Rival dealers feud over Nissan rights

Content image - Phnom Penh Post
Traffic passes in front of a Nissan dealership in Phnom Penh yesterday. Hong Menea

The long-running and acrimonious battle for dealership rights of Japanese-manufactured Nissan vehicles in Cambodia has taken another turn with Tan Chong Motor, the brand’s official distributor in the Kingdom, announcing that it is countersuing the local company that has filed lawsuits against it to protect its claim as Cambodia’s exclusive Nissan dealership.

Malaysia-based Tan Chong Motor Holdings (TCMH), the parent company of Tan Chong Motor (Cambodia) Pty Ltd (TCMC), announced in a disclosure filing on May 15 that it was seeking $33 million from Narita Motorcare (Cambodia) Co Ltd for actual losses and emotional damages stemming from its rights claims and associated legal action. TCMC is also seeking a ruling to confirm that no agreement on dealership rights exists between it and Narita, as well as the dismissal of all previous claims made by Narita against TCMH.

 

Narita was appointed as the sole authorised dealer of Nissan vehicles in Cambodia in 2005 by the brand’s regional distributor at the time, Danish vehicle supplier Kjaer Group. However, its exclusivity was challenged in 2009 when Nissan Motor Co Ltd dropped Kjaer Group and appointed TCMC as its sole distributor to the Cambodian market.

According to the May 15 filing, TCMC subsequently entered negotiations with Narita to appoint the company as a non-exclusive Nissan dealer in Phnom Penh.

 

“Narita however contended that in practice, they have always been allowed by Kjaer Group to play the role of sole distributor of Nissan vehicles in the whole of Cambodia with a right, amongst others, to import Nissan vehicles into Cambodia,” it said.

No legal action was taken by either side until July 2015, when Narita filled a motion for a Preservative Relief Order after TCMC began building its own Nissan showroom in Siem Reap. The Malaysian firm claimed that in September 2016, the Cambodian Court of Appeals ruled in favour of TCMC after it appealed the injunction, adding that the Ministry of Commerce also recognised its exclusive rights to Nissan in Cambodia in a letter dated December 2015.

The matter took a further twist earlier this year when on April 26, two representatives from Narita, Long Narith and Pick Sokhom, filed lawsuits against TCMC and its parent company for damages and compensation of $6.55 million to Narita, and $200,000 each to Narith and Sokhom.

TCMH, in the latest stage of the legal battle, responded with a motion to “Correct the Counter Complaint”, asking for $33 million in damages.

Reached yesterday, the defence lawyer for Narita, Ly Chantola, claimed his client successfully obtained an injunction against TCMC in September 2016 that prohibited the Malaysian-owned company from importing and selling Nissan vehicles in Cambodia, countering claims made by TCMH in its latest filing.

He added that TCMC has continued to violate the terms of the injunction by importing vehicles into the Kingdom. “They deny any contractual relationship with Narita because for them, the relationship is only one between a buyer and a seller, not a relationship between the exclusive right owner and the dealer,” Chantola said.

Chantola maintained that the original agreement with Kjaer Group that granted the Cambodian dealership rights to Narita still stood because no subsequent agreement was reached with TCMH to define their relationship and formalise a transfer of the dealership rights.

He added that Narita is seeking compensation for the investment it made for its Nissan dealerships and brand building.

“Narita still wants to continue the relationship, they still want to be the dealer,” Chantola said. “Narita spent and invested a lot of money to brand Nissan in Cambodian between 2005 and 2015, but when the market increased, Tan Chong kicked Narita out.”

Joseph Lovell, a partner at regional law firm Sciaroni and Associates, said that as the Cambodian economy grows and its consumer market develops, the country is gaining the attention of international product distributors. With the added interest, companies need to ensure that they fully develop their contractual terms with local partners.

“As the Cambodian market matures, more companies are looking to become involved on a bigger level,” he said. “If a company had previously been here to just get some extra sales, maybe they did not take care of so many formalities then. But now, as companies are starting to see Cambodia as a distribution point for Asean, these informal relationships are being reviewed.”

Lovell said disputes over distribution rights are increasingly common in Cambodia, and he therefore advises clients that they always clearly define whether rights are exclusive or not and under what conditions.

“If parties are part of a relationship and they don’t have the same understanding or expectations of their agreement, you could have problems down the line,” he added.

Representatives of Tan Chong Motors could not be reached yesterday.