Tata Com directed to pay damages to RCom subsidiary

The International Chamber of Commerce (ICC), the global arbitration tribunal, has directed Tata Communications to pay a Reliance Communication subsidiary approximately $19 million plus interest from May 2006 as damages over a cable dispute.

“In the matter of the ICC arbitration proceedings brought by Reliance Globalcom Ltd ("Reliance"), formerly known as 'Flag Telecom', against Tata Communications Ltd, the Tribunal has, on August 27, 2008, handed down a final award dealing with the issue of damages,” Tata Communications said in a statement on Monday.

“The Tribunal has directed Tata Communications to pay Reliance a sum of approximately US $ 19 million plus interest from May 2006 as damages, against the $ 385 million sum claimed by Reliance,” the statement added.

Tata Communications said this was the tribunal's final award in the ICC arbitration proceedings over a dispute regarding FEA (Flag Europe Asia) cable, ongoing since 2004.

The dispute between the two companies goes back a few years, when FLAG accused the then state-owned Videsh Sanchar Nigam Ltd or VSNL - now Tata Communications - of denying it free access to its cable landing station and thereby having a monopolistic hold on bandwidth prices.

FLAG wanted access for enhancing the capacity of the FEA cable system from 10 Gbps to 80 Gbps. (Gbps stands for "billions of bits per second" and is a measure of bandwidth on a digital data transmission medium such as optical fibre).

However, VSNL said it was not under obligation to grant access under the construction and maintenance agreement between the two parties.

The dispute culminated in FLAG referring the matter to the ICC.