Japan’s largest mobile phone company NTT DoCoMo today said India, being a signatory to the New York Convention, is bound to enforce the award decision of a London-based arbitration court that ordered Tata Group to pay USD 1.17 billion in compensation to the company.
Pushing its case for compensation payout from its estranged joint venture partner, DoCoMo said that the awards made in England by the London Court of International Arbitration (LCIA) tribunals are recognised under the New York Convention, to which India was one of the original signatories.
“As a signatory to the New York Convention, India is bound to enforce the award decision of the LCIA tribunal for Tata to pay USD 1.17 billion to DoCoMo,” the Japanese company said in a statement.
On Finance Ministry rejecting RBI plea for exempting Tata-DoCoMo deal from foreign exchange Act, Docomo said that it was not aware of any recent decision from the Ministry of Finance on the issue.
“…Docomo notes that the reports (news) cite correspondence between RBI and MOF from back in late 2014 and early 2015. Docomo is not aware of any recent decision from the MOF on this subject since the award was issued by a tribunal of LCIA in favour of DOCOMO on June 22, 2016,” it said.
It further said that the LCIA tribunal found that Tata Sons had breached its contractual obligations, “which were legally capable of performance in ways that did not require permission from the RBI or MOF”.
NTT DoCoMo in November 2009 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 2008 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”.
The Japanese firm dragged Tata Group to international arbitration where it won a USD 1.17 billion award. To honour that award, an application was made to the RBI seeking exemption from the foreign exchange Act.
RBI, in turn, wrote to the Finance Ministry for exemption from the rules as such a measure would boost investor confidence.
The Finance Ministry, however, turned down RBI plea and took the view that the two firms had entered into a share buyback contract in contravention of prevalent law and the case will now have to be legally settled.