a strategic investor and Columbia Capital and Telecom Ventures as financial investors. For that reason, DT’s usual practice was to take a controlling stake in its subsidiaries.308

FTI has ascribed the following numerical weights to each of the four factors:309

Table 6-2: Components of the 2008 Adjustment

2008 Adjustment components% share of 2008AdjustmentValue (USD m)
Additional Devas-specific risk 50.0% 739.0
DT Negotiating power 25 0% 369.5
In-kind investments 15.0% 221.7
Minority discount 10.0% 147.8

To arrive at the FMV of Devas in 2008, FTI added the amounts ascribed to DT’s negotiating power (i.e. USD 369.5 million) and in-kind contribution (i.e. USD 221.7 million) to the implied FMV of USD 375 million (i.e. the figure based on DT’s USD 75 million investment for its 20% economic stake in Devas), arriving at a figure of USD 996 million.310
In response to India's arguments that the USD 75 million paid by DT in 2008 did not imply a value of USD 375 million, DT makes the following submissions:

a. The fact that DT held Class C priority shares does not mean that its investment in Devas in 2008 cannot be used as a starting point for Devas’s value. While Devas had five classes of shares, DT assumed that there was no economic value in Class E shares and that Class D shares had the same economic value as Class A, B and C shares. On that basis, it considered its 17% of issued share capital was equivalent to a 20% economic stake in Devas;311

b. DT did not seek to protect itself from licensing risks by way of representations and warranties.312 India’s arguments in this regard misunderstand and magnify certain comments found in documents. If DT sought such representation and warranties, they would appear in the 2008 and 2009 Share Subscription Agreements or in the papers presented to the DT’s Management or Supervisory Boards in 2008 and 2009;313

c. India’s reliance on the fact that one of the claimants in the Mauritius Shareholders Arbitration paid only USD 146 per share to acquire its ordinary shares in September 2009 is similarly unfounded. That purchase was made through Devas Employees Mauritius Private Limited ("DEMPL"), a "vehicle by which Devas management and other employees could acquire shares in Devas as part of their compensation and rewards package pursuant to an Equity Incentive Plan".314 The share price for that transaction is not relevant to DT’s investment in Devas.315

DT further rebuts Dr. Flores’ criticism that the weightings which FTI assigned to DT’s negotiating power and in-kind contribution were arbitrary. The Claimant explains that the percentages used by FTI were taken from Mr. Axmann’s evidence which provides the relative weight of these variables, as well as from

FTI’s assessment on reasonable weighting.316 The values adopted by FTI for the bargaining power and in-kind contribution are conservative and supported by the following facts:

a. Devas’s initial proposal for the sale of the shares implied a pro rata value of USD 800 million, whereas the price paid by DT implies a pro rata value of USD 375 million. This demonstrates that, using its "take-it-or-leave-it" approach (among other things), DT was able to achieve a reduction of USD 425 million, which is in fact more than the USD 370 million FTI has attributed to bargaining power;317 and

b. Based on the DCF model used by DT for the initial investment (i.e. the Series C 2008 Model) "DT’s support and procurement power would only have needed to reduce Devas’s expected operating and capital costs by circa 2.9% to increase Devas’s value by USD 221 million",318 a fact confirmed by Dr. Larsen.319 In this regard, India’s reliance on the evidence of Mr. Scheuermann and the allegation that the "in-kind" contribution was not recorded in any of the contemporaneous Board papers or documents is both incorrect and misplaced.320 This is because:

■ Mr. Scheuermann’s role was to conduct DCF valuations, whereas Dr. Larsen was "responsible for the in-kind element of the investment" and Mr. Axmann "carried out that price negotiation".321 Moreover, Mr. Scheuermann’s evidence concerning DT’s practice of accounting for in-kind contributions by a "synergy calculation spreadsheet", is confined to calculations "between two established telecom companies".322

■ The Board was informed that DT was to provide "dedicated resources in the area of Procurement, Terrestrial Network Design & Planning Deployment",323 both in the form of "manpower" (which Dr. Larsen estimated at USD 6-7 million) and in terms of procurement power and CapEx cost savings.324

■ Finally, "it would not have made sense to update the Devas business plan to provide for the full extent of the procurement benefits that had not yet been negotiated, much less obtained".325

(ii) Adjusting the fair market value to the Valuation Date

According to DT, a number of developments increased the FMV of DT’s investment by the Valuation Date, including: (i) the successful completion of phases I and II of the experimental trials; (ii) progress regarding the satellite developments and the launch; (iii) "the further investment of DT, Columbia Capital and Telecom Ventures in September 2009"; (iv) "Devas’s procurement of ISP and IPTV licenses and securing of a network of supplier and vendors".326
For those reasons, FTI has increased its calculation of FMV by 50% "to reflect developments and the lowering of risk up to the Valuation Date".327 Because a 50% uplift on USD 966 million equals USD 483 million, FTI concludes that the FMV of Devas at the Valuation Date was of USD 1.449 billion.328
FTI has also proffered two alternatives:

a. Increasing the value of Devas by 25%, rather than 50%, to account for the fact that the ICC Tribunal may have factored the "in-kind" contribution into its calculation when using 50%;329 or

b. Increasing the value of Devas by adding the uplift applied by the ICC Tribunal in absolute terms only (i.e. 50% of USD 375 million = USD 187.5million) to account for the fact that "it is impossible to determine whether the [ICC] Tribunal had a relative or absolute increase in mind when it effected a 50% uplift".330

