GMR gets Singapore court relief, but Maldives sticks to its guns

Wednesday, 5 December 2012 00:02 - - {{hitsCtrl.values.hits}}

Male calls contract termination irreversible, makes it clear firm has to hand over airport on 7 December

The Maldives government took a firm stand today, saying the termination of GMR Infra’s 25-year concession contract to run the Male international airport was “non-reversible”. The island nation’s government made it clear that GMR Male International Airport Ltd (GMIAL) would have to hand over the airport on the midnight of December 7.

The move comes even as a Singapore court, where GMIAL had challenged the order, granted it “injunctive relief” against the termination by the Maldives government on November 27. GMIAL had been awarded the contract in June 2010 during the tenure of former president Mohamed Nasheed, but after his ouster, the new government under Mohammed Waheed attacked the contract, which had brought the largest FDI in the country, seeing it as a “sweet deal” favouring GMR — an allegation it vehemently denied.

According to the interpretation of the Maldivian government, the Singapore court’s judgment does not prevent the cancellation of the contract if compensation is given. It has also appealed against the court’s decision. “Our decision is based on legal advice from lawyers in the UK and Singapore; the judge was incorrect in interpreting the law. Where compensation is adequate, an injunction cannot be issued. A court cannot issue such an injunction against a sovereign state,” said Masood Imad, the Maldivian President’s media secretary.

A GMIAL spokesperson said: “We cannot comment on the statements from the Maldives government. They have participated in the hearing and were present at the court proceedings. We expect them to respect the order.” GMIAL CEO Andrew Harrison told a news agency the sovereign guarantee in the agreement should be “respected”.

Imad said the government expected GMIAL and Maldives Airport Company Ltd (MACL) would come to a settlement and the consortium, led by the Indian firm, would hand over the airport peacefully. He, however, added Maldives courts’ recourse would have to be taken to implement the decision if the consortium didn’t comply.

The top Maldives official also said, even as GMIAL was looking at a compensation of $550 million, the government had asked MACL to provide complete details of how much the company had spent in the country. “We will have a better picture of the compensation package we need to give after this exercise is undertaken,” he added.

Imad rubbished GMR’s contention it should have got a 65-day notice, according to the agreement. “The guarantee under section 19.22 of the agreement clearly says five days’ notice has to be given,” he added.

The Maldives government says it had to cancel the contract after MACL communicated to it that it might go bankrupt if it had to pay in liue of the airport development charge, imposition of which a civil court ruled against.