Indian infrastructure giant GMR is only owed reimbursement for expenses, not compensation for the abrupt termination of the concession agreement to develop Malé International Airport (INIA), Attorney General Mohamed Anil has said.
Clarifying President Abdulla Yameen’s previous statement that GMR is owed a payment, Anil said the government believes the company is only owed reimbursement for a US$ 78 million upfront concession fee and any other expenses.
“When the agreement was first signed, US$78 million was given to the Maldivian government. In addition to that, we can see that they have spent some amount. So in the worst case scenario, if we are to revert to the state before the agreement was signed, everyone believes that they are owed [what they spent]. That is not as compensation for losses caused by the cancellation of the agreement,” he said.
“The forceful takeover of the airport by Maldives government amounts to repudiation of a valid contract and therefore damages, including loss of future profit has to paid,” the company said in a statement on April 26.
Anil said GMR’s claim is unclear, as the company had not submitted documents detailing the assertion.
In response, GMR’s legal team member Uz. Fayyaz Ismail told Minivan News details of how GMR arrived at the figure will only be revealed in the second part of the arbitration process.
The arbitration tribunal in August 2013 had acceded to GMR’s request to split the proceedings in two – firstly determining liability, before quantifying the amount of compensation to be paid separately.
“GMR is claiming it to be a wrongful termination, and if the tribunal awards a verdict for that during the first part of this bifurcation arbitration [two part arbitration process] only then would the [compensation] amount be decided through second part of the arbitration. We are very confident the rightful compensation would be received,” Ismail said, adding that the figure may be subject to minor variations.
Yameen in early April said the Maldives government will not be able to pay GMR’s claim, but conceded “some sort of financial compensation must be paid.” He estimates the figure to be a “manageable” US$ 300 million.
The GMR in consortium with Malaysia Airports (MAHB) narrowly won the International Finance Corporation (IFC)-managed bid for the airport in 2010, and signed the agreement with MACL under the former government of Mohamed Nasheed. The opposition at the time, including Yameen’s Progressive Party of the Maldives (PPM), then began a vitriolic nationalist campaign to evict GMR.
Following Nasheed’s ouster in 2012, President Mohamed Waheed’s administration terminated the agreement claiming it was ‘void ab initio’- invalid from the outset.
When the Singaporean High Court’s injunction blocking the Maldivian government from voiding the agreement was overturned by the Supreme Court in Singapore in June 2013, GMR initiated an arbitration process.
The first part of the arbitration took place in Singapore from April 10 – 16. Minivan News understands the arbitration tribunal considered GMR’s claim of wrongful termination, parallel claim for loss of profits over the lifespan of the agreement, and the Maldive’s counter-claim for restitution.
A verdict is expected soon, at the latest by mid- June. Depending on the verdict, the second process of arbitration will begin on a mutually agreed upon date.
Although Anil said the second half could take months to begin or even year for a ruling, Ismail has refuted the claim.
Despite the pending arbitration decision, expansion and development of INIA was among the five mega-projects for which the government was seeking investors at the Maldives Investment Forum held in Singapore’s Marina Bay Sands in late April.
Meanwhile, Nasheed has warned of a sovereign debt crisis if the Maldives is forced to pay the full US$ 1.4 billion and reiterated his Maldivian Democratic Party’s (MDP) call to reverse the decision to cancel the contract.
In a press release last week, Nasheed insisted that international best practices were followed in the bidding process – which was overseen by the World Bank’s International Finance Corporation (IFC) – while the Anti-Corruption Commission (ACC) has since ruled out corruption in the airport deal.
“The Maldives is now known around the world as a country that doesn’t keep its promises or honour the contracts. The airport fiasco will hit each and every Maldivian because banks won’t lend money and companies won’t invest in our country without demanding much higher rates of interest,” Nasheed said.
“By now, Maldivians should have been looking forward to a world-class, new airport, to rival Kuala Lumpur, Singapore, and Hong Kong. Instead we have nothing but an abandoned building site. The actions of President [Abdulla] Yameen and [Dr Mohamed] Waheed have caused this crisis and Maldivians will be paying for their recklessness for decades to come” he added.