Government considering seeking compensation from GMR: Attorney General Azima Shukoor

Attorney General (AG) Azima Shukoor has said the Maldives government could opt to seek compensation from infrastructure group GMR after it decided to void the India-based company’s concession agreement to develop Ibrahim Nasir International Airport (INIA), according to local media.

GMR last week confirmed that it was seeking an estimated US$800 million in compensation in order to recover what it has claimed are investment and earnings after the government “wrongfully” terminated its contract.

In a press conference held yesterday (December 17), the attorney general maintained the government’s belief that the agreement with GMR to develop INIA was illegal.  She added that the government therefore intended to seek compensation for damages it “might” have incurred during the process of entering into the contract with GMR, local newspaper Haveeru reported.  The contract was signed during the administration of former President Mohamed Nasheed.

Highlighting the pending arbitration process in Singapore Court between the government and GMR, Shukoor said that efforts were being made to appoint arbitrators for the hearings. She added that the government and Maldives Airports Company Limited (MACL) had appointed a “member” of Singapore National University as their arbitrator.

Similarly, GMR will also be given a 30-day period to appoint an arbitrator on its behalf.

Shukoor suggested during the yesterday’s press conference that it may take a period of one year until the due procedures were completed before a decision was made in the courts.

“It will take about two months time to appoint the panel to overhear the arbitration case. After that, parties will exchange documents and affidavits and respond to it and only after that a proper hearing on the matter will be held and might take up a period of one year,” she suggested.

Indian media reported last week that GMR had sent a letter to the Finance Ministry stating that it would seek compensation worth US$800 million.  Shukoor denied such a communication had been sent, adding that she did not believe such a demand could even be made.

“We terminated the agreement on the grounds of void ab initio (void from the outset) , therefore we will begin the negotiation on the position that the government of Maldives do not require to pay back anything,” Shukoor explained.

However, she admitted that owing to the size of GMR’s investment, there remained a possibility that government might have to pay some amount that would be determined through the arbitration process.

“Even if we do require paying back as compensation, it would be based on the decisions reached during the arbitration process. If it is settled out of court, then it would be based on legal arguments raised by the parties to the contract,” she added.

Shukoor has also claimed that even before INIA was handed over to GMR, no asset valuation was carried out – a decision expected to cause problems for the government. She also said that it has not been yet decided how the asset valuation would be carried out or how the amount that the government might seek in compensation from GMR would be calculated.

Even with the arbitration process now proceeding, Shukoor told local media that if the government believed additional compensation was required, it would seek the additional amount through the same courts.

“A lot of work is being carried at the moment. However, we have not yet calculated the amount we might have to pay or the amount that had been invested and even the amount we expect to seek,” she explained.

GMR demands US$800 million in compensation

GMR is seeking US$800 million in compensation following the termination of its US$511 million concession agreement signed under the former government back in 2010.

The Indian infrastructure giant has said that the proposed US$800 million claim was based on its “provisional estimates” and that the company had also taken into account the Maldives’ ability to cover such payments if compensation was awarded by the Singaporean courts overseeing arbitration.

GMR’s chief Financial Officer (CFO) Sidharath Kapur previously told Minivan News that the sum was a “preliminary estimate” based on a number of factors including investments made by the company, debt equity and loss of profits as a result of the contract termination.

He also added that on last Tuesday (December 11) the company had communicated with Maldives Ministry of Finance by sending an official letter outlining its concerns that the contract had been “wrongfully” terminated without respect for the agreed procedures.

Meanwhile according to Finance Minister Abdulla Jihad, no mechanism is currently budgeted should the Maldives face a multi-million US dollar bill for evicting GMR, but stressed it was not for the company to decide on any eventual payment.

He also played down fears that any potential fine could prove perilous for the country’s economy, as well as attempts to reduce the spiralling budget deficit, stating that any possible fines would be set by the Singaporean arbitration court hearing the dispute.

“We will deal with the matter when we know the amount of compensation to be paid,” he said at the time. “GMR cannot decide, it will be down to the court [hearing the arbitration].”

The INIA concession agreement

In 2010, the government of Maldives through its Finance Ministry, MACL and GMR-MAHB entered into a concession agreement with INIA whereby the Malaysian-Indian consortium were to develop and operate the airport for a period of 25 years.

According to the concession agreement a “project company” under the name GMR International Airport Limited (GMIAL) was to carry out the development project.

However, a lengthy dispute between the new government of President Dr  Mohamed Waheed Hassan and the GMR Group led to the eviction of the agreement.

On November 27, President Mohamed Waheed’s cabinet declared the agreement void, and gave the company a seven day ultimatum to leave the country.

Shukoor at the time stated the government reached the decision after considering “technical, financial and economic” issues surrounding the agreement.

She also claimed the government had obtained legal advice from “lawyers in both the UK and Singapore as well as prominent local lawyers – all who are in favour of the government’s legal grounds to terminate the contract.”

