President Abdulla Yameen’s administration will honor a Singaporean tribunal’s ruling on compensation owed to Indian infrastructure GMR for the terminated airport development deal in order to uphold investor confidence, Attorney General Mohamed Anil said.
The Rt Hon Lord Hoffman’s Tribunal on Wednesday found the contract termination to be wrongful and ordered the Maldives government and Maldives Airports Company Pvt Ltd (MACL) to compensate GMR for losses.
The exact figure is to be set in the next phase of arbitration.
Speaking to reporters this morning, Anil said he is certain the figure will not amount to GMR’s initial claim of US$ 1.4 billion – the figure eclipses the country’s annual budget.
“According to the agreement, [we] mostly have to compensate for the investments made. We said we do not have to pay the amount GMR has claimed. We always said we will have to pay compensation, and that this compensation has to come through the agreement,” explained the AG.
“That is why the compensation amount has been limited. This amount will not go up to the US$1.4 billion GMR is claiming,” Anil said.
He called the limitation of damages a success for the government of Maldives.
In April, Yameen predicted GMR would only be owed US$300 million in compensation.
Minivan News understands the concession agreement allows MACL to terminate the agreement for reasons of public interest and imposes a cap on losses.
A lawyer familiar with the case said the government must thank the Maldivian Democratic Party (MDP) – under which the GMR won the concession – for its foresight in inserting the clause.
The lawyer further said that the government had chosen to terminate the agreement “in the worst possible way” despite the existence of provisions for lawful termination.
“And in the process, it affected foreign investor confidence in the Maldives, the country’s reputation and it strained our relationship with India,” he added.
GMR won the 25-year concession agreement to develop and manage Ibrahim Nasir International Airport under former President Mohamed Nasheed. The US$ 511 million deal was the country’s single largest foreign investment.
The opposition at the time attacked the deal as part of a vitriolic anti- government campaign, which eventually led to Nasheed’s ouster in February 2012.
In December 2012, new President Dr Mohamed Waheed declared the agreement void ab intio – or invalid from the outset – and gave GMR seven days to leave.
The agreement’s abrupt termination saw cooling of relations with neighbor India and questions regarding foreign investor confidence in the Maldives – issues Yameen has sought to address since his election in November.
The World Bank in December said GMR compensation will place severe pressure on the country’s already “critically low” foreign reserves.
As of April 2014, the Maldives’ gross foreign reserve stood at US$ 434.8 million. Meanwhile, the total outstanding external debt at the end of 2013 stood at US$ 793.6 million dollars. Debt amounts to 34.6 percent of the country’s GDP.
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Spain being eliminated from the world cup is a victory for Spain #MordisLogic
It will not be 1.4 billion but 1.2 billion dollars, which of course we can pay with the day's catch.
It's the stupid, drug-addled kaalhushun activists that have to pay.
So what does it feel like to have BANKRUPTCY stare you in the face guys?
From where I am sitting.....in a smart coffee shop in Connaught Place.....your future looks decidedly BLEAK!!
Best to leave quickly on jihad or umrah before the compensation assessors arrive.....he he he.
The question is for how long?
The previous government did honour the contract. You came in and made it void.
Whoever who comes in next, could just make void everything signature you have made.
Hence please revise statement to reds, 'as long as we are in office, the arbitration outcomes will be honoured'.
That could be anything between 2 - 35 years.
@MissIndia
It looks as good as the prospect for women's safety in yours.
Atleast we arent sexually assaulted and hung from trees. thank God
Hello Mr.Anil! Do you have any other choice!! Don't act SO magnanimous! The Government of Maldives has to be absolutely embarrassed with this ENTIRE process!
In the FIRST place, the agreement to lease out our SINGLE International Airport should NEVER have been done. SEcondly, NO LEGITIMATE Government should ever negate and cancel an agreement WITHOUT proper compensation. Of course the Government has the SOVEREIGN right to make ANY Contract on their soil , NULL & VOID, BUT there are massive consequences to the same and they have to take the hit!
Here what the Maldives, WE THE PEOPLE was trying to do was to "eat the cake and keep it too!!".
In International business practices, it does NOT work that way and we Maldivians have to STOP thinking that the entire world is a BANANA REPLUBLIC like the Maldives!!
I actually congratulate GMR for taking the Government of Maldives to COURT, as once and for all this MANIA to throw out any foreign company will STOP once & for all AND these great Corporates like Four Seasons, HPL, Six Senses, Conrads can continue with their HARD work and hence us getting more and more lucrative & awarding jobs!
SHAME On the entire GOVERNMENT MACHINERY OF MALDIVES (PARLIAMENT, GOVERNMENTS of MDP,Mr.Waheed AND the current Govt.) for reaching this terribly embarrassing situation, thanks to some SCREECHING MALDIVIANS who ran the streets AMOCK "GO GMR GO" AND ABUSING INDIAN NATIONALS , as if EACH OF these Indians were working for GMR!!
@MissIndia.
We will never have to pay 1,4 billion to GMR and we will never allow corrupt GMR to come to our soil either.
Contract was made under the table and GMR had given millions of dollars under the table to the people involved on signing the contract .
We will continue to live and neither GMR and no other persona can make our country go bankrupt .
We will be the richest country in Asia over a period of 20 years and we will never have to bed any country for money in 20 years time.
I agree, contracts have no meaning...they are meant to be broken..
Is it a culture thing....
Void ab initio takes on a new meaning. When there were alternatives routes to cancel the contract Waheed's regime chose the worst possible option.
But then again the man who was really behind this farce is now ruling the country. Goes to show that the gullible can be ruled by any moron.
@missindia.
why your ass is paining. we will pay to gmr and we will give air port to over honest reliable brother china. also whole nation want to naval base project give to china only. insha allah will give to china. he he he. we don't want nightmares anymore.
India smells dirty.. we will pay 4 million and thats it
My brain is paining from reading so many illiterate comments on this GMR debacle. But again, dictatorships aren't really known for valuing things like education and critical thinking skills.
"We always said we will have to pay compensation."
What's the punishment for lying in Islam? What happened to the "void ab initio"? If we recall, it was the "coalition" government that threw out GMR. We can still hear the "Go home Indians" chants.
When will we hear "Go home Chinese"? Oh, let's get them over here first eh?
It is so funny to read Hero rant and rave about corruption, when an international court has agreed with GMR, proving the terms of their contract was legal and binding.
It is a pity the Maldives doesn't hold to international law for slander and libel, because GMR would be suing the a*** of Hero for his lies.
I just don't get how, with all the so called "politically smart" leaders we had then, after kicking "MDP thugs" out of the government, we have ended up in this mess. There are so many different ways the supposedly smart politicians could have played it, and even exposed to alleged corruption in the deal, to terminate the contract and save our country for the sake of our religion and our people. And yet, these smart politicians were just in too much of a hurry (only God knows why) to get rid of GMR at whatever cost. And today we are faced with this cost.
@ag
The Chinese aren't lilly-livered peaceniks like the Indians. You mess with them, they'll come here with battleships and level half the capital with high-caliber artillery before demanding the government pay reparations for "Insulting the Communist Party".
So many people here actually wants Maldives Government to loose AND pay a hefty compensation to the Indian Company, despite confirmed wrong doing, not only in Maldives but else where.
Besides, why would a political party be so involved in supporting a canceled investment. Shouldn't it be left to the courts.
Looks like BJP has a political wing in Maldives.