Facing arbitration claims here by Daiichi Sankyo, Ranbaxy's former Indian promoters - Malvinder Mohan Singh, his brother Shivinder Mohan Singh and family - are counting on certain clauses in the share purchase agreement (SPA) signed with the Japanese company on June 11, 2008, to claim immunity from damages.
Daiichi, which had bought 35 per cent controlling stake in Ranbaxy for $2.4 billion, now seeks damages from the Singh brothers for the $500-million settlement Ranbaxy had to sign with the US authorities for alleged violation of norms to get regulatory approval for its medicines.
The Singh brothers are banking on the SPA to safeguard their case in the arbitration process and claim the SPA insulates them from any such damages.
When asked about the arbitration proceedings, Daiichi declined to comment saying it does not have any further comments to offer beyond its statement on May 22, 2013. At that time, Daiichi had said it "believes certain former shareholders of Ranbaxy concealed and misrepresented critical information concerning the US Department of Justice and the FDA investigations."
While Ranbaxy's former promoters declined to comment, sources point out they had made proper public disclosures about all ongoing regulatory issues and investigations before signing the deal in 2008. Sources said the focus may shift towards possibly poor due-diligence for the deal and weak representations and warranties made in the SPA.
