Chennai: India’s argument at the Permanent Court of Arbitration in Singapore on a Nissan case was rejected and the government is to file an appeal, state reports.
The country’s argument was that the court does not have the jurisdiction to rule on a case brought against India by Japan’s Nissan Motor, said a report from Reuters.
If India had won the plea, the entire case would have been thrown out, said one of the people who has direct knowledge of the matter, the report said and added that the Indian government is now likely to file an appeal with Singapore’s Supreme Court.
Nissan sent a legal notice to Indian Prime Minister Narendra Modi’s administration in 2016 claiming more than Rs 5,000 crore ($720 million) in a dispute over incentives it said were due from Tamilnadu as part of a 2008 agreement to set up a car manufacturing plant in the State.
The Japanese car maker brought the case against India for alleged violation of a Comprehensive Economic Partnership Agreement (CEPA) the country has with Japan. The CEPA gives some protections to Japanese firms investing in India and vice versa.
India, according to the source, agreed to have the arbitration in Singapore, filed a plea in 2017 saying the arbitration court in Singapore does not have the authority to rule on the case for many reasons, including that it was a tax-related matter outside the purview of the CEPA with Japan.
The international tribunal, in a 140-page order dated 29 April, denied India’s objections, saying it has the authority to rule on the matter and would hold the final hearing in February 2020 after submission of evidence and arguments from both sides.
Nissan said in a statement it ‘continues to work with the government to resolve this matter’.
In April, the Nissan Motor Co and authorities of the State were close to settling the dispute. The proposed settlement said Nissan would take a lower payout of about Rs 2,000 crore in unpaid dues and forego sums it has sought in damages.
The Tamilnadu government had already paid Nissan some money and the proposal said the State would pay the automaker Rs 300 crore upfront once the deal was signed, with the remainder paid by the end of the year 2019 in 10 instalments.
If the two decide to settle, Nissan has the option to withdraw its arbitration case against India.
| Background |
| In 2008, when Nissan and its partner France’s Renault SA agreed to set up a car plant in Chennai, the State government promised several incentives.
Nissan and Renault have invested Rs 61 billion to set up the factory which has an annual production capacity of 4.8 lakh vehicles and has created more than 40,000 jobs. The Japanese car maker in its 2016 notice claimed Rs 29 billion in unpaid incentives from Tamilnadu and Rs 21 billion in damages, plus interest and other costs. The Tamilnadu government, meanwhile, has been trying to settle the matter with Nissan since last year but has failed to come to an agreement on the final terms. |