Tata Sons, DoCoMo to settle $1.17-bn dispute out of court

Tata Sons Ltd has agreed to pay Japan's NTT DoCoMo about $1.17 billion as compensation to settle a long-standing dispute over the termination of the latter's investment in a joint venture with Tata Teleservices in India (See: NTT DoCoMo to exit Tata Tele joint venture).

The parties have reportedly opted for an out-of-court settlement, following which, Tata Sons has withdrawn its application against DoCoMo in the Delhi High Court.

The deal could be announced early today, Japanese newspaper Nikkei reported, without citing sources.

Neither Tata Sons nor DoCoMo commented on the matter.

The matter, however, is not resolved as the RBI is yet to approve the deal.

Under the terms of the joint venture deal, in the event of an exit, DoCoMo was guaranteed the higher of either half its original investment, or its fair value, which is disputable.

When DoCoMo decided to quit the JV in 2014, Tata Tele was unable to find a buyer for the Japanese firm's stake and offered to buy the stake itself for half of DoCoMo's $2.2 billion investment.

However, the deal got stuck as the Reserve Bank of India blocked Tata's offer, saying the rules prevented foreign investors from selling stakes in Indian firms at a pre-determined price.

Tata Teleservices and DoCoMo have been locked in a tussle ever since over how to settle the issue.

Docomo initiated arbitration in a London court and won it. Tata was asked to pay a penalty of $1.17 billion, which it has deposited with the Delhi High Court (Docomo sues Tatas in US to recover $1.17-bn UK award).

Both parties are expected to inform the Delhi High Court today that they have agreed upon a framework to settle the dispute amicably and will file a fresh application before the Reserve Bank of India (RBI) soon.

DoCoMo will withdraw all cases against its former local partner in US, London and Delhi jurisdictions. Tata Sons will pay compensation, a substantial part of it being routed overseas, within a legal framework permitted by the RBI.

This payment may be routed through the Indian group's funds or assets parked abroad.

The dispute resolution was spearheaded by Ratan Tata, who briefly returned as Tata Sons interim chairman following the ouster of Cyrus Mistry in October last year.

Former TCS chief N Chandrasekharan's assumption of charge as group chairman has facilitated a smooth resolution of the dispute.