The legal dispute between Tata group and NTT DoCo-Mo is set to take a diplomatic turn. Buoyed by an international court order, Japanese telecom major DoCoMo is planning to approach the Reserve Bank of India, Prime Minister’s Office and finance ministry to break the logjam over the $1.17 billion that the company claims the Tata group owes it.
It also plans to highlight the larger impact this is having on business sentiment towards India, as the latter woos large-ticket investment from one of its traditional economic allies in Asia. Tata Sons on Tuesday said it will deposit the entire $1.17 billion it was fined after arbitration in London against NTT DoCoMo in the Delhi High Court registrar by August 2. The group called it a “gesture of good faith… in line with its earlier offer to DoComo,” though it maintained such a payout is illegal under RBI rules.
Tata Sons presented to court a new RBI letter issued on Monday, debunking validity of the arbitration award on this transaction. The high court has given both groups time till August 30 to resolve outstanding issues.When contacted, a Tata Sons spokesperson told ET, “Clearly, fulfilment by both parties of the arbitral award requires conformance to Indian regulations and law. Tata Sons is committed to full compliance with all such requirements… The matter is now sub-judice. We have no further comments to make at this stage.” The deposit with court is intended by the Tata group to give the appearance of payment, but is not the same as payment, DoCoMo will vigorously pursue its rights,” he added. After last month’s arbitration award, Tatas unilaterally approached RBI but did not fully update it about the latest developments, sources close to DoCoMo alleged. “Earlier, RBI gave its views based on the existing commercial contract between the two. But now circumstances have changed and there is a ruling from a London court in favour of DoCoMo. RBI’s original decision has been superseded by this latest award,” said another person close to the Japanese firm.
DoCoMo plans to update the regulator of these new developments, expecting “a different consideration thereafter.” The sources mentioned above also said India is signatory to a New York international convention, wherein international awards are automatically enforceable in India. DoCoMo argues this is a dispute between two private enterprises and does not involve sovereign money, which is why RBI should review the matter.
Moreover, the Japanese side claims that as per the arbitration award, a copy of which is with ET, net outstanding amount is also going up daily by $119,000 at 3.5 per cent every year, compounded each quarter.
Delhi High Court will hear arguments again on August 30, when NTT DoCoMo will seek to get recognition of the award as per convention, said the person.