Saturday, 25 January 2014

SC allows WSG-MSM arbitration on IPL facilitation fee issue

The Supreme Court on 24 January set aside an earlier Bombay High Court order and allowed sports marketing agency World Sport Group to proceed with arbitration against Multi Screen Media (MSM), erstwhile Sony Entertainment Television, on the issue of facilitation fee payment for the IPL broadcast rights. 
The Bombay HC had restrained World Sport Group (Mauritius) from proceeding with the arbitration. As per the contract, WSG had wanted the dispute to be resolved through arbitration in Singapore. However, MSM insisted it be decided in a regular trial before the court. The companies have fallen out over a facilitation fee deal for the media rights for the IPL.

Earlier, a single-judge bench had allowed the arbitration, which had been set aside by the division bench of the high court. 
“We allow the appeal, setting aside the impugned judgement of the division bench of the high court and restore the order of the learned single judge,” the apex court bench, comprising justices AK Patnaik and Fakkir Mohamed Ibrahim Kalifulla, observed after hearing on a PIL filed by WSG. 
The court stated that “it has been rightly held by the learned single judge of the Bombay High Court that it is for the arbitrator to decide this dispute in accordance with the arbitration agreement.” 
As per the IPL broadcast rights deal signed in 2009, MSM was to shell out a facilitation fee of Rs. 425 crore ( Rs. 4.25 billion) to WSG for the global rights to broadcast the IPL. However, on 30 May 2010, the Board of Cricket Control in India (BCCI) wrote to MSM stating that WSG had no role to play in the execution of the contract and hence, the ‘facilitation fee’ was to be paid to the BCCI. 
Thus, MSM stopped payment to WSG, though it had already handed over Rs. 125 crore ( Rs. 1.25 billion). Further, MSM renegotiated a direct nine-year broadcast rights deal with the BCCI for Rs. 8,200 crore ( Rs. 82 billion). 
However, WSG maintained that it was the original worldwide rights holder. Later, it initiated arbitration proceedings against MSM, claiming it was entitled to the facilitation fee.


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