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Business News/ News / India/  Singapore emergency arbitrator denies Sony interim relief in Zee merger case
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Singapore emergency arbitrator denies Sony interim relief in Zee merger case

The emergency arbitrator said it had no jurisdiction or authority to prevent Zee from approaching the NCLT to implement the merger, since these matters were within the statutory system and thus for the NCLT to decide.

Sony had asked the Singapore tribunal to prevent Zee from seeking legal remedies from the National Company Law Tribunal (NCLT) and other legal forums. Illustration: ReutersPremium
Sony had asked the Singapore tribunal to prevent Zee from seeking legal remedies from the National Company Law Tribunal (NCLT) and other legal forums. Illustration: Reuters

The Singapore International Arbitration Centre (SIAC) on Sunday rejected Sony Group's emergency petition against Zee Entertainment Enterprises' plea before India's insolvency tribunal seeking implementation of the merger scheme with the Japanese media company's local unit.

In its application, Sony asked the tribunal to prevent Zee from seeking legal remedies from the National Company Law Tribunal (NCLT) and other legal forums.

The emergency arbitrator, however, said it had no jurisdiction or authority to prevent Zee from approaching the NCLT to implement the merger, since these matters were within the statutory system and were for the NCLT to decide, Zee said in an exchange filing.

Sony Pictures said, “We are disappointed in the decision by the Singapore International Arbitration Centre (SIAC). This decision is only a procedural one, ruling only as to whether Zee Entertainment would be permitted to pursue its application with the NCLT. We will continue to vigorously arbitrate the matter in Singapore in front of a full SIAC tribunal and pursue SPNI’s (Sony Pictures Networks India's) right to terminate the merger agreement and seek a termination fee and other remedies. We remain confident in the merits of our position in both Singapore and India."

On 22 January, Sony Pictures (Culver Max) terminated its $10-billion merger with Zee. In a letter, Sony had alleged that it had to terminate the merger because Zee failed to meet specific financial thresholds and other pre-conditions set out in the merger agreement. The two had parties received the NCLT’s approval to merge on 10 August last year.

Senior counsel Harish Salve appeared for Sony, while senior counsel Janak Dwarkadas and Davinder Singh, a Singaporean lawyer, represented Zee. Shyamala Venkatachalam, chief legal officer at Zee, has led the case.

Soon after sending the termination letter, Sony separately addressed Zee, saying it had initiated emergency arbitration proceedings against it before the SIAC.

Owing to purported violations of the terms of the merger agreement, Culver Max Entertainment (earlier known as Sony Pictures Network India), owned by Sony Group Corporation, sought a termination fee of $90 million from the Indian entertainment company.

Zee, however, claimed that Culver Max and BEPL, both subsidiaries of Sony Pictures Entertainment, were not entitled to terminate the agreement, and said the claim for a $90 million termination fee had no basis and was legally untenable. Aggrieved by the decision, Zee informed the exchanges that it would begin legal proceedings against Sony at the NCLT and the SIAC.

“The company has called upon Culver Max and BEPL to immediately withdraw the termination and confirm that they will perform their obligations to give effect to and implement the merger scheme, sanctioned by the Hon’ble National Company Law Tribunal. The company has reserved all its rights in this regard," Zee said.

In its petition before the NCLT, Zee alleged that Sony’s decision to terminate the merger was “pre-determined". It said that during the 30-day discussion, Zee, acting in good faith, proposed a six-month extension to complete the transaction.

The merger had received all necessary regulatory approval since it was first announced in December 2021. However, it hit a major roadblock after Sebi took action against Subhash Chandra and Punit Goenka for allegedly diverting funds, banning them from holding key managerial positions in any listed entity. Sony had then expressed reservations about Goenka leading the merged entity.

The Securities Appellate Tribunal, however, set aside Sebi’s order, paving the way for Goenka to become chief executive and managing director of the merged entity.

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Published: 04 Feb 2024, 05:55 PM IST
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