Delhi High Court gives RBI one more day to finalise stand on Tata-DoCoMo arbitration award

RBI told HC it wants to take a fresh look into $1.17 bn arbitral award granted in favour of Docomo

The Delhi High Court on Tuesday allowed the Reserve Bank of India (RBI) a further day to finalise its stand on the enforcement of the $ 1.18 billion Tata Sons-NTT DoCoMo arbitration award, now sought to be realised in favour of the Japanese telecom major through a settlement agreement arrived at by the two companies.

On March 8, Justice Muralidhar had directed the RBI to inform the court by March 14, of its stand on an intervention application filed by the central bank against the enforcement of the international arbitral award. The court's order had come on the backdrop of lengthy arguments made by the RBI on grounds of violations to Indian law and the disregard of regulatory considerations, which in the opinion of the banking regulator, were attempting to do something that was not permitted directly in an indirect manner. After hearing the arguments raised, the court had on that date, asked the RBI to take a final call on the matter and to inform the bench on all applicable laws in favour of its position, in case the regulator still chose to object to the settlement of the issue in line with the understanding arrived at by the companies.

In Tuesday's hearing, instead of clarifying its stance as directed, senior advocate Soli Sorabjee appeared on behalf of the RBI and sought the court's allowance for the central bank to again look into the matter "afresh", before clarifying its final position. On protests made by the DoCoMo and Tata and after highlighting the volume of arguments already made by the RBI, Justice Muralidhar denied the senior counsel's request and instead remarked, "This must be decided here and now. The RBI still hasn't told the court under what law, circular or regulation it may have an issue (against the enforcement)."

However, the court did allow Sorabjee a further day to take instructions from the central bank, before making a final stand. "Be clear of what is required. We can't go around in circles," said the bench, while fixing the matter again for hearing on March 15.

The $1.18 billion arbitration award in favour of DoCoMo relates to disputes over Tata's inability to buy-back the Japanese company's 26.5 percent share in their failed joint venture Tata Teleservices at a pre-determined price, as had been initially agreed upon by the two groups. After Tata was unable to buy the shares for want of the necessary RBI permission, DoCoMo took the matter to the London Court of International Arbitration, which eventually ruled in favour of the company.

After initially opposing the award, Tata finally submitted a joint settlement agreement before the Delhi High Court to realise the award on February 28. The present RBI objection is the only thorn that remains in concluding this over two-year old dispute.