In its appeal filed in the Delhi High Court, the Tatas have disclosed that Docomo was fully aware of the regulatory restrictions in India at the time of signing the shareholders’ agreement.
The approval granted by the Foreign Investment Promotion Board (FIPB) to Docomo clearly stipulated that any issue on valuation or transfer of shares would be dealt as per SEBI or RBI guidelines, sources close to the Tatas told BusinessLine.
Furthermore, Docomo had admitted before the arbitral tribunal “it was aware that an issue of RBI or foreign exchange law would arise” in the context of exercise of sale option, the source, who declined to be identified, added.
The disclosure was by Tatas in its counter filing in the Delhi High Court against Docomo’s submission to the arbitral award.
When contacted a Tata group spokesperson declined to comment.
“Tata Sons is of view that the enforcement of the arbitral award has become infructuous on account of RBI’s rejection of Tata’a request to pay Docomo pursuant to the award. It is clear that the RBI does not agree with the argument that payment under the award would be a current account transaction merely because it is sought to be characterised as damages,” the counter-filing added.
Tatas are opposing the award on basis that if Tata Sons to pay for shares, disregarding the fact whether Tatas can legally acquire and pay for Docomo’s shares and its enforcement would result in violation of Indian foreign exchange laws.
Further, Docomo is prohibited under Indian laws from transferring its shares in Tata Teleservices Ltd in the light of the RBI’s rejection, while Tatas also allege that the arbitral tribunal disregarded the contractual provisions of the shareholders’ agreement.
Tatas have also said that the enforcement of the award will open the floodgates to parties inconvenienced by decisions of empowered regulators in India.
Tata Sons on Friday filed an appeal in the Delhi High Court to stop the enforcement of an arbitration award by the London Court of International Arbitration (LCIA).
The London court had asked Tatas to pay $1.17 billion to the Japanese major as compensation. The dispute dates back to January 2015, when Japan’s NTT DoCoMo moved the London Court of International Arbitration against Tata Sons for failing to find a buyer for its stake in Tata Teleservices.
In April 2014, NTT DoCoMo announced plans to sell its entire stake in TTSL, exiting India five years after entering the country. The exit came after the Indian company failed to achieve certain performance targets.
Under the terms of the shareholder agreement, Tata Sons had to find a buyer by December 2014, failing which it had to buy the DoCoMo stake.