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Docomo calls on Indian government to ensure Tata compensation

The Indian government must accept responsibility for ensuring that Tata Sons pays NTT Docomo the $1.17 billion that it is owed in compensation, the Japanese operator has claimed.

Following the failure of the Tata Docomo joint venture, the London Court of Arbitration (LCIA) ruled at the end of June this year that the Indian firm Tata Sons should pay Docomo the fee for its 26.5% stake in the company. However, to deliver this payment, Tata Sons will require the authorisation of India’s central Bank and Finance Ministry.

Docomo’s latest statement on the ongoing dispute involves the Indian government directly, with the operator arguing that the Indian authorities are “legally bound to enforce” the ruling, saying: “Awards made in England by LCIA tribunals are recognised under the New York Convention, to which India was one of the original signatories on the 10th June 1958. As a signatory to the New York Convention, India is bound to enforce the award decision of the LCIA tribunal for Tata to pay $1.17 billion to Docomo.”

In 2009, the Japanese operator acquired its stake in Tata Teleservices for around $2.2 billion. With the venture failing to gain traction, by 2014 Docomo opted to pull out, exercising an option that obliged Tata to shift the stake for either fair market value or 50% of the original amount paid. Docomo filed for arbitration in 2015 on the grounds that Tata had not found a buyer, and won.

Following its court victory, Docomo has kept up the pressure on Tata, noting that the Indian firm could have paid it back via one of its overseas units to circumvent the requirement for the Indian government’s approval. Docomo has even claimed it could seize some of Tata’s European assets such as Jaguar Land Rover or its steel plants.

A key issue facing the compensation payment is that the Indian government has made it illegal to sell holdings in companies for more than their fair market value.

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