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Exclusive: Bayer's Monsanto wins arbitration ruling over royalties from Indian seed company

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02/11/2019 | 01:03pm EDT
FILE PHOTO: Monsanto is displayed on a screen where the stock is traded on the floor of the NYSE

NEW DELHI (Reuters) - German drugmaker Bayer AG's Monsanto unit has won proceedings against Indian seed maker Nuziveedu Seeds Ltd (NSL) in a royalty dispute, lawyers familiar with the matter said.

The lawyers, who did not wish to be named as the decision was not public, did not disclose the terms of the arbitration ruling.

Mahyco Monsanto Biotech (India) (MMB), a joint venture between Missouri-based Monsanto and India's Maharashtra Hybrid Seeds Co (Mahyco), "has received a favorable award from the arbitration panel in the proceedings against NSL and Prabhat", a Bayer spokesman said in an e-mailed statement when asked about the ruling.

He declined to say how much NSL and one of its affiliates, Prabhat Agri Biotech Ltd, had been told to pay MMB. By Monsanto's calculations, NSL and its two affiliates owed about $22.82 million to MMB.

"The award is confidential and we will not be able to share any further details at this stage," said the Bayer spokesman.

NSL said the arbitration tribunal had directed both parties to maintain the confidentiality of proceedings and they were not allowed to make public statements.

NSL has the right to appeal the arbitration ruling in a court, the lawyers said.

MMB sells genetically modified (GM) cotton seeds under license to nearly 40 Indian seed companies, which in turn sell the products to retailers.

NSL and two of its affiliates were among the 40.

But NSL and its affiliates decided to stop paying royalties, or trait fees, to MMB in 2015, arguing that Indian law did not provide Monsanto with patent protection on its GM cotton seeds, and if there were to be payments they should be set by the Indian government. Monsanto had insisted it has patent protection in India and it therefore could collect royalties through bilateral contracts with the Indian seed companies. A spokesman for Mahyco said it was referring all questions on the matter to Bayer.

The tribunal consisted of three retired judges, according to the lawyers, though their identities have not been disclosed.

Last month India's Supreme Court set aside an order by the Delhi High Court, which in April 2018 said that Monsanto could not claim patents on its GM cotton seeds.

Hindu nationalist groups close to Prime Minister Narendra Modi's ruling Bharatiya Janata Party have opposed both Monsanto and GM technology in India's agricultur
e, Reuters revealed in a special report in 2017. (https://reut.rs/2p7eIrE

India's farm ministry has twice slashed royalties that local seed companies pay to Monsanto. The ministry has also cut cotton seed prices.

After a spate of unfavorable government orders and a tussle over royalty payments, Monsanto in 2016 withdrew an application seeking approval for
its next generation of GM cotton seeds in India. (https://reut.rs/2jbDq80

(Reporting by Mayank Bhardwaj; editing by Martin Howell and Alex Richardson)

By Mayank Bhardwaj

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