Tata Communications to challenge verdict in Flag case

Mumbai: Tata Communications, formerly Videsh Sanchar Nigam Ltd, is planning to challenge a Dutch court verdict allowing Anil Ambani Group's Reliance Globalcom (formerly Flag Telecom) access to its cable landing station in Mumbai.

"Tata Communications is disappointed with the decision of the Hague Court and is considering its options for appeal with its advisers," a Tata Communications statement said.

The district court in the Hague, Netherlands, has upheld a 2006 ruling of an arbitration panel which had ruled that Tata Communications must give Reliance Globalcom access to its landing station in Mumbai.

The court also ordered the Tata group company to pay Reliance Globalcom euro 13,092 and euro 12,844, respectively, in proceeding charges and for legal representation. 

Reliance Globalcom, a subsidiary of Anil Ambani-owned Reliance Communications, had sought damages to the tune of $400 million from Tata Communications for not allowing it to upgrade its bandwidth capacity at the cable landing station in Mumbai. 

''Given that none of the arguments advanced by VSNL is accepted by the court, its claims will have to be rejected,'' the court said in the judgment. 
 
''In connection with determining the amount of cost to be awarded in favour of FLAG, the court will consider the underlying substantive interest of the case. Both parties have indicated at the occasion of the oral argument that the underlying substantive interest amounts to approximately $400 million,'' the court added.

Flag Telecom was acquired by ADAG in January 2003. ADAG wanted to increase the capacity of the cable from 10 gigabytes to 180 gigabytes to cater to the growing demand for bandwidth in India.

It also wanted access for enhancing the capacity of the FEA cable system from 10 Gbps to 80 Gbps. However, VSNL said it was not under obligation to grant access under the construction and maintenance agreement between the two parties.
 
FLAG accused VSNL of denying it free access to its cable landing station and therefore of monopolising bandwidth market.

The dispute culminated in FLAG referring the matter to the international tribunal of the ICC (International Chamber of Commerce). In May 2006, the arbitration panel ordered VSNL to allow FLAG access to the FEA cable landing station.

With the international arbitration council ruling in its favour, ADAG had upgraded FLAG capacity to 80 gigabytes.  The group also announced a $400 million upgradation of capacity.

VSNL then challenged the tribunal's decision in the Hague court. Now that the district court has rejected it, the tribunal can go ahead and award the final settlement.

The district court has not passed any ruling on the damages claimed by FLAG and it is now up to the ICC arbitration panel to take a final view on the issue.

Flag is now in a position to enhance the capacity of cable system from 10 Gbps to 80 Gbps, for which it needs access to Mumbai landing station, a Reliance Globalcom statement said.

The company had recently announced a $1.5 billion project under which it would be laying 50,000 km of fresh optic fibre, bringing in over 65 countries across six continents within its network.