Tatas ask UK court to annul order to pay $1.17 bn to NTT
“Tata Sons has filed an application to set aside an ex-parte order obtained by NTT DoCoMo from London’s Commercial Court on July 25th, 2016,” Tata Sons said in a statement. DoCoMo had approached the London’s Commercial Court seeking enforcement of London Court of International Arbitration (LCIA) award against the Tatas for breach of contractual obligations pertaining to a shareholders’ dispute in Tata Teleservices.
Sources said that following the ex-parte order from London’s Commercial Court in July, Tata Sons were granted some time to file their application to set aside the ex-parte order. The London Court of International Arbitration in June had ordered Tata Sons to pay DoCoMo $1.17 billion in compensation for breaching an agreement on India JV.
“Tata Sons’ position is that it is not permitted to pay the sum claimed by DoCoMo pursuant to the award, since regulatory approval by India’s central bank, the Reserve Bank of India (RBI), which is necessary for performance of the award, has been denied,” Tata Sons statement said. In absence of such approval, enforcement of the award would be “unlawful under applicable Indian law and contrary to public policy”, the statement added.
Tata Sons further said it has always been committed to honouring its contractual obligations within the framework of Indian law. “In recent weeks, the company has been disappointed with the lack of cooperation from DoCoMo in arriving at an amicable resolution by jointly engaging with the Indian Government and the Regulator on the issue,” Tata Sons said. Alleging that DoCoMo has been confusing its intent to pay with what is legally payable by the Indian company, Tata Sons said its intent is to pay “but within the confines of the law”.
Tata Sons noted that DoCoMo had also earlier initiated enforcement proceedings in India, the place of residence and where the substantial assets of Tata Sons are located.
“...Tata Sons had deposited on July 30, the entire amount of $1.17 billion claimed by DoCoMo with the Court Registrar, High Court of Delhi, in connection with these proceedings before the High Court in Delhi, and has also filed its objections,” Tata Sons added. NTT DoCoMo in November 2008 acquired 26.5 per cent stake in Tata Teleservices for about Rs 12,740 crore (at Rs 117 per share). This was as per a understanding that in case it exits the venture within five years, it will be paid a minimum 50 per cent of the acquisition price.
DoCoMo in April 2014 decided to exit the joint venture that struggled to grow subscribers quickly. It sought Rs 58 per share or Rs 7,200 crore from the Tatas. But the Indian Group offered Rs 23.34 a share in line with RBI guidelines that states that an international firm can only exit its investment at a valuation “not exceeding that arrived at on the basis of return on equity”.