Bid for coal asset in Russia: Tata Power loses legal challenge to Arbitration Award against it
New Delhi: Tata Power has lost its challenge to a USD 490 million arbitration award in favour of investor Kleros Capital Partners over a failed bid for a coal asset in Russia.
The Singapore International Commercial Court has upheld the arbitral award and dismissed Tata Power’s challenge to the damages awarded to Kleros, as well as its claim that the majority arbitral order had breached principles of natural justice.
The court also ordered Tata Power to pay Kleros’ legal costs, with the amount to be determined separately.
The dispute stems from a 2013 proposal by Kleros to jointly bid with Tata Power for a Russian coal deposit that Kleros estimated contained reserves worth about USD 1.1 billion. The companies signed a non-disclosure agreement that was effective for four years from September 2013.
Their relationship deteriorated in 2015 over disagreements about leadership of the proposed bid and the ownership structure of the project, according to the court order. The collaboration ended the following year.
Kleros later opted not to participate in Russian federal auctions held in December 2017 and subsequently wound down its operations in the country.
Tata Power, through a Russian subsidiary, bid for the coal asset after the non-disclosure agreement with Kleros had expired and secured the mining licence. The company later surrendered the licence after concluding that the project was not commercially viable.
Kleros subsequently commenced arbitration proceedings, alleging that Tata Power had improperly used confidential information and acted in bad faith to shut it out of the project.
The arbitral tribunal awarded Kleros damages of about USD 490 million. Tata Power challenged the award before the Singapore court, disputing both the quantum of damages and the validity of the majority decision.
The court rejected Tata Power’s arguments and upheld the arbitration award in full, bringing a setback to the company’s legal challenge over the long-running dispute. (BVI)
