Mumbai: Tata Sons Ltd. and NTT Docomo Inc. agreed to settle a dispute over a $1.2 billion arbitration award in favour of the Japanese company after their Indian mobile-phone partnership soured. Shares of a unit of the joint venture jumped as much as 20 per cent in Mumbai.
In separate statements, Mumbai-based Tata Sons and Tokyo-based Docomo said they jointly applied to the Delhi High Court to enforce the compensation ordered by a London arbitration court in June 2016. The companies also agreed to suspend proceedings in the US and the UK. The Indian court will decide on whether to accept the accord on March 8.
Docomo has been fighting India’s largest conglomerate over the right to sell its stake in closely held Tata Teleservices Ltd. for at least 50 per cent of the original $2.6 billion investment made in 2009. India’s central bank weighed in on the dispute, citing a new rule that foreign investors could exit an investment only at prevailing “fair value,’’ effectively barring Docomo from receiving the money already deposited by the Indian partner.
At a hearing at the Delhi High Court on Tuesday, a lawyer representing the Reserve Bank of India said he would have to seek instructions from the central bank to clarify its stand on the settlement application. The court said it will hear all concerned parties at the March 8 hearing.
A resolution of the dispute would allow Tata Sons to move on after a boardroom coup that saw the ouster of Chairman Cyrus Mistry last October. Ratan Tata, who briefly returned to Tata’s helm, sought to honour the agreement with Docomo. The handling of the dispute by Mistry was one of the reasons for his replacement by Ratan Tata, people with knowledge of the matter said earlier. Mistry’s stalling was seen as an erosion of the Tata ethic of honouring commitments, according to the people.
Shares of Tata Teleservices Maharashtra Ltd., a listed unit of the venture, soared 20 per cent, the biggest jump in four months, as of 2:21 p.m. in Mumbai. Docomo shares fell 0.8 per cent in the final minutes of trading in Tokyo as it remains uncertain whether the Indian court will ratify the settlement.