Tata vs Docomo: A match made in heaven takes an ugly turn

It started as a big deal in the telecom space but it has now turned into one of the most bitter disputes Corporate India has seen.The fight between Tata Sons and Japanese major NTT Docomo has reached a point where both the estranged parties have stooped to media posturing and mud slinging in public. In the latest edition of CNBC-TV18's 'Big Deal', Gopal Jain, Advocate, Supreme Court and Saionton Basu of Duane Morris LLP explain this ongoing feud and the possible outcome.Below is the verbatim transcript of Gopal Jain and Saionton Basu's interview to Nisha Poddar on CNBC-TV18. Q: What do you make of this dispute and what is the point of contention here? Jain: Well, there are big disputes and maybe this is one of the bigger disputes, but it is not that we have not had big disputes whether it was in the telecom sector or other sector, they have seen disputes, but let us put this whole thing in context and perspective, which is this that there is a contract which is executed let say between two contracting parties. Now in the India context that’s the contracts are always subject to what I would call the overarching regulatory and legal regime. When an investor comes to execute a contract or decides to invest, they have to take into account the contract, the legal and the regulatory regime. Now it is in this lens or this prism that we have look at these issues. One side is saying, look I have invested I am entitled to get a particular predetermine fix rate, the other side’s contention really is, look there are regulatory restrictions and even if we want to comply with it, it will have to be subject to the regulation and in this context I just wanted to give one judgment of the Supreme Court, which was in the case of Power Trading Corporation where they have very clearly said and 5 judges of the Supreme Court have said, that look all contracts are subject to the regulatory regime. I think the crucial issue here is that contract and regulation have to be seen together and at the end of the day if they are harmonious, I think that’s a very good sign, but if there is an inconsistency or there is a legal or regulatory requirement, then the contract has to yield to and be subservient to what I would say are the regulatory stipulations and requirement. So this is the way forward, this is really the key issue as I see it. Q: Where does the powers of London Court of International Arbitration (LCIA) really stand in this particular space, because DoCoMo says that India is bound to pay, what arbitration court has really awarded? Basu: Once an LCIA award is rendered, that has to go back to the domestic jurisdiction, in this case India for enforcement and there again just as has been discussed earlier, there is one exception to enforcement of a foreign arbitral award, which is key here, which is if it is contrary to the fundamental policy of Indian law, then a court may refuse execution. An Indian Court would not sit as a second appellate body over findings of fact, but if the arbitral award is found to be in contrary to the fundamental policy of Indian law that could be refused. So that is one way that DoCoMo has proceeded, the other way they have proceeded which I have realised is that they have moved to seize some assets of one of the parties to the agreement in a London Court, which I believe has been passed ex parte and therefore Tatas have another opportunity to agitate that before the London Court. Just to summarise that in one nutshell, an Indian Court is well within its rights to refuse this, whereas the London Court can and proceed an order or assets assuming that the shareholder base is the same as the once against whom the award has been rendered.