As Tata and DoCoMo look for out-of-court settlement, here's a blow-by-blow account of the long legal tussle
Tata Group and NTT DoCoMo are planning to settle their differences by seeking the Reserve Bank of India's permission, under a fresh application, for Tata Sons to remit $1.17 billion to the Japanese company to buyback DoCoMo’s 26.5 per cent stake in their loss-making joint-venture Tata Teleservices.
According to the report, lawyers from both the parties are busy trying to find a way out and according to sources the government might give its nod to such a move in a bid to highlight the ease of doing business in India.
As Tata and DoCoMo move towards a possible out-of-court settlement of the issue, Business Standard takes a look at how the Tata-DoCoMo dispute started and progressed.
What is the dispute about?
The dispute centres around the Tata Group not honouring a contract signed between Ratan Tata and DoCoMo in 2009.
Under the contract, the Tatas would buy back DoCoMo's shares in Tata Teleservices at least half the acquisition prices in five years. However, when DoCoMo decided to exit the Indian market in 2014, Tata Sons refused to buy back the shares at the pre-determined prices.
The reason for Tata Sons' refusal was that in the period between 2009 and 2014, a change in regulation led to the RBI objecting to the transaction committed on a pre-fixed price. DoCoMo had asked Tata to buy back shares at $1.2 billion but the Tatas offered a lower exit price. DoCoMo's original investment in 2009 was valued at $2.2 billion.
Incapable of finding an external buyer, Tata had made an application to the RBI to acquire the DoCoMo holding themselves, as previously agreed upon. The regulator refused the application at the time.
What action did DoCoMo take?
DoCoMo sued Tata Sons in the US and the UK courts, apart from litigation in the Delhi high court over the matter.
The Tatas were sued by DoCoMo in the London Court of Arbitration in January last year.
In June this year, a three-member international arbitration panel ordered Tatas to pay $1.17 billion (Rs 7,956 crore) to NTT Docomo for breach of contract.
But, Tata Sons did not pay $1.2 billion to DoCoMo and the latter sued Tata Sons in the United Kingdom Commercial Court and in the United States earlier in October to enforce the award.
On July 25 this year, the English court passed an ex-parte order in favour of NTT DoCoMo, allowing the company to realise the amount of the award against Tata's assets in the UK, subject to Tata Sons contesting the adjudication.
In response to DoCoMo's application in the English court, the Tatas had argued that DoCoMo could not attach Tata Motors' or Tata Steel’s properties in the UK, as Tata Sons is a minority shareholder in Tata Steel and Tata Motors-JLR.
DoCoMo also filed a separate enforcement application in the Delhi high court. The Tatas are challenging these proceedings as well, however they have still deposited the full sum of the arbitral determination with the registrar of the high court, subject to final adjudication in the matter.
Then in October this year, DoCoMo sued Tata Sons in the US District Court for the Southern District of New York, seeking $1.2 billion in damages that it had won in the London Court of Arbitration.
At the same time, the Delhi high court allowed the RBI to file an intervention application in the enforcement proceedings initiated by DoCoMo against Tata Sons. RBI had pressed to intervene in the ongoing enforcement proceedings and requested the court to allow the regulator to state its position regarding the legality of the award.
With the long-drawn legal tussle not yet resolved, reports indicate that under its new leadership, Tata Sons would seek an out-of-court settlement to the issue.
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Photograph: Reuters