The Tamilnadu government on Wednesday withdrew a case filed by it in the Madras High Court in 2017 to restrain Japanese automaker Nissan Motor from proceeding with an international arbitration to recover $770 million.Nissan alleged the government failed to make timely payment of investment promotion incentives.Justice N. Sathish Kumar dismissed the case as withdrawn after he was informed that the Industries Secretary N. Muruganandam had written to Additional Advocate General Narmadha Sampath on Monday, requesting her to withdraw the petition filed by the government since the issue had been settled amicably out of court. In the letter, the official pointed out that the government had entered into a Memorandum of Understanding with a consortium of French automaker Renault and Nissan in 2008. As per the MoU, the R&N consortium established an integrated vehicle manufacturing and assembly unit at an industrial park in Oragadam near here. However, in February 2017, Nissan invoked the provisions of the 2011 Comprehensive Economic Partnership Agreement (CEPA) between India and Japan and initiated international arbitral proceedings after serving notice upon Prime Minister Narendra Modi in July 2016. It claimed a whopping amount towards unpaid incentives. After receipt of the notice, the Centre nominated former Chief Justice of India Jagdish Singh Khehar to the international arbitral tribunal comprising Kaj Hober from the United Kingdom and the presiding arbitrator Jean E. Kalicki from the United States. The Centre also questioned the jurisdiction of the tribunal to interfere in investment disputes. Meanwhile, the State government approached the Madras High Court in December 2017, seeking an injunction restraining the R&N consortium from proceeding with international arbitration. It was claimed that only domestic arbitral proceedings could be invoked in such matters since only then, the government would be able to defend itself effectively. Even as this petition was pending in the High Court, the State government and the R&N consortium attempted for an out-of-court settlement of the dispute. “Accordingly, in Government Order Ms. No.82, Industries department, dated March 10, 2020, orders were issued sanctioning the outstanding dues pertaining to R&N consortium. “Following the G.O., both Government of Tamil Nadu and R&N consortium have signed a settlement agreement on March 30, 2020,” the letter of the Industries Secretary read. It, however, did not disclose specific details regarding the quantum of outstanding dues that the government had agreed to pay to the automaker to settle the dispute. The Industries Secretary also stated that the consortium had already initiated action to withdraw the international arbitral proceedings in accordance with the provisions of the settlement agreement. “As such, no further action seems necessary in this case. Therefore, it is decided to withdraw the said Original Application pending before the High Court,” he added.
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