 "Tata Sons moves Delhi HC against $1.17-bn award")
In the latest twist to the Tata–DoCoMo joint venture (JV) tale, Tata Sons on Friday filed an affidavit in the Delhi High Court, objecting to the enforcement of the June 24, $1.17 billion London Court of International Arbitration (LCIA) award in favour of NTT DoCoMo.
Tata’s latest move comes as a severe contradiction to its earlier stance, where the company had mentioned its commitment to the arbitral adjudication before the Delhi High Court and had even deposited the entire sum of the award (Rs 8,450 crore) with the registrar of the court, subject to final determination of the proceedings.
“The fact that Tata has raised objections to the enforcement of the LCIA award, directly contradicts its statements of intent to meet its payment obligations. The award by the LCIA is internationally recognised, including India, and there is no reason to delay,” said an official statement issued by NTT DoCoMo.
Friday’s affidavit though, lays down Tata’s modified stance. Tata now claims that NTT DoCoMo was fully aware of the regulatory implications of the agreement at the time of signing the JV, including all Reserve Bank of India (RBI) share-transfer guidelines.
The affidavit further highlights the enforcement of the LCIA award would be in contravention of Indian law and public policy.
According to sources close to Tata, the company had been willing to cooperate with DoCoMo, in order to make the arbitral award workable, but the latter has been far from forthcoming in its approach. DoCoMo’s aggressive stance, in relation to the award, has also been extremely concerning to Tata, said sources.
The RBI had, on earlier two occasions, declined the applications made by Tata to arrive at a workable solution - one prior to the issuance of the LCIA award and one thereafter.
According to a submission made by Tata counsel Darius Khambata on July 26 before Justice Manmohan Singh of the Delhi High Court, the RBI had even issued a letter to the Indian multinational, reiterating its earlier stand and had instructed Tata not to make any payouts in relation to the June 24 LCIA adjudication.
The arbitral award, now attempted to be enforced by DoCoMo, is the fallout of a two-year scuffle between the two corporate giants, in regard to their unsuccessful JV - Tata Teleservices - in which NTT DoCoMo has a 26 per cent holding.
According to the initial agreement, NTT DoCoMo was given the option of exiting the collaboration after a three-year time period, at a predetermined share price. DoCoMo’s stake was to be bought by Tata Sons or an external buyer, which the Indian entity was to organise.
In 2014, after the venture failed to generate the desired returns, DoCoMo decided to exercise its exit option, at a time when the price of Tata Teleservices shares had plunged far below the earlier decided exit amount.
Incapable of finding an external buyer, Tata made an application to the RBI to acquire the DoCoMo stake themselves, as previously agreed upon. The regulator refused the application at the time, citing such a transfer could not be made at predetermined share prices on a subsequent date under prevalent Indian regulations.
The deadlock culminated in the international arbitration proceedings that followed, resulting in the $1.17 billion award now sought to be enforced against Tata.
Tata’s latest move comes as a severe contradiction to its earlier stance, where the company had mentioned its commitment to the arbitral adjudication before the Delhi High Court and had even deposited the entire sum of the award (Rs 8,450 crore) with the registrar of the court, subject to final determination of the proceedings.
“The fact that Tata has raised objections to the enforcement of the LCIA award, directly contradicts its statements of intent to meet its payment obligations. The award by the LCIA is internationally recognised, including India, and there is no reason to delay,” said an official statement issued by NTT DoCoMo.
Friday’s affidavit though, lays down Tata’s modified stance. Tata now claims that NTT DoCoMo was fully aware of the regulatory implications of the agreement at the time of signing the JV, including all Reserve Bank of India (RBI) share-transfer guidelines.
The affidavit further highlights the enforcement of the LCIA award would be in contravention of Indian law and public policy.
According to sources close to Tata, the company had been willing to cooperate with DoCoMo, in order to make the arbitral award workable, but the latter has been far from forthcoming in its approach. DoCoMo’s aggressive stance, in relation to the award, has also been extremely concerning to Tata, said sources.
The RBI had, on earlier two occasions, declined the applications made by Tata to arrive at a workable solution - one prior to the issuance of the LCIA award and one thereafter.
According to a submission made by Tata counsel Darius Khambata on July 26 before Justice Manmohan Singh of the Delhi High Court, the RBI had even issued a letter to the Indian multinational, reiterating its earlier stand and had instructed Tata not to make any payouts in relation to the June 24 LCIA adjudication.
| TIMELINE OF EVENTS IN THE NTT DOCOMO-TATA SONS DISPUTE |
| 2008 Nov : NTT DoCoMo purchases a 26 per cent stake in the Tata Teleservices for $2.22 billion in terms of the joint venture agreement 2010 Aug: DoCoMo decides not to invest a further $1 billion in the Teleservices venture 2014s Jul: DoCoMo exercises exit option against Tata Sons on previously agreed terms Nov: Unable to find an external buyer, Tata Sons makes an application with RBI to purchase DoCoMo stake at Rs 58 per share amounting to Rs 27,000 crore Dec: Tata Sons deadline to find external buyer/purchase shares expires 2015 Jan: DoCoMo approaches London Court of International Arbitration against breach of the joint venture agreement Mar: RBI refuses Tata Sons November 2014 application to purchase DoCoMo’s shares at the pre-determined rates Jul: DoCoMo refuses to accept Tata Sons offer to buy stake at fair market value of Rs 23 per share amounting to Rs 11,000 crore (less than half of the previously agreed price) 2016 Jun: London Court of International Arbitration awards $1.17 in favour of DoCoMo Jul: DoCoMo approaches Delhi High Court to enforce international arbitration award — RBI reiterates former stance against stake-sale via letter issued to Tata Sons — Tata Sons agrees to deposit full sum of the award with the Delhi High Court pending final determination Jul: DoCoMo obtains London Commercial Court ex-parte order allowing enforcement of award against Tata Son’s UK assets — The Court allows Tata Sons 23 days to respond Sep: Tata Sons files affidavit opposing the enforcement of the international award in Delhi High Court Oct: The matter is scheduled for further hearing in Delhi High Court on October 5 |
The arbitral award, now attempted to be enforced by DoCoMo, is the fallout of a two-year scuffle between the two corporate giants, in regard to their unsuccessful JV - Tata Teleservices - in which NTT DoCoMo has a 26 per cent holding.
According to the initial agreement, NTT DoCoMo was given the option of exiting the collaboration after a three-year time period, at a predetermined share price. DoCoMo’s stake was to be bought by Tata Sons or an external buyer, which the Indian entity was to organise.
In 2014, after the venture failed to generate the desired returns, DoCoMo decided to exercise its exit option, at a time when the price of Tata Teleservices shares had plunged far below the earlier decided exit amount.
Incapable of finding an external buyer, Tata made an application to the RBI to acquire the DoCoMo stake themselves, as previously agreed upon. The regulator refused the application at the time, citing such a transfer could not be made at predetermined share prices on a subsequent date under prevalent Indian regulations.
The deadlock culminated in the international arbitration proceedings that followed, resulting in the $1.17 billion award now sought to be enforced against Tata.