India has in the past several years become involved in a considerable number of investment treaty claims by foreign investors. While public data is not always available or accurate, the United Nations Conference on Trade and Development (“UNCTAD”) website, lists more than a dozen pending cases where India is respondent.
This number seems to have reduced by one, following the reported settlement of the claim brought by Nissan under the Japan-India Comprehensive Economic Partnership Agreement (“CEPA”).
As previously reported, the claim related to the failure to make incentive payments allegedly promised by the state government of Tamil Nadu pursuant to a 2008 agreement under which Nissan established a manufacturing facility in Chennai. Nissan alleged that the failure of the state government to pay certain of these incentives, some of which were said to be almost two years overdue, was arbitrary and without any proper reason, and therefore both a breach of the fair and equitable treatment clause of the CEPA, as well as its umbrella clause (under which India had committed to observe any obligations entered into with regard to investment activities covered by the CEPA).
India had initially disputed the jurisdiction of the arbitral tribunal formed under the dispute resolution provisions in CEPA, however the tribunal rejected India’s objections in a 2019 decision (see our report here).
In the latest development, a settlement has been reached between the state of Tamil Nadu and Nissan, bringing the arbitration proceedings to an end.
According to this report, the Tamil Nadu Minister for Industries, MC Sampath, confirmed the settlement has been reached, but declined to give the settlement amount. Sources have placed the settlement at between 14-18 billion rupees (equivalent to US$185-$238 million) against an amount in dispute of some US$660 million.
Nissan has reportedly begun withdrawing its arbitration claims.
For more information, please contact Nick Peacock, or your usual Herbert Smith Freehills contact.