In a move that heralds the beginning of another round of legal wrangles between the feuding Ambani brothers, Mukesh Ambani-led
Reliance Industries Ltd (RIL) on Thursday comenced arbitration proceedings against younger brother Anil Ambani?s Reliance Communications Ltd (RComm) for holding negotiations with South African telecom major MTN over a possible merger.
In a statement issued on Thursday, RIL said, ?RComm has refused to participate in the conciliation meetings under the alternate dispute resolution provisions contained in the non-competition agreement. RIL has commenced arbitration proceedings by nominating Hon?ble Justice BP Jeevan Reddy, a former judge of the Supreme Court of India, as an arbitrator for resolution of the disputes.?
RIL sources said that if RComm does not participate in the arbitration process, the former would be left with no option but to go to court.
Responding to RIL?s move, RComm said in a statement, ?RIL has issued the fourth letter today threatening legal action on MTN discussions. RIL?s mala fide design to derail MTN discussions clearly exposed that RIL has successfully destroyed India?s image in foreign eyes. RIL?s notice for arbitration proceedings is legally and factually unwarranted.?
The bone of contention is a ?non-compete? agreement purportedly signed between the two groups on January 12, 2006, under which RIL claims first right of refusal should there be any majority equity dilution in RComm.
RIL shot off its first missive to this effect, advising MTN not to proceed with negotiations, on June 12. For its part, RComm has challenged the legal validity of the 2006 agreement and accused RIL of attempting to frustrate RComm?s attempts to emerge as a global telecom major.
An RComm statement issued on June 13 this year countered, ?RIL?s claim is legally and factually untenable, baseless, and misconceived. RIL has based its claim on an agreement of January 12, 2006, which was unilaterally signed only by RIL?s officials, when RComm was under RIL?s control, under a procedure which the Hon?ble Bombay High Court, vide its judgement dated 15th October 2006, has held to be ?unfair and unjust?.?
On July 3, RIL invoked an arbitration clause, inviting RComm for conciliatory talks. The talks failed to take place, as RComm officials did not turn up. Later, RIL officials refused to turn up for a meeting fixed by RComm.
The 45-day exclusive period for talks between RComm and MTN came to an end on July 8 and has been extended until July 21. However, international media reports say that in the backdrop of the feud between the Ambani brothers, MTN is growing wary of entering into a deal with RComm.
