Delhi high court approved a $1.18-billion settlement pact, allowing Japanese major NTT DoCoMo to sell its 26.5 per cent stake in the telecom joint venture back to Tata Sons. While the shareholders' agreement between the two parties, in 2009, and settlement terms struck between them were opposed by the Reserve Bank of India on the grounds that those contravened the country's laws.
The Delhi high court however, rejected the central bank's objection, stating that “there is no provision in law which permits the RBI to intervene in a petition seeking enforcement of an (international) arbitral award to which the RBI is not a party.” It added that the RBI had failed to prove that it has the power to overrule a foreign court's arbitral award. The 41-page order by Justice S Murlidhar can have confidence-building implications for foreign players investing in India, demonstrating the country's business-friendly environment. Tejas Karia, partner at Shardul Amarchand Mangaldas, said, “The decision sends a strong message that Indian courts do recognise ability of International Arbitral Tribunal to pass award on contractual terms and the same will be enforced in India.”
Tata Sons welcomed the decision saying, “The court allowed both the enforcement of the award and implementation of the consent terms between the two entities. Tata Sons and NTT DoCoMo are taking further steps in terms of the order.” DoCoMo, in 2016, had won the $1.18-billion arbitral award from a London court and sought its implementation in India. It had moved the international court after it was denied an exit price of $1.18 billion from the Indian telecom joint venture. As per the shareholder agreement, the Japanese telco would get a minimum 50 per cent of its $2.36 billion investment it had made in the joint venture on its exit. However, the payout was blocked by the RBI, citing rules that prevent a guaranteed payment to a foreign investor with regard to selling its shares in an Indian company.
The court, in its order said that the arbitral award “is enforceable in India” and “it shall operate a deemed decree of this court.”
