Tata Sons says Docomo cannot seize its British assets
Tata Sons Thursday denied strongly the speculation that its assets in Britain could be seized following the London arbitration award against the group in the Tata Tele-Docomo case last month.
Mumbai: Tata Sons Thursday denied strongly the speculation that its assets in Britain could be seized following the London arbitration award against the group in the Tata Tele-Docomo case last month.
The company also said that though it has time till August 2, it hopes to deposit the entire amount of USD 1.17 billion with the registrar of the Delhi High Court by tomorrow.
On June 23 this year, the London Court of International Arbitration (LCIA) had asked the Tatas to pay up USD 1.17 billion to Japanese partner Docomo.
Following this Docomo has obtained an exparte order from the commercial court in London to enforce the award in Britain. Because the order was obtained exparte, Tata's arguments have not yet been heard, Tata Sons said in a statement this evening.
"We would like to clarify that the London commercial court has granted Tata Sons a period of 23 days, starting July 27, 2016, to apply to set aside the exparte order. The arbitral award cannot be enforced until the end of that period, or until any application made by Tata Sons has been finally decided upon.
"Further, the British assets of Tata Steel and Jaguar Land Rover are not owned by Tata Sons. These are subsidiaries of Indian public listed companies of which Tata Sons is a promoter with a minority shareholding of not more than 30-35 percent," the statement said.
The statement pointed out that these companies are not party to the arbitration proceedings, and therefore no award has been issued against them. Therefore, it follows that the award cannot be enforced against those companies.
The company further said it has made its position clear in statement on July 26 to the Delhi High Court.
"Tata Sons has from the outset underlined its commitment to honouring its contractual obligations to Docomo, and has taken every possible step keeping in mind the interests of all stakeholders and in accordance with the laws of the land," it said.
"The regulatory approval for performance of the arbitral award of the London Court of International Arbitration has been denied by the Reserve Bank. However, in the Delhi High Court, Tata Sons, as a gesture of good faith and without prejudice to its rights, has in line with its earlier offer to Docomo, committed to deposit the entire amount of the arbitral award by August 2, 2016, with the Delhi High Court Registrar," the company said.
The statement further noted that the Delhi High Court has given time till August 30, 2016, for both parties to try and resolve the outstanding issues between them.
Fulfilment of the arbitral award requires conformance to Indian regulations and laws, and Tata Sons is committed to be in full compliance with all such requirements, it said.
The company had earlier said it has been consistently underlining its commitment to honour the contractual obligations with NTT Docomo, and has taken every possible step to keep the interests of all stakeholders in mind.
The arbitral award is the result of a two-year tussle between the partners in their failed joint venture Tata Teleservices in which NTT Docomo of Japan holds 26 percent stake which it had picked up in November 2008 for USD 2.7 billion or about Rs 12,770 crore at the then exchange rate.
At that time Tata Sons held 38 percent in the CDMA operator and the deal valued the company at USD 10.38 billion.
According to their initial agreement in 2008, the largest Japanese teleco was given the option of exiting the venture after a three years at a predetermined share price, which was to be bought by Tata Sons or an external buyer which the Tatas were to arrange.
By 2014, as Tatas failed to get a buyer, Docomo decided to exit, at a time when the share price of Tata Teleservices has plunged far below the earlier decided exit agreement.
Unable to find a buyer, Tata Sons sought the permission of the Reserve Bank to buyback the shares at the previously agreed price but was told no, on the ground that such a transfer could not be made on a subsequent date at a predetermined share price, according to existent forex and securities norms.
Following this Docomo went in for international arbitration, which ended in the Japanese company getting awarded USD 1.17 billion in compensation.