Nissan Motor moves Arbitral Tribunal
In Madras High Court, Tamil Nadu accused the company of surreptitiously obtaining an order from international tribunal
The dispute between Japanese automaker Nissan Motor and India with respect to incentives of $770 million reportedly due to the company from the Tamil Nadu government has got mired into a bigger legal tangle. While the State government has approached the Madras High Court to restrain the company from proceeding with international arbitration, the latter has moved the International Arbitral Tribunal to forbear the government from proceeding with the case in the High Court.
Justice Anita Sumanth of the Madras High Court on Thursday dubbed “unfortunate” the automaker’s attempt to stall the proceedings pending before her after having accepted notice on the State government’s petition on Monday. The observation was made after Advocate-General Vijay Narayan, representing the State government, accused the company of having “surreptitiously obtained an order from the tribunal at 3 a.m. last night on its application for urgent interim relief.”
In his submissions, Additional Solicitor-General (ASG) G. Rajagopalan urged the court to simply adjourn the case by two weeks for filing a counter-affidavit by the Centre.
“Actually on merits, we are supporting the Government of Tamil Nadu,” he said, and added in the same breath that interference by local courts in international arbitration would have its own ramifications. Acceding to his request, the judge adjourned the case to December 20 for further hearing.
During the course of arguments, Senior counsel P.S. Raman, appearing on behalf of Nissan Motor, denied the allegations of the company having taken any steps to stop the proceedings before the High Court. He pointed out that an urgent interim relief had been sought only against the Centre. However, Mr. Narayan said the company had worded its plea so “cleverly” that a direction was sought against the State government too from conducting the case in the High Court.
He also produced a copy of the order passed by the tribunal comprising Kaj Hober of London, former Chief Justice of India Jagdish Singh Khehar and the presiding arbitrator Jean E. Kalicki from the United States. The order stated that it had been passed under the 2013 Arbitration Rules of the United Nations Commission on International Trade Law (UNCITRAL) and the 2011 Comprehensive Economic Partnership Agreement (CEPA) between Japan and the Republic of India.
It began with an observation that Article 96(21) of the CEPA makes it clear that an international arbitration tribunal constituted under its auspices was empowered to rule on any objections to its jurisdiction and pointed out that in the present dispute, India had raised such an objection by contending that investment disputes would not fall within the competence of the tribunal. Nissan Motor too had agreed to a preliminary hearing to decide the issue of jurisdiction.
It was also decided that a conference call between the parties and the tribunal would be held on December 14 to lay down the procedures and timetable for hearing the issue of jurisdiction. In the meantime, since Nissan Motor apprehended that the case filed by the Tamil Nadu government in the Madras High Court would imperil the arbitration proceedings, the tribunal directed the automaker as well as India to take all necessary steps to ensure that the High Court does not injunct arbitration proceedings at least until the issue of preliminary issue of jurisdiction was resolved.
A file picture of the Nissan Auto India plant in Chennai.