DoCoMo case: Tata Sons moves London court

A woman walks past a brach of Japanese mobile communications company NTT Docomo in Tokyo, Japan. Photo: Reuters
Tata Sons made an application on Monday to set aside a July 25 ex-parte order passed by London’s Commercial Court in relation to the enforcement of the $1.17 billion international arbitration award against the company.

The commercial court had passed the ex-parte order in favour of NTT DoCoMo, allowing the Japanese telecom giant to realise the amount of the award against Tata assets in the UK, subject to Tata Sons contesting the adjudication. Tata Sons had been allowed 23 days, starting July 27, to challenge the order, which was extended by two weeks on August 20, on a request made by Tata in court.

According to a statement issued by Tata Sons on July 28, “the UK assets of Tata Steel and Jaguar Land Rover are not owned by Tata Sons. These are subsidiaries of Indian public listed companies, of which Tata Sons is a promoter with a minority shareholding of not more than 30-35 per cent. These companies are not party to the arbitration proceedings, and no award has been issued against them.”

DoCoMo has also filed a separate enforcement application in the Delhi High Court against Tata Sons on July 7, in relation to the arbitration award. Tata has deposited the full sum of the arbitral determination (Rs 8,450 crore) with the registrar of the high court, subject to the final adjudication in the matter. Close sources of Tata Sons say that the quantum of interest forgone by the company in making the deposit in court amounts to over Rs 2 crore per day.

Tata Sons has recently submitted its opposition to the enforcement of the award in the Delhi High Court. The Tata affidavit highlights the necessity of regulatory approval to comply with the terms of the award. It also mentions how the enforcement would be illegal under Indian law and public policy without such prior approval.

Meanwhile DoCoMo contested Tata Sons’ desire to pay, as it had hoped that Tata would join it in seeking confirmation from the Delhi High Court that enforcement of the London Court of International Arbitration (LCIA) award in India would not contravene Indian law. According to DoCoMo, the clarity would have facilitated the path to payment of the award in India. DoCoMo had that hope, with the meeting of its executives and the Tata Sons top brass in Mumbai, following London Commercial Court’s ex-parte order giving DoCoMo leave to enforce the arbitration award.

“DoCoMo does not wish to revisit, in public, its discussion with Tata. However, it feels necessary to clarify that DoCoMo has, throughout, sought Tata’s cooperation to facilitate the payment of the award in line with the LCIA tribunal’s ruling,” said a statement issued by DoCoMo on Monday.

“Instead of cooperating, and contrary to its publicly stated desire to pay, Tata used its court filing on Friday (September 2) to seek the Delhi court’s assistance to block the enforcement of the award in India. In doing so, it appears that Tata is attempting to re-litigate arguments that already were fully considered and rejected by the panel of distinguished LCIA arbitrators appointed by both Tata and Docomo,” the statement said. DoCoMo also said that it was open to any discussion with Tata and the India government to enable this.

The June 24 LCIA arbitral award is the fallout of the failed teleservices joint venture (JV) between the two companies, in which DoCoMo owns a 26 per cent stake. According to the terms of the initial agreement, the Japanese company was allowed an exit option under which Tata Sons (or an external buyer that the company was to arrange) was to purchase the DoCoMo stake at a predetermined price.

After the JV failed in generating the desired returns, DoCoMo decided to exercise the exit option at a time when the share price of the JV had dropped significantly below of the agreed upon price. Unable to find an external buyer, Tata made an application to the Reserve Bank of India (RBI) to purchase the 26 per cent stake themselves. The RBI denied the request, citing a 2014 regulation that disallowed subsequent transfers at predetermined prices.

As a result, Tata Sons was unable to purchase the DoCoMo stake as per the agreement, leading to the institution of international arbitral proceedings and the $1.17 billion arbitration award thereafter.

SPARRING GIANTS

DoCoMo statement

“Instead of cooperating, and contrary to its publicly stated desire to pay, Tata used its court filing on Friday (September 2) to seek the Delhi court’s assistance to block the enforcement of the award in India. In doing so, it appears that Tata is attempting to re-litigate arguments that already were fully considered and rejected by the panel of distinguished LCIA arbitrators appointed by both Tata and DoCoMo”

Tata Sons’ statement

“The legal effect of refusal to give regulatory approval by the Indian regulatory authorities, Tata Sons’ objections to DoCoMo’s petition, and whether the award can now be enforced, are all matters to be determined by the High Court in Delhi, India… DoCoMo is unfortunately confusing Tata Sons’ intent to pay with what is legally payable by the company; Tata Sons’ intent is to pay but within the confines of the law”

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