High Court rules against Alpha MVKB duty free shop

The High Court today backed the Civil Court ruling that GMR’s decision to terminate its contract with Alpha MVKB duty free shop at the Ibrahim Nasir International Airport in March was valid, and that MVK’s request to extend the notice until December 31 violated its contract with GMR.

According to the ruling, GMR had vacated the Alpha MVKB Duty Free Shop at Ibrahim Nasir International Airport (INIA) legally and according to the agreement between both companies.

The High Court noted that GMR gave notice on March 1 and, as per the agreement, the contract terminated on March 31. As no party could extend the termination notice, the court concluded that MVK had no right to remain at the airport without approval from GMR.

Alpha MVKB was leased for 10 years under an agreement between MVK and Maldives Airports Company Limited (MACL). The agreement requires the party wishing to terminate the agreement to give a one-month notice; the High Court stressed that both parties had that right.

The High Court also denied MVK’s request for a temporary order allowing them to run the duty free shop through December 31 on the basis that the case had been closed.

Airport shops contracted under Maldives Airports Company Limited (MACL) were allowed to remain in operation for one year after GMR took over airport management. As per the MACL contracts, all shop contracts will terminate on December 31 of this year.

GMR said it has given the required 90-day notice to all shops except Spice Island, which will remain in service. Plans for new shops are unclear, however GMR has said it welcomes any company offering a product appealing to locals and foreigners alike.

Minivan News made repeated calls to Alpha MVKB Managing Director Ibrahim Shafeeq, MVK  and Alpha MVKB offices, but had received no response at time of press.

GMR officials today said they could not issue a comment on the case until they received an official notice of the ruling.

Earlier this month, Customs officials intervened when GMR officials began dismantling a temporary wall outside of the Alpha shop and packing up goods.

“Duty-free goods are Customs’ responsibility, and we will be involved in the process of opening or closing duty-free shops,” said Customs Director Ismail Nashid. “As for the goods involved, there are several options for the shop owner to choose from including importing the stock to the Maldives or selling it internationally.”

GMR officials earlier said that action was taken against the shop after several notices for evacuation had been ignored, thereby complicating the airport renovation schedule.

The airport renovation is the single largest foreign investment in the Maldives at US$400 million. GMR is upgrading the old terminal ahead of completing construction of the new terminal in 2014, and will operate the airport for 25 years under a concession agreement signed last year with the government.

GMR has faced repeated legislative battles since it entered the contractual agreement.

Opposition Dhivehi Qaumee Party (DQP) earlier filed a case challenging GMR’s right to collect a US$25 (Rf385.5) Airport Development Charge (ADC) and US$2 (Rf30.8) Insurance Charge commencing January 2012. The DQP had claimed that a pre-existing Airport Service Charge (ASC) of US$18 (Rf277.56) invalidates the ADC.

The Civil Court ruled against GMR on December 8 on the grounds that a clause in the concession agreement with GMR violated the Airport Service Charges Act of 1978, which was amended in 2009 to raise the charge to US$18 for foreign passengers and US$12 for Maldivians above two years of age.

The government has said it will likely appeal the lower court’s ruling, given its contractual obligation to GMR.