Tata Power shares slide 4% after company loses $490 million arbitration challenge in Singapore. What's the case about?

Tata Power's shares plummeted by 4% on Thursday after a Singapore court dismissed the Indian energy company's attempt to contest a $490 million arbitration award stemming from a dispute with investor Kleros Capital Partners. The stock plummeted to its lowest point since early February, trading at Rs 349.50 per share. The situation has the potential to mark the sharpest single-day decline in near 17 months.

The disagreement between Tata Power and Kleros began in 2013 when the latter approached the former with a proposal to jointly bid for a Russian coal deposit. The two parties signed a non-disclosure agreement that lasted for four years, starting from September 2013. However, tensions escalated in 2015 as disputes arose over who would lead the bid and the ownership structure.

Kleros ultimately decided not to bid for the mine, while Tata Power submitted a bid through a Russian subsidiary and successfully won the mining license after the non-disclosure agreement expired in 2017.

Kleros accused Tata Power of breaching the non-disclosure agreement by misusing confidential information and acting in bad faith to prevent Kleros from participating in the project. Despite Tata Power's efforts to challenge the $490 million arbitration award, the Singapore International Commercial Court has rejected the company's arguments, stating that the majority arbitral order did not violate natural justice.