1. RBI can not intervene in awards of damages under international law: Kapil Sibal

RBI can not intervene in awards of damages under international law: Kapil Sibal

Kapil Sibal said that under the international law, no regulator can intervene in any award of damages. He added that the award of damages was not a repatriation of investments and that it has to paid according to the international convention.

By: | Published: May 1, 2017 1:44 PM
Whether the arbitration violates any law is a decision for the courts and not RBI, Sibal said.

In the long pending dispute resolution between Tata Sons and its former joint venture partner NTT DoCoMo, the counsel for the Japanese company has said that the Reserve Bank of India could not intervene in the award of $1.2 billion in damages by Indian conglomerate Tata Sons, a decision which was upheld by the Delhi High Court earlier last week.

Sibal, in an interview with ET Now, said that under the international law, no regulator could intervene in any award of damages. He added that the award of damages, originally ordered in an arbitration by a London tribunal, was not a repatriation of investments and that it has to paid according to the international convention. Whether the arbitration violates any law is a decision for the courts and not RBI, Sibal said.

Earlier last week, the Delhi High Court rejected RBI’s intervention plea in the Tata-DoCoMo case while taking on record, the terms of consent of the settlement between Japanese telecom major NTT DoCoMo and Tata Sons over the payment of $1.17 billion damages to the former.

Justice S Muralidhar in his verdict rejected RBI’s intervention plea opposing the settlement as well as the damages awarded to DoCoMo by the London Court of International Arbitration (LCIA).

Under the shareholding agreement between them, on DoCoMo’s exit from the venture within five years, Tata was to find a buyer who would purchase the Japanese company’s stake at minimum 50 per cent of the acquisition price, which came to around Rs 58.45 per share. The other option was Tata purchasing the shares at the fair market value, which was Rs 23.44. However, this was not acceptable to DoCoMo and it had opted for arbitration. Thereafter, the LCIA in June 2016 awarded damages of $1.17 billion in favour of DoCoMo for Tata’s inability to find a buyer as per the shareholding agreement.

Docomo had moved the Delhi High Court for enforcement of the award after Tata cited refusal of permission by the RBI to make the payment.

The RBI, during the proceedings, had contended that once it had denied permission for transferring the money overseas, the issue had attained finality. It had said that till date, its decision has not been challenged. The RBI, in its intervention application, had contended that the shareholding agreement was illegal and objected to the award of damages. It had said that DoCoMo’s shares in TTSL be purchased only at the fair market value. The Indian central bank had later also opposed the settlement arrived at between Tata and DoCoMo.

Under the settlement agreement between the two companies, Tata and DoCoMo had decided to settle their two-year-old dispute regarding TTSL with the Indian company withdrawing its objections to the enforcement of the award. Tata had already deposited $1.17 billion with the high court. The Japanese company, in turn, had said it will “suspend its related enforcement proceedings in the United Kingdom and the United States” for a period of six months.

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