MSM petition over facilitation fee arbitration dismissed

The Bombay High Court has dismissed MSM Satellite (Singapore) Pte Limited's petition asking it to prevent World Sport Group (Mauritius) from seeking to resolve their dispute over the IPL media rights 'facilitation fee' through international arbitration.

The original agreement between WSG and MSM states that any disputes between the two parties must be settled by an international arbitration under English law conducted by the International Chamber of Commerce in Singapore. However MSM, the official broadcasters of the IPL, opposed the arbitration process and wanted the High Court to rule on the dispute.

Justice Roshan Dalvi's dismissal of the case means the arbitration process can go ahead unimpeded. "The court has taken a very clear stand," Suhas Tuljapurkar, a lawyer for WSG, told Cricinfo. "If you have agreed to arbitration, you have to go through arbitration." Cricinfo has learnt that these proceedings are already underway and typically take about a year to complete.

The facilitation fee arose out of the restructuring of the television rights deal following the first IPL. WSG India had originally bought the worldwide telecast rights of the IPL for ten years (2008 to 2017) at a cost of over $1 billion. Meanwhile MSM had secured the rights to broadcast in India for five years (2008 to 2012) and had the option of securing the rights for the remaining five years (2013-2017) by paying WSG an option fee of $25 million.

However, the board cancelled the original rights deal in 2009 and renegotiated its deal with WSG Mauritius. On its part, MSM did not want to renegotiate with WSG, wanting a direct contract with the board instead. The result was that MSM eventually negotiated a deal with the BCCI for the same price and duration as WSG Mauritius, in lieu of the latter relinquishing its rights.

In a statement released by MSM on April 23, 2010, the company stated the payment of the fee to WSG Mauritius was "for the original option fee of $25 million (Rs 115 crores approximately) to extend the rights to years six till 10 and an additional fee over the nine years of the contract of Rs 310 crores ($55 million approximately).

"These fees were to compensate WSG Mauritius for returning its rights for IPL season 2 - 10 to BCCI in favour of MSM, and were necessary if MSM was to secure the rights to IPL season 2-10. "

The BCCI subsequently argued that the fee was an "improper payment" and restructured the media rights agreement with MSM in June to recover the facilitation fee from WSG. A representative for MSM declined to comment for this story.