Applying these alternatives, FTI calculates the FMV accounting for the increase in value for these two alternative scenarios between USD 1.154 billion and USD 1.449 billion. These figures yield an FMV for DT’s stake in Devas between USD 207 million and USD 284 million.331
In response to India’s allegation that the value of Devas decreased rather than increased by the Valuation Date, DT advances the following arguments:

a. The fact that DT paid the same price for its shares in 2008 and 2009 is not indicative of a decrease in Devas’s value. The reason why the price was identical is "primarily as a result of the global financial crisis".332 In fact, contrary to India’s view, DT’s willingness to pay the same price despite the financial crisis demonstrates that Devas had increased in value;333

b. There is no evidence suggesting an increase in risk concerning the WPC License.334 This is buttressed by the fact that the ICC Tribunal concluded that the lack of WPC License had no adverse impact on the value of Devas;335

c. The reliance which India places on the 2010 BWA Spectrum Auction as evidence of increased WPC License risk is misplaced. The evidence demonstrates that "the high prices likely to be paid in the BWA auction were value-enhancing, since they were viewed as a proxy for the value of the spectrum rights owned by Devas, not the cost of the WPC License";336

d. Dr. Flores is wrong to suggest that satellite risks increased prior to the Valuation Date. Progress was made on constructing the satellites and Devas considered alternate launch vehicles. The slow roll-out of the first launch should be disregarded on the basis that by July 2010 India had decided to annul the Devas Agreement;337 and

e. Prior to the Valuation Date, there were favorable technological and economic developments that reduced risks inherent in the project, such as development in TD-LTE for the roll out of Devas’s BWA business, and improvements in macroeconomic factors.338

b. The Respondent’s position

The Respondent submits that the Investment Plus method is not based on economics but is constructed by the Claimant in order to achieve a pre-determined result that is otherwise unachievable applying orthodox economic theory.339 India further asserts that such method is unsustainable as it is based on three manifestly incorrect premises. A correct assessment of the evidence leads to the conclusion that:

a. DT invested USD 75 million in preferential shares and on the basis of representations and warranties of Devas. It is therefore wrong to conclude that Devas’s value was at least USD 375 million in 2008;

b. The USD 600 million uplift for in-kind contributions and bargaining power is unjustified;

c. The further upward adjustment of USD 483 million on the ground that the value of the Devas business increased from 2008 to 2011 is also untenable.340

(i) DT acquired priority shares in Devas

It is the Respondent’s contention that DT’s starting point for the application of the Investment Plus method (i.e. the implied value of Devas is USD 375 million based on DT’s 2008 acquisition of its 20% share in Devas for USD 75 million) is untenable. The reason is that it ignores that DT acquired preferential shares that entitled it to receive the purchase price plus dividends in case of Devas's liquidation or sale. These rights were reflected in the Term Sheet, which served as the basis for the 2008 acquisition, and the 2008 Subscription Agreement, and were confirmed by Mr. Parson at the hearing in the Mauritius Shareholders Arbitration.341 As Dr. Flores explains by reference to academic writing,342 it is inappropriate to value a business by reference to an ownership percentage if the company has different classes of shares some of which have preferential terms.343
Moreover, according to India, Devas gave express assurances to DT in the form of representations and warranties that the "use of spectrum, including its terrestrial use, is the sole responsibility of ISRO".344 This is expressly made clear in responses given by DT to questions from the German Government, as well as the Term Sheet.345
As a result, according to the Respondent, the value of Devas is overstated. A calculation on the basis of the value of ordinary shares would result in a value of USD 27 million, calculated by reference to the price of USD 146 per unit paid by one of the claimants in the Mauritius Shareholders Arbitration in September 2009.346

(ii) The uplift for DT’s bargaining power and in-kind contributions is frivolous

It is India’s submission that, contrary to DT’s allegations, Devas was not under a "compulsion to sell" in 2008. As shown in Devas’s and DT’s internal documents, there were other potential strategic partners interested in Devas, in the event that DT had not invested in it. The deal offered by DT was the best deal available to Devas, not the only one.347
In relation to DT’s in-kind contributions, India argues that there is no evidence to support the argument that the deal factored an in-kind contribution.348 The documents show that the share acquisition was a "100% cash deal".349 Mr. Scheuermann’s testimony confirmed that in-kind contributions played no role in DT’s acquisition of Devas shares.350 This point is further buttressed by the fact that, when Mr. Larsen worked over the DCF model with Mr. Scheuermann for internal purposes, costs were increased rather than decreased to account for DT’s expertise.351
According to the Respondent, as confirmed by the documents on record, the price that DT paid in 2008 and 2009 was attributable to the licensing risk inherent in the Devas project, which was at the forefront of DT’s mind.352
For the Respondent, the weight of the 2008 adjustments is based solely on the instructions of counsel, rather than on any economic analysis. Neither are the relative weights of the adjustments derived from the witness statement of Mr. Axmann.353

(iii) The upward adjustment based on a supposed increase in Devas’s value after 2008 is baseless

It is India’s submission that there is no basis for the upward adjustment of USD 483 million, which assumes that the value of Devas increased by 50% between 2008 to 2011. To the contrary, a hypothetical buyer looking to purchase the investment on the Valuation Date would have considered that the value of the business had decreased given the events in that period:

a. Following the BWA Auctions, as part of its due diligence, a hypothetical buyer would have sought clarification from the regulator and would have been informed that there was no existing licensing regime permitting Devas to provide the services envisaged. Similarly, the hypothetical buyer would have been advised that "even if the required licenses had been issued, Devas would have had to pay fees commensurate with the 2010 auction values, as reflected in the July 2010 letters written by the highest officers of the DOT and WPC";354

b. A hypothetical willing buyer would have been alerted by delays in launching the GSAT-6 satellite, which is supported by Devas’s concern about increasing delays.355 Contrary to the Claimant’s arguments there is simply no evidence that the launch was deliberately "slow-rolled".356