September 05, 2016

Statement from Tata Sons

Tata Sons has today filed an application to set aside an ex-parte order obtained by NTT DoCoMo from London's Commercial Court on July 25th, 2016. DoCoMo has sought enforcement of a London Court of International Arbitration (LCIA) arbitration award dated June 22nd, 2016, made in a shareholders dispute between Tata Sons and DoCoMo in relation to DoCoMo’s shareholding in Tata Teleservices Limited. Tata Sons' position is that it is not permitted to pay the sum claimed by DoCoMo pursuant to the award, since regulatory approval by India's central bank, the Reserve Bank of India (RBI), which is necessary for performance of the award, has been denied. Furthermore, absent such approval, enforcement of the award would be unlawful under applicable Indian law and contrary to public policy.

DoCoMo had also earlier initiated enforcement proceedings in India, the place of residence and where the substantial assets of Tata Sons are located. Notwithstanding the position set out in the preceding paragraph, Tata Sons had deposited on July 30th, 2016 the entire amount of $1.17 billion claimed by DoCoMo with the Court Registrar, High Court of Delhi, in connection with these proceedings before the High Court in Delhi, and has also filed its objections. The legal effect of refusal to give regulatory approval by the Indian regulatory authorities, Tata Sons’ objections to DoCoMo’s petition, and whether the award can now be enforced, are all matters to be determined by the High Court in Delhi, India.


Tata Sons has always been committed to honour its contractual obligations within the framework of Indian law. In recent weeks, the company has been disappointed with the lack of co-operation from DoCoMo in arriving at an amicable resolution by jointly engaging with the Indian Government and the Regulator on the issue. DoCoMo is unfortunately confusing Tata Sons’ intent to pay with what is legally payable by the company; Tata Sons’ intent is to pay but within the confines of the law.
 
Chronology of events
March 2009: NTT DoCoMo acquires 26.5% equity in Tata Teleservices for approximately $2.5 billion.

January 9, 2014: The Reserve Bank of India (RBI) comes out with rules on Pricing Guidelines for FDI instruments with optionality clauses; while foreign investors were hitherto allowed to transfer their shares to residents at fair value, the new rules now prescribed ‘return-on-equity’ method to compute the price at which the options could be exercised. These regulations were again modified in July 2014 (to prescribe that the valuation could be done using any internationally recognized methodology). RBI’s stated guiding principle underlying these regulations was that the foreign investor will not be guaranteed an assured exit price and will exit at the price prevailing at the time of the exit.
 
July 2014: DoCoMo informs Tata Sons of its decision to exit the telecom joint venture, exercising the put option in the contract that predetermined the value of 26.5% equity to the higher of either half the investment DoCoMo made — which amounts to Rs 7,250 crore — or the stake's fair market price.
 
November 2014: Tata Sons approaches the RBI for its approval to purchase DoCoMo’s 26.5% stake at Rs. 58.045 per share.
 
January 2015: DoCoMo approaches the London Court of International Arbitration (LCIA).
February 20, 2015: RBI turns down Tata Sons’ application for approval to purchase DoCoMo’s stake at Rs. 58.045 per share.
 
June 22, 2016: LCIA pronounces ruling on the issue, ordering Tata Sons to pay $1.17 billion to NTT DoCoMo for breach of contract, and for NTT DoCoMo to tender to Tata Sons its shares of Tata Teleservices.
 
July 1, 2016: Tata Sons approaches RBI to seek the approval for making payment to DoCoMo in terms of the arbitral award.
 
July 7, 2016: DoCoMo approaches the Delhi High Court seeking enforcement of the Arbitral Award.
 
July 7, 2016: DoCoMo also approaches the London Commercial Court, seeking enforcement of the award in the UK.
 
July 25, 2016: RBI refuses to approve Tata Sons’ application for making payment to DoCoMo in terms of the arbitral award.
 
July 25, 2016: London Commercial Court passes an ex-parte order giving DoCoMo leave to enforce the award, subject to the right of Tata Sons to contest the order.
 
July 27, 2016: Tata Sons served with a copy of the order of the London Commercial Court, given 23 days to apply to have the order set aside.
 
July 29, 2016: Tata Sons deposits $1.17 billion, representing the entire awarded sum, with the Delhi High Court. The deposit is without prejudice to the merits of the case until the final determination of the matter.
 
September 2, 2016: Tata Sons files an affidavit in the Delhi High Court, highlighting the regulatory and public policy impediments to enforcing the Award.
 
September 5, 2016: Tata Sons submits application to the London Commercial Court seeking to have the ex-parte order set aside.
 
