DoCoMo dispute: Tata Sons to deposit $1.2-bn arbitration award with Delhi HC
29 July 2016
Tata Sons Ltd on Thursday said it will be depositing $1.2 billion with the Delhi High Court on Friday, an amount equivalent to the money it was ordered to pay Japan's NTT DoCoMo Inc by an international arbitration court last month.
DoCoMo had earlier moved against Tata Sons in the Delhi High Court, which rejected the Japanese company's demand stating that the condition that partners pay a predetermined price on severance does not hold under Indian laws.
Tata Sons also denied the possibility of its UK assets being seized as a result of the ruling by a UK court.
DoCoMo has obtained an ex parte order from the commercial court in London to enforce the award in Britain. Because the order was obtained ex parte, Tata's arguments have not yet been heard, Tata Sons said in a statement on Thursday.
"We would like to clarify that the London commercial court has granted Tata Sons a period of 23 days, starting July 27, 2016, to apply to set aside the exparte order. The arbitral award cannot be enforced until the end of that period, or until any application made by Tata Sons has been finally decided upon.
"Further, the British assets of Tata Steel and Jaguar Land Rover are not owned by Tata Sons. These are subsidiaries of Indian public listed companies of which Tata Sons is a promoter with a minority shareholding of not more than 30-35 percent," the statement said.
The statement pointed out that these companies are not party to the arbitration proceedings, and therefore no award has been issued against them. Therefore, it follows that the award cannot be enforced against those companies.
The company further said it has made its position clear in statement to the Delhi High Court on 26 July.
"Tata Sons has from the outset underlined its commitment to honouring its contractual obligations to DoCoMo, and has taken every possible step keeping in mind the interests of all stakeholders and in accordance with the laws of the land," it said.
"The regulatory approval for performance of the arbitral award of the London Court of International Arbitration has been denied by the Reserve Bank. However, in the Delhi High Court, Tata Sons, as a gesture of good faith and without prejudice to its rights, has in line with its earlier offer to DoCoMo, committed to deposit the entire amount of the arbitral award by August 2, 2016, with the Delhi High Court Registrar," the company said.
The statement further noted that the Delhi High Court has given time till 30 August 2016, for both parties to try and resolve the outstanding issues between them.
Fulfilment of the arbitral award requires conformance to Indian regulations and laws, and Tata Sons is committed to be in full compliance with all such requirements, it said.
In 2009, DoCoMo bought a 26.5-per cent stake in Tata Teleservices Ltd (See: NTT DoCoMo to launch open offer for TTML on 19 February) but announced plans in 2014 to exit the venture, which struggled to boost subscribers (See: NTT DoCoMo to exit Tata Tele joint venture). DoCoMo then asked Tata to find a buyer for its stake at a pre-determined price. Tata failed to find a buyer and instead offered to buy the stake itself.
However, the Reserve Bank of India rejected Tata's offer, saying a rule change in the previous year prevented foreign investors from selling stakes in Indian firms at a pre-determined price.
The Indian government wants to block Tata's payment of the arbitration award as it would set a precedent for at least 10 other companies that have sought waivers for similar deals, reports point out.
The Delhi high court has given the companies until 30 August to resolve the issue.