Delhi High Court Allows $1.17-Billion Arbitration Award By Tata Sons To Docomo

Delhi High Court says the award is implementable.

The logo of Tata DoCoMo, the  joint venture between NTT DoCoMo  and Tata Teleservices (Photographer: Dhiraj Singh/Bloomberg)
The logo of Tata DoCoMo, the joint venture between NTT DoCoMo and Tata Teleservices (Photographer: Dhiraj Singh/Bloomberg)

The Delhi High Court on Friday approved the arbitration award to be paid by Tata Sons Ltd. to its erstwhile Japanese telecom partner NTT Docomo Inc., rejecting the Reserve Bank of India’s (RBI) objection to the settlement.

The judgement delivered by Justice S Muralidhar clears the way for the $1.17 billion already deposited by Tata Sons with the court to be paid to Docomo, and will allow the Japanese company to transfer its shares in Tata Teleservices Ltd.

On February 28, both companies had informed the high court that they have reached a settlement agreement regarding enforcement of the arbitration award by the London Court of International Arbitration (LCIA).

They had also filed a joint application at the time in court. Tata Sons withdrew all their objections to the award and also said that in anticipation of the matter being finally resolved in India, Docomo agreed to suspend its related enforcement proceedings in the U.K. and the U.S. for a period of time.

However, the RBI opposed the award despite the joint application by the two companies. The central bank took the stand that the award was contrary to India’s public policy stated under the Arbitration Act and, therefore, cannot be enforced. Under the Act, the court can refuse to allow enforcement of a foreign award if it is in conflict with the public policy.

NTT Docomo on their part had said since both parties involved have no objection to the award by the London court, the RBI does not have the right to oppose it. Tata Sons and Docomo told the court that it was an award for damages and doesn’t need the banking regulator’s permission.

After hearing both sides, the high court reserved the judgement on March 15, 2017.

Rejecting RBI’s opposition to the award, the high court judgement said on Friday: ‘’There is no provision in law which permits RBI to intervene in a petition seeking enforcement of an arbitral Award to which RBI is not a party. Its prayer for permission to intervene is rejected.’’

It further said, “There is no such statutory requirement that where the enforcement of an arbitral Award might result in remitting money to an non-Indian entity outside India, or to an account of a party outside India, RBI has to necessarily be heard on the validity of the Award.

“The mere fact that a statutory body’s power and jurisdiction might be discussed in an adjudication order or an award will not confer locus standi on such body or entity to intervene in those proceedings.’’

NTT Docomo had been fighting Tata Sons over the right to sell its stake in the Indian wireless venture for at least 50 percent of the original investment, as per the terms of the 2009 agreement.

Docomo had moved the high court to enforce the LCIA arbitral award it won in June last year. The arbitral tribunal had directed Tata Sons to pay $1.17 billion to NTT Docomo as compensation for breaching the agreement.