GMR is only owed reimbursement, not compensation, says AG

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.

GMR has said it will stick to a US$ 1.4 billion compensation claim – an amount that exceeds the annual state budget.

“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.


10 thoughts on “GMR is only owed reimbursement, not compensation, says AG”

  1. Anil, please go to grade school and learn to read and write basic dhivehi and english - since you have trouble understanding some basic facts.

  2. Mr. Attorney General, your predecessor had in a very public and publicised interview (media records available in public domain) indicated that the compensation Maldives has to pay to GMR may be in the range of US$700 million. Is it not misleading to just quote US$78 million in your interview when you are not putting a total figure. Just quoting that tiny figure is as ridiculous as saying GMR had bought some paper reams for use at INIA amounting to US$200 and hence we will start assessing what needs to be paid after calculating these sums??
    As a trained lawyer, you should know very well your predecessor had blundered and bungled the GMR contract termination and as a result a multinational company has not only been deprived of its contractual benefits in this country, but also has been illegally bullied and sabotaged in its business venture. Any lawyer worth basic training would understand that such an act comes with a figure of compensation and loss of profit payment IN ADDITION to actuals expended. Perhaps this is time to rectify the blunder and bungling by your predecessor when she, in an act of gross delinquency terminated this contract on the premise of "void ab initio". This infamous argument has been rubbished by PY in his recent interview when he conceded, albeit sensibly, that GMR contract was a valid agreement signed by a sovereign government! Pls stop misleading the public. When educated ppl start the profession of selling lies and deception, the people will have very little to look up to, let alone lean on!

  3. politics is a dirty game. GMR may end up getting just 150 million or say just nothing.

  4. Key sentence - "the government believes the company is only owed reimbursement for a US$ 78 million upfront concession fee and any other expenses". Yes..your expert AG Taakooru and the Takaa, Takaa group, in the past, also BELIEVED that the contract was void ab initio, but look where that landed you lot! And when you say US$ 78 MILLION, you say it as if you are buying a yard of sarong cloth from a shop! Plus how much are the "other expenses" going to be??? You don't even KNOW how much the real costs are going to have to be paid up when the arbitration award is declared, do you? Come on, show us the real costs that we and our children's children will have to pay up in this mess, because you lot really "effed" it up big time! Mi sarukaarah vote vikki dhivehinnah varah salaam!

  5. Time to sell your mothers to the arabs for some dough guys and pay up.
    I hope the GMR settlement bankrupts you.
    Any poor mug who decides to accept the contract to complete the airport works should realise that his contract will only last till the start of the next elections.....which is pretty much what happened to GMR.
    Does anyone in the Maldives government have a clue about international contracting procedures?.....seems nobody has the foggiest idea.

  6. Any foreign company dumb enough to invest in Maldives after this GMR case deserves the financial losses they surely will incur.

    The only way Maldivians know how to do business is by lying, cheating, stealing and scamming. That is a fact. They can't be bothered to put the work and effort in required to do an honest deal. Easier to take the money and run, shut off their phone and pretend they're praying.

  7. What's happening to xenophobic group of maldivians,remaining silent despite rumours of selling out to changi gp,what ever happens in Singapore,maldivians will never get an airport of international class without selling out to some foreign investor,but the million dollar question are there any takers

  8. All these Maldive Loving Idiots who are commenting here seem to be wishing GMR to win the case!

  9. Foreign investors will at least be assured there won't be another regime change for a very long time. There will never be another "free election" until Maldivians decide it's worth the trouble to throw out Gayoom and company. That won't be with a ballot box and seems nobody cares to protest and fight for democracy here. Especially if it's raining.

    The only thing foreign investors have to worry about is the local custom of taking the product, service, development, etc. and then refusing to pay. But there's no getting around that. Maldivians even do it to each other so just standard operating procedure here.

  10. I hope the GMR wins. Sure, we lost the war - but we can inflict lasting damage to the enemy regime that hijacked our country. They took our nation, intending to rule it for another 30 years.

    May this 30 years be the most miserable age in their lives.


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