Tan Chong files RM143mil countersuit in Nissan distributorship battle

Edaran Tan Chong Motor Sdn Bhd's flagship showroom in Glenmarie was set up at a cost of RM20mil.

KUALA LUMPUR: Tan Chong Motor Holdings Bhd (TCMH), through its subsidiaries, has filed a US$33mil (RM142.8mil) countersuit against Narita Motorcare (Cambodia) Co Ltd and its representatives in defence of the group’s sole and exclusive right to distribute Nissan vehicles in Cambodia.

In a statement to Bursa Malaysia, TCMH said its units ETCM (C) Pty Ltd (ETCM (C)) and Tan Chong Motor (Cambodia) Pty Ltd (TCMC) had on Tuesday last week filed a defence on a Motion to Add and Correct Complaint against Narita and its representatives Long Narith and Pich Sokhom.

Narita argued that it had always been allowed by Nissan’s former distributor, Kjaer Group, to be the sole distributor of Nissan vehicles in Cambodia.

To recap, TCMH said ETCM (C) had in March 2010 entered into a distribution agreement with Nissan Motor Co Ltd for the sole and exclusive right to distribute Nissan completely built-up vehicles in Cambodia.

ETCM (C) took over the Nissan distributorship from the Denmark-based Kjaer Group, which had appointed Narita as its non-exclusive dealer for Nissan vehicles in Cambodia. 

Following this, TCMC was appointed to undertake the distribution of the Nissan vehicles in Cambodia, including the right to appoint dealers to sell the Nissan vehicles. 

ETCM (C) then went into negotiation with Narita with a view to appoint Narita as a non-exclusive dealer in Phnom Penh, Cambodia.

Narita, however, contended that in practice, it had always been allowed by Kjaer Group to act as sole distributor of Nissan vehicles in the whole of Cambodia with a right to import Nissan vehicles.

Narita filed a motion for a preservative relief order in July 2015 for the protection of its purported sole distributorship status.

On Sept 12, 2016, the Court of Appeal made a ruling in favour of ETCM (C) and TCMC. The Commerce Ministry of Cambodia also, via its letter dated Dec 23, 2015, recognised the exclusive rights of TCMC to distribute Nissan vehicles in Cambodia.

Last month (on April 26) Narita and its two representatives filed a Motion to Add and Correct Complaint and a counter complaint to, among others, order ETCM (C) and TCMC to pay damages and compensation of US$6.55mil (RM28.34mil) to Narita and US$200,000 (RM865,256) each to the representatives.

TCMH said on May 9, its units jointly filed a 3rd Motion to Correct the Counter Complaint.

Among others, they requested to dismiss all claims by Narita and its representatives, confirm the non-existence of the agreement between Narita and ETCM (C) and TCMC, and order Narita and the two individuals to pay ETCM (C) and TCMC damages totalling US$33mil for actual losses and emotional damages.

“Based on the advice of the solicitors, ETCM (C) and TCMC are of the view that they have a legitimate defence against the claims,” TCMH said. 

“Should ETCM (C) and TCMC fail in their contestation of the claims, TCMH is of the opinion that the group is able to fulfill the commitment to the abovementioned claims.”

The net asset per share of the group would, however, fall by 4.6 sen, it noted.

TCMH said there was no impact to its units’ business operation in Cambodia.