The INIA was handed over to the government on December 8, in an invitation-only press conference; Finance Minister Jihad presented the official handover documents to MACL Managing Director Mohamed Ibrahim, and said that the Maldives would pay whatever compensation was required “however difficult”.

With arbitration proceedings underway in Singapore over the contested airport development charge (ADC), GMR received a stay order on its eviction and appeared confident of its legal position even as the government declared that it would disregard the ruling and proceed with the eviction as planned.

On December 6, a day prior to its eviction, the government successfully appealed the injunction in the Supreme Court of Singapore. Chief Justice Sundaresh Menon declared that “the Maldives government has the power to do what it wants, including expropriating the airport.”

That verdict, effectively legalising the sovereign eviction of foreign investors regardless of contractual termination clauses or pending arbitration proceedings, was “completely unexpected”, according to one GMR insider – “the lawyers are still in shock”, he said at the time.

A last ditch request for a review of the decision was rejected, as was a second attempt at an injunction filed by Axis Bank, GMR’s lender to the value of US$350 million.


13 thoughts on “Government considering seeking compensation from GMR: Attorney General Azima Shukoor”

  1. Holy shit is this government and AG for real. GMR should sue the pants off the Maldives, the chances of GMR paying you is less than zero.
    International basket case, chance of significant foreign investment is nil. Dont you get it, GOM was GOM under Nasheed and is still GOM under Waheed. From the point of view of law it is still a contract between GOM and GMR. Please, please Maldives grow up and join the big wide world, it wants to help, you just have to let it. Put out the welcome mat, wipe away fear and enjoy the ride!

  2. 800 million eh, but the country now only has 140 million in reserves? Hey China Bro, swap ya 800 million of r rights to our water for fisheries and gas you can get your naval base. I bet Garsim of Villa` is happy he can wipe his Million Dollar USD debt for Jet fuel to GMR. Party time in Male` 🙂

  3. anni gaveS to his friends and krooKs all the islands and big prpojekts to run copupsan. Aaazima is also meybe not korupshumn but she is not caypebel persons To becomes aterney general of MaldiveS. she is thinks she know all the legalslative matter. but i know She dont know. eveRy body know She dnont know

  4. Ha ha! This gmr mess is now turning funny. Wall Street is going to have a good laugh at this one they will know that azima shukoor AG is bonkers.Lol

  5. It's simples. Once upon a time there was an elected government in the Maldives. It signed a binding contract with a foreign investor.

    Then that government was toppled and replaced by those who were unelected and vehemently opposed to all the policies of the previous government. All of a sudden, they declared that the former binding contract was now null and void!

    Peace and khalaas!

  6. If the purpose of the law is to protect the innocent and prevent the weak from being exploited unfairly by bullies, then GOM should not have to pay anything to GMR.

    It is quite evident to the average person that GMR and the old regime were in bed to cook up this deal which ended up with GOM paying GMR millions to run an airport which GMR now is estimating future profits at hundreds of millions.

    It is unconscionable for GMR to get into this deal with a GOM that did not have the technical proficiency to execute such a large contract. At best, GMR dangled the $60mil and the short sighted incompetent GOM didn't see throught the USD what an unfair deal it truely is. At worst, they are together in a faudulent case of biabolical proportions. Either way people of the Maldives are unfairly robbed of one of their most lucrative businesses. I hope the Singapore arbitrators will see this point...

  7. Anyone with basic knowledge of Contracts (specially International Contracts) would know that the AG is talking nonesense and GMR-MAHB will probably be awarded a huge compensation. The payment should be made by liquidating the personal assets of those who took the decision.

  8. Country does not have to pay a dingle to cent to GMR.

    Since this was under hand deal done by Anni outside the constitutional rights, then by canceling this contract, Maldives does not require to pay anything to GMR except the advance money that Anni had taken.

    GMR senior officers said earlier that they were aware of the the potential problems that it could rise once Anni is gone but took the risk in view of the high financial gain that they will have.

    In last few years they have already got a much more in clean profit than what the advance payment that they had made to Maldives. It was nice gabling that GMR done and if Anni was able to stay in power they would have no issue and could have enjoyed the give profit for at least for 10 years.

    both you and me also can file any amount against GMR on the ground that GMR had paid money to MDP to buy Ali waheed , Alhan Fahumee also. But truth of the matter is whether we will be able to win the case.

    same goes with GMR too, GMR can file the case with any amount that they feel , but the question will be whether they will be able to win ?

    Both GMR and Anni is playing games to threaten the public and nothing can be done by them. Note that Anni is not MDP and he has hijacked the party for last few years.

  9. To all the American puppets out there who believe the Maldivian government should pay GMR, you have no idea whatsoever and you all need to get a life and stop wishing ill towards the new government. The government run by Anni was a corrupt one and your former president was only there to make money for himself and his corrupt and greedy party members. Thank God they are out, finally the Maldives will now have the opportunity to grow successfully and righteously without interference from greedy companies and countries such as America and India who merely want to profit from tourism and not help the people.


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