The Tamil Nadu government
has moved the Madras High Court, seeking an injunction restraining Japanese carmaker Nissan
from proceeding with its international arbitration against India. The company has sought Rs 5,000-crore dues
from Indian government.
The state argued that the matter should have been taken to the local courts first and that Indian government
cannot be made a party to the arbitration process.
had sent a notice to Prime Minister Narendra Modi
and his government, seeking the recovery of the said amount that included unpaid incentives, interest charges and damages- all of which were supposed to be cleared by the TN government, rued the firm.
has also initiated international arbitration proceedings against the Union Government in this regard.
Narmadha Sampath, a special government pleader (Taxes) in the Madras High Court, confirmed the development saying the matter came up on Monday and the court has ordered in favour of issuing a private notice to all parties involved in the matter.
Nissan’s advocate, who will be handling this case, has received the notice issued to all involved parties.
The state's Industries Department had asked the court to intervene and stall arbitration proceedings, citing terms and conditions of the signed contract. According to the contract terms, disputes would settled under the jurisdiction of the Arbitration Act of 1996- a provision to which the firm would itself be subjected to.
“Our argument is that they (Nissan) are bound by those terms and conditions and now they can’t bring a new scenario and invoke the jurisdiction of an international court of law,” Sampath said.
An executive close to the development said: "We are asking the Indian government
to uphold its commitments made in the India Japan Comprehensive Economic Partnership Agreement (CEPA). Under that treaty, we are entitled to seek international arbitration. We have taken the action as a last resort and are committed to working with the Indian government
to resolve the issue."
has sought payments
for setting up a car manufacturing plant in Tamil Nadu, as part of a 2008 agreement. The agreement between Nissan
and the state is to refund the incentives over a period of 21 years but the company wants to get the accruals in a short period, alleged an official.
“We have also told the court that in the CEPA
Agreement, commercial taxation-related issues and sovereign issues are not discussed. We are trying to bring this to the notice of the court. They are taking a wrong plea in CEPA, for which the jurisdiction is CEPA
itself. Before going to the international court, they need to seek remedies available in the existing memorandum of agreement (MoU) signed between the two parties,” added the official.