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Delhi HC reserves judgment on $1.18 bn Tata-DoCoMo arbitration award

Central Bank sticks to its guns against the award's enforcement in India

#2016@shock&awe: Headline Grabbers of 2016
Sayan Ghosal New Delhi
Last Updated : Mar 16 2017 | 1:55 AM IST
The Delhi High Court on Wednesday reserved its judgment on Japanese telecom major NTT DoCoMo’s plea to enforce the $1.18 billion arbitration award in line with its settlement agreement with Tata Sons.

Justice Muralidhar’s decision came after lengthy arguments by the Reserve Bank of India (RBI), which has opposed the enforcement of the award on grounds of alleged violations of Indian law and disregard for regulatory considerations.

In Wednesday’s hearing, the central bank again highlighted the issue of violations of public policy in the realisation of the award, even if Tata decided not to oppose it. The agreement through which DoCoMo received a favourable ruling in the London Court of International Arbitration (LCIA) was void, the RBI said.

Questioning the authority of the RBI to intervene, the court, instead, asked the central bank that under what provision of law it was objecting to the realisation of the award, when neither of the two parties was objecting to it. “Even parties cannot endow jurisdiction on a court that it does not have. The RBI is not a party to these proceedings, how can it be allowed to intervene?” remarked Justice Muralidhar. On March 8, the bench had directed the RBI to inform the court of its stand on its intervention application. On March 14, instead of finalising its position, the RBI had attempted to seek the court’s permission to take a fresh look at the issue. Rejecting the request, the bench had given the central bank only one day to take a call on its stance and inform the court on all applicable laws in favour of its position, in case the regulator still chose to object to the settlement. Reacting to the RBI submissions on Wednesday, senior advocate Kapil Sibal, appearing on behalf of DoCoMo, reiterated his earlier arguments. “If there is no objection by the parties, the award cannot be refused. That is the fundamental policy of India. It is part of the (Arbitration) Act,” said Sibal.

Tata’s counsel, senior advocate Darius Khambata, also spoke in favour of the enforcement of the award. “This is a strong signal for FDI to come into India. The RBI should support it,” said Khambata. The court said there was no law that the RBI would have the final word on what the law of India should be, and that it was up to the parties to choose what they thought fit in private enforcement proceedings.   

The $1.18-billion arbitration award in favour of DoCoMo relates to a dispute over Tata’s inability to buy back the Japanese company’s 26.5 per cent share in their failed joint venture, Tata Teleservices, at a pre-determined price, as had been initially agreed upon by the two sides.  As Tata was unable to buy the shares for want of the necessary RBI permission, DoCoMo took the matter to the LCIA, which eventually ruled in favour of the company. After initially opposing the award, Tata submitted a joint settlement agreement before the Delhi High Court to realise the award on February 28.