CLB refers Telenor-Unitech dispute for arbitration in Singapore

The Company Law Board (CLB) has allowed Unitech, Telenor's estranged partner in its Indian joint venture Uninor, to settle a dispute over control and transfer of assets of their joint venture through arbitration in Singapore.

The move has come as a shock for Telenor, which was seeking to scrap the joint venture and migrate to a new company after the Supreme Court scrapped all 122 telecom licences issued by the department of telecom in 2008, including its own.

In a statement issued today, the Norwegian telecom major said the CLB order has come as a surprise to the company and that it would challenge the order in a higher court. Telenor said its intention remained to establish a new venture in India.

Telenor is seeking to scrap the joint venture with Unitech on grounds of falsification and concealing of facts relating to the 2G spectrum licence and migrate to a new company after seeking fresh operating licences.

CLB chairman D R Deshmukh held that an arbitrator alone can decide whether the alleged fraud had vitiated the 'share subscription agreement' and 'shareholders agreement' between the joint venture partners.

"Telenor by claiming relief identical to relief claimed in its counter claim before the arbitral tribunal has left no room for any doubt that adjudication of the dispute arising must be left to the forum for resolution of dispute agreed by the parties, ie, foreign arbitration," CLB said in its order. "Parties are referred to arbitration in accordance with the arbitration rules of Singapore International Arbitration Centre as contemplated under article 13 of the Share Subscription Agreement entered into between the parties," it added.