Tata Sons ordered to pay $1.2bn to Japan’s NTT DoCoMo for breaching agreement
Tata Sons, the holding company for the Tata Group, has been ordered to pay Japan’s largest mobile phone firm NTT DoCoMo $1.2 billion in compensation for breaching an agreement on India joint venture.business Updated: Jun 24, 2016 11:32 IST
Tata Sons, the holding company for the Tata Group, has been ordered to pay Japan’s largest mobile phone firm a compensation of $1.2 billion for breaching an agreement on a joint venture in India.
The International Court of Arbitration ruled in favour of Japan’s NTT DoCoMo over the price it was entitled for exiting the Indian joint venture, the Japanese firm said in a statement.
The court has asked the Tatas to honour a 2008 agreement that stipulated that Tata Sons will pay Docomo 50% of the Japanese company’s investment of $2.2 billion in a joint venture with Tata Teleservices, if Docomo exits within five years.
Docomo went to the International Court of Arbitration after Reserve Bank of India rejected a Tata application to buy out the Japanese company’s stake at an agreed valuation of Rs 58 a share. Post RBI rejection, the Tatas had scaled down the offer to buy, to Rs 23.34 a share.
The Japanese firm had filed for arbitration on January 5, 2015.
Reacting to the court order, Tata Sons said on Friday that it is examining Thursday’s order.
“Tata Sons has received the arbitration award and we are currently studying it. We will not be able to comment further at this stage, beyond maintaining our consistent position that Tata Sons has always been and continues to be committed to discharge its contractual obligations in a manner consistent with the law.”
Incidentally, Tata Steel which is an investor in Tata Teleservices along with other Tata group companies, had stated in its annual report for 2014-15 that the liability on Tata Teleservices would depend on an order from the arbitration court.
According to the arbitration award, Tata Sons will receive or designate a recipient for DoCoMo’s entire stake in TTSL.
DoCoMo said it is uncertain whether Tata Sons will pay the awarded damages.
“As of the date of this press release, some matters remain uncertain, including whether Tata Sons will pay the awarded damages and when the delivery of TTSL’s shares will be made. Accordingly, DoCoMo is not able to predict how events will unfold,” it added.
(With inputs from PTI)
First Published: Jun 24, 2016 11:12 IST