Tata Group approached a London Commercial Court seeking annulment of an ex-parte order obtained by the NTT Docomo for enforcement of the arbitral award against the Indian company.
Docomo had approached the London’s Court seeking enforcement of the London Court of International Arbitration (LCIA) award against the Tatas for breach of contractual obligations pertaining to a shareholders’ dispute in Tata Teleservices.
The LCIA in June had ordered Tata Sons to pay Docomo $1.17 billion in compensation for breaching an agreement on India joint venture.
Tata Sons informed that Docomo had also earlier initiated enforcement proceedings in India, the place of residence and where the substantial assets of Tata Sons are located.
Tata Sons had deposited on July 30, the entire amount of $1.17 billion claimed by Docomo with the Court Registrar, High Court of Delhi, in connection with these proceedings before the High Court in Delhi, and has also filed its objections.
What is the issue?
NTT Docomo in November 2008 acquired 26.5 per cent stake in Tata Teleservices for about Rs 12,740 crore (at Rs 117 per share). This was according to a understanding that in case it exits the venture within five years, it will be paid a minimum 50 per cent of the acquisition price.
Docomo in April 2014 decided to exit the joint venture that struggled to grow subscribers quickly. It sought Rs 58 per share or Rs 7,200 crore from the Tatas.
But the Indian Group offered Rs 23.34 a share in line with the RBI guidelines that states that an international firm can only exit its investment at a valuation not exceeding that arrived at on the basis of return on equity.
The Finance Ministry had rejected a plea for exempting Tata-Docomo deal from the foreign exchange act, saying that the two firms had entered into a share buyback contract in contravention of prevalent law and the case would have to be settled legally.