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TAMIL NADU

State, Nissan Motor granted time by HC to settle dispute

Legal CorrespondentCHENNAI 15 JULY 2020 00:08 ISTUPDATED: 15 JULY 2020 00:10 IST    

Adjournment granted for one final time, says judge

The Madras High Court on Tuesday granted time till August 14 for the State government and Japanese automaker Nissan Motor to file a joint compromise memo for withdrawal of a case filed by the former to restrain the latter from pursuing international arbitral proceedings with respect to alleged unpaid incentives to the tune of $770 million.

Justice N. Sathish Kumar passed the order after he was told that the warring parties had reached a settlement over the financial dispute but it could not be finalised because of the COVID-19 lockdown. Directing counsel concerned to speed up the settlement proceedings, the judge said the adjournment was being granted one final time. The financial dispute relates to a manufacturing plant established by the automaker at Oragadam, on the outskirts of Chennai. Claiming that the State government had not paid incentives worth millions of dollars, the company went for arbitration by invoking the provisions of Comprehensive Economic Partnership Agreement between Japan and India (CEPA).

The international arbitral proceedings were kickstarted in February 2017 after serving an advance notice upon Prime Minister Narendra Modi in July 2016. Immediately, the State government rushed to the High Court to stall the proceedings since it was not a party to it, though the money claimed by the company had to be eventually paid by it. It was the contention of the State government that any dispute over non-payment of incentives could be resolved only through domestic arbitration. However, the Centre was confident of handling the issue effectively before the international arbitral tribunal and urged the High Court not to interfere with the arbitration since it was related to foreign affairs.Advertising

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Even as the case was pending before the High Court, the government and the automaker began efforts to arrive at an out of court settlement. They also continued to obtain adjournments from time to time on the ground that talks were proceeding at a steady pace and that they would arrive at a final settlement very soon.