Hague Court decision favours Flag in dispute with VSNL

The district court of the Hague, Netherlands, has upheld the decision of the arbitration panel...

The district court of the Hague, Netherlands, has upheld the decision of the arbitration panel that Videsh Sanchar Nigam Ltd (VSNL) — now renamed Tata Communications — must allow Flag Telecom 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 the Mumbai landing station, 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 passes through 15 countries. In India, it is routed through Tata-run VSNL, which controls its ‘Mumbai landing station’. Due to technological advances, 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 the Mumbai landing station.

But VSNL’s stand was that under the Construction and Maintenance Agreement between the two, it was not under 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 Flag has access to not only Mumbai, but also to each landing station of the cable system for installations, inspections and to equip the FEA with higher capacity.

Story continues below this ad

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.

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.