Japanese auto maker Nissan Motor on Tuesday informed the Madras High Court that an international arbitral tribunal had disposed of its interim application to restrain the High Court from proceeding with an anti-arbitration suit filed by the State Government, and therefore, the court could proceed with the hearing.
Senior Counsel P.S. Raman made the submission before Justice Anita Sumanth who decided to test the maintainability of the suit on March 6 before going into the merits of the case. The automaker as well as the Centre had questioned the maintainability on the ground that domestic courts should keep their hands off international arbitration.
Additional Solicitor-General G. Rajagopalan had already told the court that the Centre supported the State Government on the merits of the case. It was, however, not in favour of domestic courts interfering with international arbitration proceedings. The court was also told that the Centre had raised jurisdictional issue before the tribunal itself.
It was further brought to the notice of the court that the Centre had filed elaborate objections before the tribunal questioning the invocation of arbitration clause under the Comprehensive Economic Partnership Agreement between Japan and the Republic of India (CEPA) when a tax dispute was pending between Nissan Motor and the Tamil Nadu government in domestic courts.
Invocation of CEPA clause
The international arbitral tribunal was also told that a Memorandum of Understanding (MoU) entered between the Japenese automaker and the State government provides for arbitration in Tamil Nadu itself, and therefore, that arbitration clause must have been invoked by the company instead of the clause under CEPA.
The tribunal had recently given time till August for Nissan Motor to submit its reply to the objections raised by the Centre and decided to commence hearing on the jurisdictional dispute by September.
International arbitration had been initiated by the automaker to recover incentives worth $770 million with respect to an automobile manufacturing facility established by it in the State. However, the State Government had sought to restrain the arbitration since only the Centre was party to it.
