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Delhi HC Allows Settlement Between Tata Sons, NTT Docomo [Read Judgment]

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28 April 2017 4:21 PM GMT
Delhi HC Allows Settlement Between Tata Sons, NTT Docomo [Read Judgment]
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The Delhi High Court on Friday allowed Tata Sons and NTT Docomo to enforce an arbitral award by the London Court of International arbitration.

On June 22, 2016, the London Court of International Arbitration had ruled that Tata Sons will pay $1.17 billion to NTT Docomo, a Japanese company.

Justice Muralidhar had reserved verdict in the case last month after both parties filed an affidavit before the court agreeing on broad consent terms for a settlement.

According to consent terms agreed by Tata and NTT Docomo, the latter will begin transferring shares to an account designated by Tata after deducting taxes.

The court disagreed with the contention of the Reserve Bank of India that the mutual settlement between the companies permitting transfer of funds violated provisions of the Foreign Exchange Management Act (FEMA), 1999, and was against public policy.

The RBI was initially not a party to the case but was later allowed to join in.

It had claimed that an agreement between the two companies on exit options is illegal and contrary to foreign direct investment (FDI) norms of India.

The original disputed agreement between the two parties is one containing exit options for the foreign company for its investment in India.

The agreement has NTT the right to sell its stake of 26.5% that it bought for $2.6 billion in 2009 at two rates whichever is higher - either at fair value or at half of the acquisition price.

So when NTT wanted its investment back at the second option, problems arose.

Cut to 2014, the RBI introduced new FDI norms that do not allow this. So Tata said they could not pay and NTT initiated arbitration proceedings.

Tata Sons repeatedly told the court that while it was willing to pay, Indian laws prevented it from doing so.

Read the Judgment here.

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