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Japan-Update

Delhi court upholds Daiichi Sankyo claim on ex-Ranbaxy owners

The Japanese drugmaker awarded $550m in damages

Ranbaxy was sold to Indian peer Sun Pharmaceutical in 2014.   © Reuters

MUMBAI -- The High Court of Delhi on Wednesday ordered owners of the former Ranbaxy Laboratories to pay about 35 billion rupees ($550 million) in damages to Japanese pharmaceutical company Daiichi Sankyo, upholding the verdict of an international arbitration tribunal.

Daiichi sought arbitration in 2012 with the dispute settlement arm of the International Chamber of Commerce, alleging that Ranbaxy's owners -- including brothers Malvinder and Shivinder Singh -- had hidden critical information when Daiichi purchased a major stake in the Indian drugmaker. The International Court of Arbitration ruled in Daiichi's favor in 2016, and the Japanese company sought to have the Delhi court enforce the penalty.

In a 115-page ruling, the presiding judge rejected the defense's arguments and ordered the owners to pay the damages awarded by the tribunal, plus arbitration fees and penalties for delays.

The brothers and other defendants may still appeal to the Supreme Court of India. Daiichi does "not imagine payment will be settled quickly," and intends "to keep careful watch over the proceedings," a representative of the Tokyo-based company told the Nikkei Asian Review.

In 2008, Daiichi bought a large stake in Ranbaxy in a deal worth about $4.6 billion. But the Indian company suffered from quality issues that resulted in an order from the U.S. Food and Drug Administration to halt exports to that market, among other blows. Ranbaxy was sold to Indian peer Sun Pharmaceutical Industries in 2014, and the following April, Daiichi sold off the Sun shares it had received as payment, extricating itself from management of Ranbaxy.

Conflicts such as the Ranbaxy case and Japanese wireless carrier NTT Docomo's dispute with Tata Group over Docomo's exit from an Indian joint venture, have left many Japanese companies wary of doing business in India. Concerns remain in India about the "impression Japanese businesses must have" of the country, in the words of a local economist.

In India, companies frequently face litigation over matters such as intellectual property rights, labor issues and defamation. That the Delhi high court found in Daiichi's favor will likely be taken as an encouraging sign by many foreign businesses.

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