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The international Arbitral Tribunal handling the investment dispute between Nissan Motor and the Government of India has directed both parties to take action to defer any anti-arbitration ruling by the Madras High Court.
The Tamil Nadu government has filed an injunction petition in the Madras High Court to restrain the Japanese automobile company and its Indian subsidiary from proceeding with the international arbitration. The State government filed the injunction petition on December 4.
When the matter came up in court today, Nissan’s counsel PS Raman presented the court a copy of the arbitration order based on Nissan’s petition of urgent anti-suit relief.
The order by the Tribunal passed on Wednesday was in response to the Japanese motor company seeking a stay of the proceedings in the High Court initiated by the State government to prevent Nissan Motor and its Indian subsidiary proceeding with the international arbitration.
Nissan has approached the Tribunal seeking $770 million in dispute over unpaid State incentives. The dispute between Nissan Motor and the Tamil Nadu government relates to an agreement between the two in February 2008 ahead of the motor company investing in a ₹4,500-crore manufacturing unit in the State. The agreement provides for the State government extending tax incentives and other support to the company.
State government officials maintain that the incentives paid so far are in line with the agreement but the company is seeking accelerated disbursements and its claims are exaggerated. The Arbitral Tribunal constituted under the 2013 Arbitration Rules of UN Commission on International Trade Law and the 2011 Comprehensive Economic Partnership Agreement between Japan and India denied Nissan Motor’s request for an open ended order that India “take no other action of any kind that might aggravate or further extend the dispute submitted to the Tribunal.”
Deferred ruling
The Tribunal has also deferred ruling on Nissan’s allegation that the High Court proceedings were started in breach of the agreement to arbitrate. It will discuss the jurisdiction issue with the parties concerned during the preliminary conference call scheduled for December 14. It pointed out the Government of India has invoked a jurisdiction issue in the context of the agreement to arbitrate under CEPA and the dispute resolution clause in the MoU.
Meanwhile, counsel for Government of India told the Court that a detailed response would be filed.
The next hearing in the case is on December 20.
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