India on Tuesday lost a major arbitration case in an international court involving the Indian Space Research Organisation with regard to satellite and spectrum allocations. It will now have to pay $1 billion (approximately Rs 6,734 crore) to Devas Multimedia, a telecom company in Bangalore.

Devas filed cases at the International Court of Arbitration of the International Chamber of Commerce in Paris and at the Permanent Court of Arbitration at The Hague after the Indian government cancelled a deal between Antrix, the commercial arm of Isro, and Devas in 2011.

In 2005, Antrix signed an agreement granting a 12-year lease to with Devas Multimedia to use 90% transponder space on two satellites, G-SAT6 and G-SAT6A. Devas would be able to use 70 MHz of the 150 MHz os S-band spectrum available with Isro to launch satellite-based mobile services for a price of $300 million (Rs 2,020 crore) over the 12-year period. The agreement would give Devas first-mover advantage in satellite telephony and an edge over terrestrial mobile service providers that relied on communication towers.

However, the deal was cancelled in July 2010 after an Isro internal review of the agreement. In February 2011, The Hindu reported that a draft audit report had flagged financial irregularities and conflicts of interest.

The UPA government set up a committees to look into into the deal. As a result of the findings of these committees, G Madhavan Nair, who was headed the space agency when the Devas deal was signed, and three others were barred from government jobs.

After the termination of the agreement, Devas approached the international arbitration fora seeking damages. The International Court of Arbitration awarded a $672-million (Rs 4,400 crore) award to the company in September last year, which the government of India said it would appeal. A CBI investigation into the case is also underway.