Government ordered to pay MVR349 million in damages for terminated transport contract

The Civil Court has ordered the Maldives government to pay MVR348,995,154.60 (US$22.5million) to Dheebaja Investment Pvt Ltd for the abrupt and unlawful termination of a contract to establish ferry services in four northern atolls.

The verdict, dated October 23, said President Dr Mohamed Waheed Hassan’s administration had terminated a contract with Dheebaja on 30 May 2013 claiming the company had failed to fulfill terms by suspending ferry services to Baa Atoll Fulhadhoo and Fehendhoo Islands.

The transport services contract had been signed under former President Mohamed Nasheed in February 2010. Dheebaja was to provide ferry services in Noonu, Raa, Baa and Lhaviyani Atolls in exchange for 47 plots of land to build ferry terminals and tourism development.

The Civil Court found that the Waheed administration’s termination of the contract was unlawful, stating the government had violated the contract first by failing to hand over promised plots of land to Dheebaja.

The court ordered the Maldives government to pay nearly MVR349 million in damages to Dheebaja for it’s unilateral decision to terminate contract with only five days of notice. The amount is to be paid back within six months.

The Maldives is also currently facing a potentially crippling payout to India’s GMR infrastructure for the abrupt and unlawful termination of a contract to develop Ibrahim Nasir International Airport.

President Waheed had declared the US$511 million contract “void ab initio” (invalid from the outset) in November 2012 and gave GMR a seven-day ultimatum to leave the country.

However, a Singaporean arbitration court in June declared the agreement to be “valid and binding” and said the government and Maldives Airports Company Pvt Ltd (MACL) are liable to GMR for damages.

The arbitration tribunal is in the process of determining a compensation figure. Although GMR had initially sought US$1.4 billion – a figure that exceeds the Maldives’ annual budget – government sources say the figure will be between US$300million and US$600million.

The World Bank in 2013 said the payout would place severe pressure on the country’s already critically low foreign reserves.

Since President Nasheed’s controversial ouster in 2012, President Waheed and incumbent President Abdulla Yameen’s administration have terminated or renegotiated several contracts signed under Nasheed.

The government, on October 22, terminated an agreement made with India based Tatva Global Renewable Energy to provide waste management services in Malé and renegotiated a housing contract with India’s TATA group.

The US$190 million housing project had been delayed for more than two years.

Indian companies blamed the government of creating “undue challenges” for political gain to derail their substantial investments in the Maldives in a 2012 report in India’s Business Standard.

Nasheed’s government had been ousted after months of a vitriolic nationalist and anti–India campaign.

Several of Yameen’s ministers also served in Waheed’s cabinet. They include Tourism Minister Ahmed Adeeb, Defense Minister Mohamed Nazim, Finance Minister Abdulla Jihad, Minister of Housing and Infrastructure Dr Mohamed Muizzu, and Minister of Islamic Affairs Dr Mohamed Shaheem Ali Saeed.

Incumbent Foreign Minister Dunya Maumoon served as Waheed’s State Minister for Foreign Affairs while Vice President Dr Mohamed Jameel Ahmed held the position of Home Minister.

Since assuming power, Yameen has strengthened trade and political ties with China and the Maldives is now a partner in China’s flagship Silk Route.


10 thoughts on “Government ordered to pay MVR349 million in damages for terminated transport contract”

  1. Another contract illegally terminated!! How many more terminations in the pipeline? You dumb people seems to make up your contracting rules as you go along oblivious to internationally agreed procedures.
    The Indian government should declare Maldives 'void ab initio' and discourage any further investments by Indian companies.
    All contractors working in Maldives should beware of the 'Maldivian System Contract' and take the money upfront.
    When is GMR going to be paid?

  2. @MissIndia. We do not need corrupt Indian companies like GMR to come in invest in this country and people like you to work here in this nation.

  3. Dear miss India
    Can you get it through you head and take it lying down.we will do as we want

  4. Miss-India-Agrawal-the-thug should stay away from even being on this site. Leave the peaceful people of Maldives to mind their own business. Maldivians do not want another Rajiv Gandhi again to ready troops in Agra to exercise mopping up operations in the Maldives after directing bunch of terrorists to the Maldives who were taken care of by Indian Peace Keeping Force (IPKF) in Sri Lanka.

  5. Can I remind all Maldivians that your country survives on cheap imports from India, everything from medicines to car parts. We can certainly survive without the insignificant market that Maldives is for our goods, but can you?
    All foreign companies with current contracts in Maldives should keep their fingers crossed that there is no change of government because it will also mean the termination of your contract.

    BTW and for the umpteenth time, I DO NOT LIVE OR WORK IN THE MALDIVES OK ?

  6. Miss India is absolutely right in what she says and what she writes. Either you are ignorant or simply arrogant,but the fact remains that you are dependent on foriegn countries and you need them.more than they need you. Accept reality and get on with your lives.

  7. c'on maldivians, you keep kicking the butt of your govt on a regular basis, and now your govt just terminatesa contract for reason best known to you, if this is the way maldives is going to work then no sane man is going to set foot on male, BTW accept it that you dependent on india, what wrong a lot of countries are even the mighty USA for our brilliant cyberbrains.

  8. well ms. india you are certainnly right the richest man in india can buy the whole of maldives with his pocket money, but that's not the issue here, small things are always beautiful and love maldives and its people, but some maldives are being led away by ISIS, ALL SANE MALDIVIANS STAND ON YOUR FEET, you have nothing to loose except your madness.

  9. Yes GMR may be corrupt but so are most business operating in India, Maldives, Sri Lanka etc. Since one government may have reaped all the under-hand benefits, another govt would also want to do the same. This story happens in India too, not just Maldives. I am from India, but there are always two sides to every coin. Some win and some lose.


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