Media statements issued by Tata Sons on the matter
 
July 8, 2016
Tata Sons has received the arbitration award, and we are currently studying it. We will not be able to comment further at this stage, beyond maintaining our consistent position that Tata Sons has always been and continues to be committed to discharge its contractual obligations in a manner consistent with the law.
 
July 26, 2016
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 Indian law. The regulatory approval for performance of the arbitral award of the London Court of International Arbitration has been denied by the Reserve Bank of India. However, in the Delhi High Court today, 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 Tuesday, August 2nd, 2016, with the Delhi High Court Registrar. Clearly, fulfilment by both the parties of the arbitral award requires conformance to Indian regulations and law, and Tata Sons is committed to full compliance with all such requirements. The Honourable High Court has given time till August 30th, 2016, for both parties to try and resolve the outstanding issues between them.
 
July 28, ‎2016
There are some speculative media reports suggesting the possibility of Tata company assets in the United Kingdom (UK) being seized as an outcome of an arbitration award by the London Court of International Arbitration (LCIA), in the ongoing Tata DoCoMo case. DoCoMo have obtained an exparte order from the Commercial Court in London for permission to enforce the award in the UK. Because the order was obtained exparte Tata’s arguments have not yet been heard. We would like to clarify that the London Commercial court has granted Tata Sons a period of 23 days, starting July 27th, 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 UK 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% to 35%. These companies are not party to the arbitration proceedings, and no award has been issued against them. It follows that the award cannot be enforced against those companies. We have made our position clear in our statement on July 26th, 2016: “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 Indian law. The regulatory approval for performance of the arbitral award of the London Court of International Arbitration has been denied by the Reserve Bank of India. 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 Tuesday, August 2nd, 2016, with the Delhi High Court Registrar (Tata Sons expects to deposit the money by tomorrow, i.e. July 29, 2016).
 
Clearly, fulfilment of the arbitral award requires conformance to Indian regulations and law, and Tata Sons is committed to full compliance with all such requirements. The Honourable High Court in Delhi has given time till August 30th, 2016, for both parties to try and resolve the outstanding issues between them.”
We have no further comments to make at this stage.
 
July 29, 2016
With reference to the recent London Court of International Arbitration’s arbitral award, Tata Sons confirms that the full amount, $1.17billion, has today been transferred into fixed deposits favouring the Court Registrar, New Delhi without prejudice to its legal rights. The Honourable High Court in Delhi has given time till August 30th, 2016, for both parties to try and resolve the outstanding issues between them. Tata Sons wishes to clarify that it has in the past, as well as after the arbitral tribunal announced its award, invited DoCoMo to join it in representing this matter before the Reserve Bank of India (RBI) and the Ministry of Finance. In the meantime, we would caution against any stakeholders being misled by statements that are made in ignorance of India’s foreign exchange regulations.
 
August 1, 2016
We have from the outset underlined our commitment to honouring our contractual obligations to NTT DoCoMo, in compliance with Indian regulations and law. In the Delhi High Court as well, which was moved by NTT DoCoMo for enforcement of the arbitral award, we have demonstrated our good faith by voluntarily depositing $1.17billion, transferred into fixed deposits favouring the Court Registrar, New Delhi without prejudice to our legal rights. This is the largest such amount ever to be deposited in an Indian Court by any corporate in this kind of matter.

Our intentions are evident in our actions, and we accordingly reject any suggestion to the contrary which conveys an inaccurate portrayal of the sequence of events.
We are quite concerned that such a sensitive matter which requires maturity and judgment when dealing with the highest regulatory and government authorities, is being discussed in public rather than with us. Our effort has been consistently in the direction of resolution and requires the cooperation of our partners. We need to pay due heed to the laws that bind us all, with respect to the judicial process that is already underway.
 
The Honourable High Court in Delhi has given time till August 30th, 2016, for both parties to try and resolve the outstanding issues. We are committed to a resolution of this matter, and would urge constructive engagement towards this end. In the meantime, we will of course do everything necessary to protect our rights and reputation.
 
September 3, 2016
We have been disappointed with the lack of co-operation from our partners in arriving at an amicable resolution. Despite several attempts on our part, our partners have refused to come together with us to engage the Government and the Regulator on the issue. The position Tata Sons has taken in its affidavit filed in the Delhi High Court is in line with what we have stated from the outset – that Tata Sons is committed to honouring our contractual obligations to NTT DoCoMo, in compliance with Indian regulations and law. There is a judicial process that is underway and we need to pay due heed to the laws that bind us all. DoCoMo is unfortunately confusing our intent to pay with what is legally payable by us. Tata’s intent is to pay but within the confines of the law.
 

Issued by:
Sarika Kapoor Chokshi/Arushi Agrawal
Tata Sons
022- 66657891 / 7564
skchokshi@tata.com/arushiagrawal@tata.com