The Hindu : Business : Dutch court decision favours Flag

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Tuesday, Apr 08, 2008
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Dutch court decision favours Flag

MUMBAI: The District Court of the Hague, Netherlands, has upheld the decision of the arbitration panel that VSNL, now renamed Tata Communications, must allow Flag Telecom an access to Flag Europe Asia Cable Landing Station in Mumbai.

Flag Telecom (now known as Reliance Globalcom), a subsidiary of Anil Ambani-led Reliance Telecom, wanted access to Mumbai landing station of Flag Europe Asia cable (FEA), a submarine fibre optic cable that runs from England to Japan, for the purpose of enhancing its capacity, according to the English translation of the judgment made available last week.

FEA, also called as landing stations, passes through 15 countries. In India, it is routed through Tata-run Videsh Sanchar Nigam Ltd., which controls its ‘Mumbai landing station’.

Flag, due to technological advances, is now in a position to enhance the capacity of the cable system from 10 Gbps to 80 Gbps, for which it needs access to the Mumbai landing station.

But VSNL’s stand was that under the construction and maintenance agreement between the two, it was not under the obligation to grant access to Flag. So Flag took the matter for arbitration before the International Chamber of Commerce.

On May 17, 2006, a three-member arbitration panel held that not only Mumbai, but Flag also had access to each landing station of the cable system, for the purpose of installing, inspecting etc and to equip FEA with higher capacity.

VSNL approached the Hague District Court, seeking to set aside this award.

It contended that arbitration tribunal’s decision was unreasoned, and contrary to the terms of contract between VSNL and Flag.

However, in its judgment last month, the bench of H. Wien, P Joele and C. H. Van Dijk rejected VSNL’s application.

It said, “none of the arguments advanced by VSNL were acceptable to the court.”

The court said a civil court can interfere with arbitration panel’s decision only if it is wholly devoid of reasons, or the reasoning is of poor nature that it can be equated with a unreasoned order.

VSNL will pay euro 248 for expenses and euro 12,844 for legal representation to Flag, the court added. — PTI

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