Tata Sons agrees to pay 1.17 billion dollar to DoCoMo, withdraws case in HC

NTT Docomo
Tata Sons have agreed to pay Rs 7,876 crore(USD 1.17 billion) in damages to Japanese mobile operator NTT DoCoMo in their long-standing dispute over the latter's exit from a joint venture in India.

Mumbai, Feb 28: Tata Sons have agreed to pay Rs 7,876 crore(USD 1.17 billion) in damages to Japanese mobile operator NTT DoCoMo in their long-standing dispute over the latter’s exit from a joint venture in India.

The deal could be announced today.

The both parties have opted for an out-of-court settlement. Following to this, Tata Sons has withdrawn its petition against NTT DoCoMo in the Delhi High Court.

“The Tata Sons Director Board has agreed to pay Rs 7,876 crore ($1.17 billion) to DoCoMo as enforced by the London Court of International Arbitration on June 22, 2016 and withdraw objections to its award in India,” Tata Sons, the Tata Group’s holding firm, said in a statement here.

The biggest hurdle to a settlement now remains is the RBI, which remains opposed to the payout under the existing structure.

Reserve Bank Of India said the existing clause in the joint venture agreement was illegal, something which Tata Sons challenges.

Reserve Bank Of India said a fixed rate of return for exit from the joint venture makes it unacceptable.

As both of the parties have jointly applied to the High Court of Delhi for settling their dispute, the settlement terms will be subject to its further orders.

The amount was already deposited by Tata Sons in the Delhi High Court.

“As part of the joint application, NTT DoCoMo has agreed to suspend its enforcement proceedings in London and the United States for a period of time,” added the statement.

In the year 2009, the Japanese telecom giant NTT Docomo invested around  2.6 billion US Dollar in order to buy a 26.5 percent stake in Tata Teleservices (TTSL). Under the terms of that deal, in the event of an exit, DoCoMo was guaranteed the higher of either half its original investment, or its fair value.

Under the terms of that deal, in the event of an exit from the agreement DoCoMo was guaranteed the higher of either half its original investment, or its fair value.

NTT DoCoMo later agjudjed the venture as its “worst” overseas investment, and sought  1.17 billion US Dollar in compensation for its 2014 exit from Indian Market.

In June 2016, an arbitration court in London ruled against the Tata Group. Docomo had alleged a breach of contract on the grounds that Tata Sons had neither found a buyer nor bought back the Japanese partner’s 26 percent stake in their telecom joint venture Tata Teleservices. The Reserve Bank of India was opposed to the payout under the existing structure. It said the existing clause in the joint venture agreement was illegal, something which Tata Sons denies.

NTT DoCoMo had alleged a violation of contract on the grounds that Tata Sons had neither found a buyer nor bought back the Japanese partner’s 26 percent stake in their telecom joint venture Tata Teleservices.

The RBI was opposed to the payout under the existing structure. It said the existing clause in the joint venture agreement was illegal, something which Tata Sons challenge.

–With IANS Inputs

Top