Nokia's decision to close the plant sparked an angry reaction

North-Rhine Westphalia (NRW) wants the Finnish mobile phone maker to give back the money after Nokia announced it was relocating the facility to Romania.

Nokia said it had invested more than 350m euros in the plant since 1999, "well above" its agreement with NRW.

NRW counters that the factory did not employ as many people as Nokia pledged.

If the two sides fail to make a deal, it will go before a German tribunal.

'Acted correctly'

Nokia announced last month that the Bochum plant will close by the middle of this year.

Nokia not only fulfilled the conditions of the agreement, it exceeded them Nokia statement

The move, which will result in 2,300 job cuts, sparked staff protests and an angry reaction from German politicans and union leaders.

Nokia "strongly believes it has acted correctly", the firm said, adding that it believes the facts do not support the attempt to recall the subsidies.

NRW insists the subsidy must be repaid because the factory employed between 200 and 400 fewer people than the 2,860 Nokia had pledged to take on between 2002 and 2005.

Nokia counters that the plant employed more than 3,200 workers on average from 2001 onwards.

"Nokia not only fulfilled the conditions of the agreement, it exceeded them," said the company.

It is relocating the factory to take advantage of Romania's lower labour costs.

The company said at the time of last month's closure announcement that the Bochum plant accounted for 6% of its handsets, but 23% of its global wage costs.