Comments
The GMR group, which was forced to quit an airport project in the Maldives late in 2012 following a change of regime there, has won the first round of arbitration proceedings in Singapore over the termination of its contract.
The arbitration had been initiated in 2012 by the Maldives government, which sought to declare a concession agreement signed by the previous regime with GMR void. The agreement was inked by the two sides for the modernisation and operation of the Ibrahim Nasir International Airport in Male, the Maldives’ capital.
The Tribunal, headed by retired British judge Lord Hoffman, said the the Government’s decision to terminate the company’s lease was wrongful repudiation of the concession agreement. It has ordered the Maldives Government to pay GMR Male International Airport Ltd (GMIAL), a GMR group subsidiary, $4 million by way of costs, within 42 days. The concession agreement was valid and binding and was not void, and the collection of airport development charges and insurance surcharge, as allowed in the concession agreement, was lawful under Maldivian law, GMR said, citing the Tribunal.
GMR Male had inked the concession agreement with the Maldives Government and Maldives Airport Company Ltd (MACL) in 2010.
Termination of contract The Maldives Government unilaterally terminated the contract on November 29, 2012, and initiated arbitration proceedings in an effort to have the concession agreement declared voidab initio (invalid from the outset).
Commenting on the Tribunal’s order, a senior GMR official said: “This clears the way to begin the process to decide how much compensation GMR should be paid for termination of the contract.”
“At the moment it is not clear as to how much compensation or by when the final amount will be firmed up,” he added.
Company sources said that Thursday’s award clearly indicates that the GMR group did not do anything wrong to bag the deal.
The agreement to adjust the shortfall arising out of non-collection of airport development charges and an insurance surcharge from the concession fee was lawful and binding on MACL and the Maldives government, GMR said, quoting the award.
Comments
COMMENT NOW
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.