Under the consent terms, Tata and Docomo have decided to settle their two-year old dispute regarding their telecom joint venture, Tata Teleservices Ltd (TTSL), as the Indian entity withdraws its objections to the enforcement of the award. Tata has already deposited the amount of $1.17 billion with the Delhi High Court.
The Japanese company in turn has said that it will “suspend its related enforcement proceedings in the United Kingdom and the United States” for a period of six months.
The Reserve Bank of India is opposed to the consent terms and had earlier said that if Docomo fails to succeed in enforcement of its award in India, it cannot say it will try and enforce it in some other jurisdiction after six months.
On the last date of hearing, the court had disagreed with RBI’s contention and had termed it “absurd”. It had said that if Docomo does not succeed here, it can take the award for enforcement of the award to the US or the UK and “RBI has no jurisdiction outside India”.
Docomo had in November 2009 acquired 26.5% stake in TTSL for about Rs 12,740 crore.
After Docomo’s exit from the joint venture, TTSL, the matter had gone to arbitration as Tata was unable to find a buyer for Docomo’s 26.5% stake in TTSL for 50 per cent of the acquisition price, which came to around Rs 58.45 per share.
The Japanese company was not willing to accept the “fair market value” of Rs 23.44 that the Indian company was willing to pay as per the shareholding agreement.
Under the agreement between the two companies, on Docomo’s exit from the venture within five years it will be paid a minimum 50% of the acquisition price through the purchase of its shares by a buyer who would be found by Tata.
The other option was Tata purchasing the shares at fair market value.
LCIA had awarded the damages in favour of Docomo for Tata’s alleged breach of the agreement regarding buying of the Japanese company’s stake on its exit.
Docomo had moved the Delhi High Court for enforcement of the award after Tata cited refusal of permission by RBI to make the payment.
Docomo in an affidavit had said that RBI’s permission was not required for paying the damages.