The Hindu Business Line : Reliance Comm's FLAG slaps notice on VSNL for $406 m

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Mumbai Feb. 6 Tatas-owned Videsh Sanchar Nigam Ltd said it received notice of a $406-million claim from FLAG Telecom, the global undersea cable business of Reliance Communications. The claim works out to over Rs 1,800 crore. VSNL's shares slid by 3.4 per cent on the BSE, closing at Rs 488.5 on Tuesday.

FLAG has approached the Arbitration Tribunal of the International Chamber of Commerce (ICC) seeking monetary relief in the FLAG-VSNL dispute with respect to the interpretation of the Construction and Maintenance Agreement governing the FLAG Europe-Asia cable system (FEA), said a statement from VSNL to the stock exchanges on Tuesday.

VSNL owns the Mumbai cable landing system of FEA

Monetary Claim

The earlier award of the ICC tribunal in May last year had gone in favour of FLAG. The partial award, by 2:1 majority, ordered VSNL, to grant FLAG access to the Mumbai cable landing station of the FEA cable system for upgradation to any level. In September 2006 VSNL had appealed this in a writ filed at the District Court in the Netherlands.

During a flare-up of the same dispute then, VSNL had said: "The Netherlands Court has already admitted the writ filed by VSNL. However, the award until it is set aside, is binding on VSNL and VSNL is fully compliant with its obligations. Indeed, VSNL and FLAG are currently liasing for the upgrade of the Mumbai cable landing station by FLAG."

FLAG's recent monetary claim is for the cost of lost opportunity. A spokesperson at the Reliance group said that they were following due process of litigation, first asking for upgrade, then pressing monetary claim for damages. VSNL said it is studying FLAG's claim and will file its response with the Tribunal in due course as per the schedule finalised by the Tribunal.

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