Tatas seek two weeks for replying to attachment order in Docomo case

MUMBAI: Tata Sons sought another two weeks to reply to the order that NTT Docomo could attach the former’s overseas assets to recover $1.2 billion in penalties that a London arbitration court awarded Japan’s largest telecom company.

“The meeting yesterday (on Thursday) went well,” said a person aware of Friday’s development. Docomo didn’t contest the extension in “good faith” to help ease the standoff, he added. Both the Tatas and NTT Docomo declined to comment.

Legal experts said the Tata group will likely challenge validity of the award that sidestepped Indian laws on foreign exchange in its response unless the two reach a resolution before that. The two-week mark puts the deadline just after the next hearing in India.




The issue remains before the Delhi High Court, where Tata Sons has deposited funds that can be transferred in case local rules can be changed or the court overrides them. The next Delhi High Court hearing is on August 30, the time that was given for the parties to resolve differences.

“It takes as much as two years to dispose of such correspondence in London. The best shot is to work (toward) an approval in India,” said a legal expert aware of Tata’s views The group has deposited the amount due with the high court as agesture of “good faith,” Tata said at the time.

The scuffle is over the diminished value of their joint venture Tata Teleservices. Docomo had asked for half its original $2.7-billion investment back after the organisation failed to meet profitability terms in the agreement at the end of five years. The Tata group pointed out it could only pay half the amount agreed to in 2008 because the Reserve Bank of India mandated a trade only at fair market price.

Late last month, Docomo served an order from London’s Commercial Court against Tata Sons to enforce the June 22 arbitration award against assets in the UK. The London court had granted Tata 23 days, ending August 19, to respond to the ex-parte order in favour of NTT Docomo allowing it to attach Tata assets overseas.

Lawyers have said courts in the US may also uphold the arbitration award and sources aware of DoCoMo’s thinking in the past have said the Japanese are keeping that option open.

While initial reports suggested Docomo would look to pursue Jaguar Land Rover and Tata Steel assets in the UK, some experts said that may not be possible as they have an independent corporate identity. Even a 100% group subsidiary cannot be tapped for award recovery, according to this view.

Docomo said previously it had identified assets on which it may "lift the corporate veil" and show them as belonging to Tata Sons even though they are held through other group companies.

Tata Sons has a minority shareholding in Tata Motors in India, which in turn owns Jaguar Land Rover. Also, Tata Sons has a minority shareholding in Tata Steel in India, which in turn owns Tata Steel Europe through arms based in Singapore and the Netherlands.