RCom’s Subsidiary Reliance Globalcom wins appeal against Tata Communications

Netherlands-based district court in Hague has upheld an order by the arbitration tribunal of the International Chamber of Commerce in 2006 directing Videsh Sanchar Nigam Ltd (VSNL, now Tata Communications) to permit Reliance Globalcom (formerly Flag Telecom) to upgrade its bandwidth capacity at the cable landing station in Mumbai.

The district court has also ordered the Tata group company to pay proceeding charges of euro 13,092 plus euro 12,844 for legal representation to ADAG. The decision comes just ahead of a final verdict on the dispute in which Flag Telecom has separately sought $400 million (Rs 1,600 crore) in damages. Hearings for this issue have ended.

Under an agreement with VSNL, Flag terminated its undersea cable at the Tata group company’s landing station at Mumbai. This meant Flag also required VSNL’s permission to upgrade cable capacity. In 2004, VSNL denied Flag this permission on various technical grounds. ADAG filed for arbitration with the international tribunal in December 2004 against Tata Communications on two accounts. One, it had asked for directions to allow the company to upgrade the capacity of the Indian leg of the cable. Two, it demanded compensation for the business opportunity it had lost due to its inability to upgrade the capacity.

This significant development will pave the way for further expansion and will result in reduced costs for RCom and improvement in services to RCom’s customers. The group has already announced laying of cable at the cost of $400 million connecting 14 countries in West Asia to India and seamlessly integrated with Flag Global Network. Currently, the cable connects 39 countries across four continents. 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.