Arbitration panel asks Tata to pay $19 million in damages to RCom

Tata Communications Ltd (Tata Com) has lost the ICC arbitration proceedings at The Hague, brought against it by Reliance Globalcom Ltd - formerly known as as 'FLAG Telecom' - and will now have to pay $19 million plus interest to the Anil Ambani firm as damages.

The Tribunal's final award of 27 August  2008, on the dispute over allowing FLAG access to the Tata's Europe Asia Cable (FEA) landing Station in Mumbai, has directed Tata Communications to pay Reliance approximately $19 million plus interest from May 2006 as damages, as per the statement issued to the BSE.

Reliance has claimed damages of around $385 million as the cost of lost opportunity. Tatas had earlier received a notice of $406-million (over Rs1,800 crore.) claim from FLAG Telecom.

The dispute between the two companies on the FEA cable has been going on since 2004. FLAG accused Tata Communications Ltd (then VSNL) of denying it free access to its cable landing station and of keeping a monopolistic hold on bandwidth prices.

FLAG also wanted access for enhancing the capacity of the FEA cable system to 80 Gbps from 10 Gbps.

In May 2006, the arbitration panel ordered VSNL to allow FLAG access to the FEA cable landing station.

Tata Communications has lost its appeal against FLAG (now part of Reliance Globalcom) in April this year and the court had held that Tata Com would be ordered to pay the cost of the proceedings.

The Court, in its April 2008 order, stated: ''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.''

Internationally, Tata Com is one of the top three providers of wholesale voice services and wholesale Voice over Internet Protocol (VoIP) services.

Tata Com is also one of the largest providers of submarine cable capacity in the world, and is a global Tier-1 InternetServices Provider (ISP) and is a major player in the growing global IPTransit market.

Tata Communications is the only Indian telecom company identified by the Boston Consulting Group as one of the new global challengers.