Nissan Sued by Dubai Company over Distribution Agreement: Report

Economy

New York, June 19 (Jiji Press)--A Dubai company has sued Nissan Motor Co. <7201> for 386 million dollars in damages, accusing the Japanese automaker of violating the terms of a distribution agreement between them, The Wall Street Journal reported in its online edition on Tuesday.

The Middle East company, Al Dahana, was established in 2008 to help boost sales of Nissan vehicles in the Persian Gulf region. It is majority owned by Saudi Arabian billionaire Khaled Juffali, a longtime friend of former Nissan Chairman Carlos Ghosn, the paper said.

In October 2008, Al Dahana and Nissan established a joint venture called Nissan Gulf, according to the report. In their contract, Nissan Gulf was set to obtain vehicles from a wholly owned Nissan subsidiary in the region and supply them exclusively to dealers in Saudi Arabia, Kuwait, Bahrain and Abu Dhabi.

Al Dahana argues that Nissan soon violated the terms of the exclusive deal by letting the subsidiary continue to supply vehicles directly to some regional dealers at a lower price than what Nissan Gulf was offering, the paper said. The lawsuit was filed in Dubai last month, it said.

The Japanese automaker had questioned for years whether Nissan Gulf was generating enough value to justify the added costs, the paper said. Nissan plans to terminate the deal with Al Dahana next month, the paper said.

[Copyright The Jiji Press, Ltd.]

Jiji Press