The emergency arbitrator said it lacked jurisdiction to intervene, stating that such matters fall within the statutory system and are the NCLT's prerogative.
The Singapore International Arbitration Centre (SIAC) rejected Sony Group's plea against Zee Entertainment Enterprises' appeal before India’s insolvency tribunal seeking implementation of the merger scheme with the Japanese media company's local unit.
Sony had sought to prevent Zee from pursuing legal remedies at the National Company Law Tribunal (NCLT) and other forums. The emergency arbitrator ruled that it lacked jurisdiction to intervene, stating that such matters fall within the statutory system and are the NCLT's prerogative.
Expressed disappointment in the decision, Sony, in a statement said, "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 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.”
The dispute stems from Sony Pictures' termination of a $10-billion merger with Zee on January 22, citing Zee's failure to meet financial thresholds and other pre-conditions outlined in the agreement. Seeking a $90 million termination fee due to alleged violations, Sony initiated emergency arbitration proceedings against Zee at the SIAC.
In response, Zee contended that Sony's subsidiaries, Culver Max Entertainment and BEPL, lacked the entitlement to terminate the agreement, dismissing the $90 million fee claim as legally untenable. Expressing discontent, Zee announced plans to initiate legal proceedings against Sony at both the NCLT and SIAC, calling on Culver Max and BEPL to retract the termination and fulfill their obligations under the merger scheme.
Zee's petition before the NCLT alleges Sony's termination was pre-determined and highlights Zee's good-faith proposal for a six-month extension during the 30-day discussion period. The merger, initially approved by regulatory authorities in December 2021, faced obstacles when SEBI took action against Subhash Chandra and Punit Goenka, initially banning them from key managerial positions in listed entities.
The Securities Appellate Tribunal later overturned SEBI's order, allowing Goenka to assume the role of chief executive and managing director in the merged entity. However, Sony still expressed concerns about Goenka leading the merged entity.