Tata Sons on Monday said it has filed an affidavit in the London Commercial Court against the enforcement of the arbitration award in favour of Japan’s NTTDoCoMo.
“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 ... has been denied,” the company said in a statement. In the absence of such approval, enforcement of the award would be “unlawful under applicable Indian law and contrary to public policy.”
Meanwhile, sources close to the Tata Group said that the company has told the Delhi High Court in a separate affidavit filed last week that according to UN provisions a country’s policy should take precedence over the arbitral tribunal award, and hence the group cannot be forced to pay $1.17 billion as compensation to DoCoMo. Indian laws do not permit share buybacks at premiums or direct payment of compensation to foreign companies.
Tata Sons has invoked the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards in the matter, sources added. The Mumbai-based salt-to-software group has pointed out how the Reserve Bank of India (RBI) denied it permission to remit the compensation money directly to DoCoMo on July 25.
According to a 2009 agreement that saw DoCoMo take a 26.5% stake in Tata Teleservices (TTSL), the Japanese company had the option of exiting the partnership if TTSL failed to meet certain financial targets, in return for a minimum 50% of its original investment. When DoCoMo chose to exercise this option in March 2014, it sought ₹58 per share, or ₹7,200 crore from the Tatas. But the RBI ruled that the option was not valid and payment would have to be at a fair market value. So the Tatas offered DoCoMo ₹23.34 a share. This led to an arbitration between the two. DoCoMo moved the London court in January 2015, and the Tatas were ordered to pay $1.17 billion. DoCoMo filed an enforcement proceeding before the Delhi High Court again in July 2016.
The Tata Group is likely to have invoked the same provision while filing the affidavit in the London court on Monday.