Docomo says Indian government must make Tata pay $1.2B compensation - Mobile World Live

Docomo says Indian government must make Tata pay $1.2B compensation

03 AUG 2016

Japan’s NTT Docomo said it is the Indian government’s responsibility to ensure Tata Sons pays $1.17 billion in compensation it has been awarded by an international arbitration court.

The London Court of Arbitration (LCIA) ordered India’s Tata Sons to pay Docomo the fee for the Japanese firm’s stake in the failed Tata Docomo joint venture at the end of June, but the issue rumbles on as payment requires permission from India’s central Bank and Finance Ministry.

In a statement, the Japanese company has now directly dragged the Indian government into the issue, claiming that New Delhi is “legally bound to enforce” the award decision, with India a signature of the New York convention, which recognises awards made in England by LCIA tribunals, and other foreign courts.

“Awards made in England by LCIA tribunals are recognised under the New York Convention, to which India was one of the original signatories on the 10th June 1958,” said Docomo. “As a signatory to the New York Convention, India is bound to enforce the award decision of the LCIA tribunal for Tata to pay $1.17 billion to Docomo.”

The feud relates to Docomo’s 26.5 per cent stake in Tata Teleservices, which it acquired for about $2.2 billion in 2009.

In 2014 it decided to pull out of the struggling joint venture, and exercised an option that required Tata Sons to find a buyer to take its stake at 50 per cent of the original price, or at fair market value. In 2015, the Japanese firm filed for arbitration claiming the Indian firm had failed to find a buyer, which it won.

After wining the case, the Japanese company has even threatened to seize some of the India’s group’s assets in Europe, namely steel plants or a part of Tata-owned Jaguar Land Rover, while arguing that the company could have made the payment from its overseas businesses, which would not require its government’s approval.

The award faces complications because the Indian government has banned the sale of stakes in companies for more than their fair market value.

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Kavit Majithia

Kavit joined Mobile World Live in May 2015 as Content Editor. He started his journalism career at the Press Association before joining Euromoney’s graduate scheme in April 2010. Read More >>

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