BizNewZ!

SINGAPORE COULD BE
POSSIBLE SITE FOR RANBAXY ARBITRATION


If Daiichi Sankyo, the Japanese parent of Ranbaxy Laboratories,
decides to pursue arbitration
against the latter's previous promoters, this might be in
Singapore, it is learnt.
According to sources in the know, the agreement signed
between Daiichi Sankyo and the former promoters of Ranbaxy in 2008, at the time of purchase of the latter by the former, contains a provision to this effect.
On May 13, Ranbaxy pleaded guilty in the US of making
fraudulent statements to the US Food and Drug Administration
(FDA) related to testing of drugs
in the past for gaining approvals.
The company also agreed to pay a fine of $500 million. On May 22,Daiichi said it was evaluating legal remedies against the
former promoters for hiding critical information related to
investigations by the FDA and the US department of justice (DOJ) at the time of purchase.
"Daiichi Sankyo believes that certain former shareholders of Ranbaxy concealed and misrepresented critical information concerning the DOJ
and FDA investigations. Daiichi
Sankyo is currently pursuing its available legal remedies and
cannot comment further on the subject at this time," the
Japanese drug maker had said.
When asked on the arbitration issue, Daiichi Sankyo said in an e-mail response to a questionnaire sent by Business Standard, "As we mentioned in the previous release, we will not be commenting further at this time."
Singapore is considered the hub for arbitration in Asia, according to Arun Chawla, assistant
secretary general, Federation of Indian Chambers of Commerce and Industry. "The institutional arbitration structure is very strong in Singapore. Unlike India,where arbitrations are essentially carried out in English, institutions
in Singapore have the capability to arrange for various laws and
languages," he said.
"Singapore also has strict regiments for time and schedule.
In India, arbitrations are slow,primarily because of judicial
intervention," says Indian Council
of Arbitration president N G Khaitan.
Daiichi Sankyo had bought the entire 34.82 per cent stake in Ranbaxy from its promoters,Malvinder Mohan Singh and
family, in 2008 for $4.2 billion.
Singh is now executive chairman
of Fortis Healthcare.
Singh, however, counters Daiichi Sankyo's charges as "false and baseless". "Daiichi Sankyo
purchased the Singh family's interests in Ranbaxy after a long
negotiation process and after conducting full due diligence on
the affairs of Ranbaxy. The negotiations on behalf of Daiichi
Sankyo were led by Takashi Shoda, Daiichi Sankyo's current
representative director and chairman, and Tsutomu Une, executive director, who is also the current chairman of Ranbaxy.
They and Daiichi Sankyo were legally advised," he said.
Sources said the battle between the current owners of Ranbaxy
and its former promoters is likely
to get stretched and become a major corporate war in the near future.
According to reports, Daiichi on April 29, almost a month before it spoke about legal action against
Ranbaxy's ex-shareholders, had
filed five caveats in the Delhi high court, seeking to prevent any stay order being issued against it
without being heard.
Daiichi started negotiations with
the former Ranbaxy promoters in 2007 and signed the initial
agreement in June 2008. The deal was finally concluded in
November that year. Meanwhile,the US FDA imposed an import
alert on Ranbaxy's facilities in Poanta Sahib and Dewas, and
banned 30 drugs in the US from these units.