Former Renault-Nissan boss Carlos Ghosn. File picture: Regis Duvignau / Reuters.

Tokyo - Carlos Ghosn could soon be freed on bail after a Japanese court on Thursday threw out a bid by prosecutors to extend his detention, in a move nearly as unexpected as the auto tycoon's sudden arrest.

The 64-year-old Franco-Brazilian-Lebanese executive has languished in a Japanese detention centre since his November 19 arrest for alleged financial misconduct sent shockwaves through the business world.

But in another stunning twist in the case, the Tokyo District Court said prosecutors had filed a bid to extend his detention on December 20, but it was "rejected". 

In the Japanese system, it is extremely rare for the court to turn down prosecutors' request to continue the detention of someone who denies the allegations as Ghosn does, and the decision wrong-footed everyone.

The move paved the way for a potential release on bail as early as Friday, according to public broadcaster NHK.

However, there are still many legal battles to be fought and Ghosn's release is by no means certain with prosecutors already lodging an appeal against the court decision.

Deputy chief prosecutor Shin Kukimoto declined to comment on the particular case, telling reporters only "we will handle this appropriately."

Kukimoto said that as far as he knew, Ghosn's lawyers had not yet filed a request for bail. NHK reported that prosecutors could also press further charges, which would further drag out his detention.

It is also not clear what bail conditions would be set in Ghosn's case.

Yasuyuki Takai, a former official at the prosecutor's office, told AFP: "The court now needs to decide whether or not to free him on bail. He could also be arrested on suspicion of a third crime. We do not know."

Ghosn 'combative'

Prosecutors formally charged Ghosn on December 10 with financial misconduct for allegedly under-declaring his income by some five billion yen (R616m) between 2010 and 2015.

At the same time, they re-arrested him on suspicion of also under-reporting his income by a further four billion yen over the past three years. He has not formally been charged over this allegation.

Ghosn's detention threw the spotlight on the Japanese legal system where suspects can be detained for long periods.

He is being held in a one-man cell in northern Tokyo measuring just three tatami mats - around five square metres - a far cry from the lavish lifestyle that had previously attracted criticism.

Ghosn has told embassy visitors he is being well treated but has complained of the winter cold and the rice-based food.

Nevertheless, sources at French car giant Renault have described his frame of mind as "combative" as he fights the charges against him.

'Personal effects'

In addition to charges against Ghosn and his right-hand man Greg Kelly, prosecutors had also indicted Nissan itself, as the company submitted the official documents that under-reported the income.

Nissan and Mitsubishi Motors promptly sacked the tycoon as chairman but Renault kept him on and appointed an interim boss as it waited to assess the legal procedures against him.

The Japanese firm said: "Since this particular decision is exclusively between the court and the prosecutors, Nissan is not in a position to comment."

It said the company decision to fire Ghosn was "based on the substantial and convincing evidence" from an internal investigation. 

"Both Ghosn and Kelly have violated their director duty of care," the firm added in a statement.

Ghosn's arrest on November 19 unleashed a firestorm through the three-way car alliance of Nissan, Renault and Mitsubishi Motors -- which together sold more vehicles than any other group last year.

On Monday, Nissan failed to agree a replacement as chairman amid growing tensions with the French firm.

Renault owns 43 percent of Nissan but the Japanese company now makes more money, leading to rifts within the tie-up that Ghosn forged and was credited with holding together.

A newly formed committee looking into governance at Nissan is to report its findings by March, but the decision on a new chairman could potentially stretch beyond that, said current CEO Hiroto Saikawa.

In addition to the formal charge of financial misconduct, Ghosn has been accused of a variety of other unproven allegations, including using Nissan funds to purchase a string of luxury homes around the world.

One of these homes - a luxurious, 800-square-metre spread with ocean views over Rio de Janeiro's famous Copacabana Beach - has become the subject of a legal battle.

Last week, Ghosn family members entered the flat, removed "personal effects" and opened the safes, according to Nissan. This followed a court order giving Ghosn's representatives access despite objections from the Japanese firm.

Agence France-Presse