 "Docomo moves Delhi HC to seek London award")
Weeks after the London Court of International Arbitration awarded $1.17 billion in favour of NTT Docomo against Tata Sons, the Japanese telecom giant has moved the high court here to enforce it.
The matter was introduced before Judge Manmohan on Wednesday. The next date of hearing is July 26.
The two-year arbitration proceedings between the companies relates to disputes over Tata Sons’ inability to buy back NTT Docomo’s 26 per cent share in their joint venture, Tata Teleservices, as initially agreed upon.
According to the terms of the agreement, NTT Docomo had been allowed the option of exiting the venture after three years, at a pre-determined share price. The shares were to be bought by Tata Sons or an external buyer, which the Indian company was supposed to arrange.
In 2014, after the collaboration consistently failed in generating the desired returns, NTT Docomo decided to exercise its exit option at a time when the share price of Tata Teleservices had plummeted far below the earlier agreed exit agreements. Unable to find a buyer, Tata Sons made an application to the Reserve Bank of India (RBI) to purchase the shares according to the terms of the venture.
RBI refused the application on the ground that such a transfer could not be made at a pre-determined share price on a later date, according to existent foreign exchange and securities regulations.
The deadlock resulted in the international arbitral proceedings that followed, resulting in the July 24 award.
According to Section 49 of the Arbitration and Conciliation Act, 1996, recognised foreign awards may be enforced in the country as decrees of court. The preceding section of the legislation though, allows for refusal to enforce the award if the determination is yet to attain finality.
In similar situations relating to domestic arbitration, an award may only be enforced after the time-period to file a setting aside application has expired. The specific nature of the finality of the June 24 award will have to be determined by the court after examining the relevant international provisions at play.
According to experts, the enforceability of the award will also depend largely on its fine print. If the award is squarely for a breach of contract, then Indian regulations that disallowed the initial transfer might not come into play. On the other hand, if the adjudication is for compensation of equity value, NTT Docomo might still find itself on an uneven footing according to Indian law and public policy.
Tata Sons said it would honour the contractual obligations to Docomo.
“Tata Sons has from the outset communicated its commitment to honouring its contractual obligations to Docomo, and had taken every possible step keeping in mind the interests of all stakeholders and in accordance with Indian law. Tata Sons has been advised and has sought regulatory approvals for the performance of the arbitral award of the London Court of International Arbitration. Tata Sons have already offered to deposit the entire amount of the award in escrow pending receipt of regulatory approvals,” said a company spokesperson.
“It needs to be pointed out that fulfilment by both the concerned parties of the arbitral award requires conformance to Indian law, and Tata Sons is committed to full compliance with all provisions of Indian law.”
The matter was introduced before Judge Manmohan on Wednesday. The next date of hearing is July 26.
The two-year arbitration proceedings between the companies relates to disputes over Tata Sons’ inability to buy back NTT Docomo’s 26 per cent share in their joint venture, Tata Teleservices, as initially agreed upon.
According to the terms of the agreement, NTT Docomo had been allowed the option of exiting the venture after three years, at a pre-determined share price. The shares were to be bought by Tata Sons or an external buyer, which the Indian company was supposed to arrange.
In 2014, after the collaboration consistently failed in generating the desired returns, NTT Docomo decided to exercise its exit option at a time when the share price of Tata Teleservices had plummeted far below the earlier agreed exit agreements. Unable to find a buyer, Tata Sons made an application to the Reserve Bank of India (RBI) to purchase the shares according to the terms of the venture.
RBI refused the application on the ground that such a transfer could not be made at a pre-determined share price on a later date, according to existent foreign exchange and securities regulations.
The deadlock resulted in the international arbitral proceedings that followed, resulting in the July 24 award.
According to Section 49 of the Arbitration and Conciliation Act, 1996, recognised foreign awards may be enforced in the country as decrees of court. The preceding section of the legislation though, allows for refusal to enforce the award if the determination is yet to attain finality.
In similar situations relating to domestic arbitration, an award may only be enforced after the time-period to file a setting aside application has expired. The specific nature of the finality of the June 24 award will have to be determined by the court after examining the relevant international provisions at play.
According to experts, the enforceability of the award will also depend largely on its fine print. If the award is squarely for a breach of contract, then Indian regulations that disallowed the initial transfer might not come into play. On the other hand, if the adjudication is for compensation of equity value, NTT Docomo might still find itself on an uneven footing according to Indian law and public policy.
Tata Sons said it would honour the contractual obligations to Docomo.
“Tata Sons has from the outset communicated its commitment to honouring its contractual obligations to Docomo, and had taken every possible step keeping in mind the interests of all stakeholders and in accordance with Indian law. Tata Sons has been advised and has sought regulatory approvals for the performance of the arbitral award of the London Court of International Arbitration. Tata Sons have already offered to deposit the entire amount of the award in escrow pending receipt of regulatory approvals,” said a company spokesperson.
“It needs to be pointed out that fulfilment by both the concerned parties of the arbitral award requires conformance to Indian law, and Tata Sons is committed to full compliance with all provisions of Indian law.”
