The Madras High Court on Wednesday decided to begin hearing from April 5 the arguments on the maintainability of a case filed by the State government to restrain Japanese automaker Nissan Motor from proceeding with international arbitration initiated by it against the Republic of India. The dispute was with respect to alleged non-payment of tax incentives worth more than $770 million for having established a vehicle manufacturing unit at Oragadam near here.
Justice Anita Sumanth fixed the date after Advocate-General Vijay Narayan objected to Nissan’s request to adjourn the case to June just because the arbitration proceedings had been deferred to November.
“Nobody has a vested right to seek adjournments. On our side, we have some urgency. We would like to have it in the first week of April. If your lordship grants an interim order, then we have no problem in hearing the matter even in September,” he said.
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In December 2017, the State government had filed the case on the ground that the automaker ought not to have initiated international arbitration proceedings against the Centre alone when a Memorandum of Understanding (MoU) entered between the company and the State government provides for domestic arbitration. The State government apprehended that it may have to cough up a huge amount of money if Nissan happened to succeed in the international arbitration.
Centre’s stand
On its part, the Centre took a stand that it would be better if domestic courts refrain from interfering with international arbitration initiated under the provisions of the Arbitration Rules of the United Nations Commission on International Trade Law (UNCITRAL) and the Comprehensive Economic Partnership Agreement between Japan and the Republic of India (CEPA) since the Centre was backing the State government and confident of succeeding in the arbitral proceedings. It was brought to the notice of the court that the Centre had, in fact, questioned the jurisdiction of the international arbitral tribunal and insisted that the dispute should be resolved only through domestic arbitration with its seat in Chennai as per the MoU. However, on its part, Nissan Motors had filed a counter-affidavit stating that the State government could not object to international arbitration initiated by it against the Republic of India for having failed to protect its investments.
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Since the pleadings in the case had been completed with all necessary parties having filed their counter-affidavits, the judge decided to commence hearing of oral arguments from April 5.