Tata to Seek India Nod to Resolve $1.2 Billion Docomo Spat

  • Ratan Tata looks for amicable solution after returning to helm
  • Conglomerate to seek government approval to make payment

Tata Sons Ltd., reversing course after ousting Chairman Cyrus Mistry, plans to seek Indian approval to pay $1.17 billion to estranged partner NTT Docomo Inc. as it looks for an amicable solution to their legal tussle, people with knowledge of the matter said.

Ratan Tata, who suddenly returned to the helm of India’s largest conglomerate last week, has restarted discussions with NTT Docomo on resolving the dispute outside the courts, according to the people. Tata Sons plans to reapply to the country’s central bank and finance ministry for permission to pay the arbitration award to NTT Docomo, the people said, asking not to be identified because the information is private.

NTT Docomo has been fighting Tata Sons over the right to sell its stake in their Indian wireless venture for at least 50 percent of the original investment. The Japanese company has asked an Indian court to enforce an order it won in June from the London Court of International Arbitration, which ruled Tata should pay $1.17 billion to NTT Docomo. The Indian central bank has signaled such a payment would violate foreign-investment rules.

“The fact that the Tatas have reached out to resolve the issue amicably speaks of the sensitivity” they have toward resolving disputes, Alok Shende, founder of Ascentius Consulting, a management advisory firm. “This fracas also alludes to the ambiguity in legal provisions for cross-border deals and that some provisions are not harmonized with international practices. Such instances do impact country risk profiles.”

The companies believe Indian Prime Minister Narendra Modi is keen to resolve the spat, which has been cited as an example of the difficulty of doing business in the country, according to the people. India’s government, which previously rejected a Tata Sons request to pay the arbitration award to NTT Docomo, would be willing to consider a new application, one of the people said. 

For a QuickTake Q&A on the dispute, click here.

Tata Sons and NTT Docomo hope to find a solution as soon as this month, according to the person. Legal representatives from both companies plan to meet soon to discuss a friendly way to resolve the dispute, another person said.

Shares of Tata Teleservices Maharashtra Ltd., a listed arm of the Indian conglomerate’s venture with NTT Docomo, surged as much as 8 percent in Mumbai trading Thursday. It was up 3.7 percent to 7.10 rupees at 12:08 p.m. local time.

A spokesman for Tata Group said he has no comment, as the matter is subject to legal action. Representatives for NTT Docomo and the Indian finance ministry also declined to comment, while the Reserve Bank of India didn’t immediately respond to a request for comment.

NTT Docomo Chief Executive Officer Kazuhiro Yoshizawa said last week the Indian government will need to take action to resolve the disagreement.

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