Termination of GMR agreement unlawful, declares arbitration court

GMR Infrastructure has said that it has won the arbitration proceedings in a Singapore tribunal against the Government of Maldives over the premature termination of the contract to develop and manage Ibrahim Nasir International Airport (INIA).

In a filing with the Bombay Stock Exchange (BSE), GMR Infrastructure said the tribunal has declared that the concession agreement between Government of Maldives and GMR Male’ International Airport (GMIAL, a subsidiary of GMR Infrastructure) was valid and binding and “was not void for any mistake of law or discharged by frustration”.

After 18 months of detailed proceedings, the tribunal’s verdict stated that the "Government of Maldives and Maldives Airports Company Limited (MACL) are jointly and severally liable in demands to GMIAL for loss caused by wrongful repudiation of the agreement as per the concession agreement," said GMR Infrastructure in its filing with BSE.

The tribunal has directed the Government of Maldives and MACL to pay $4 million to GMIAL as compensation for legal costs within 42 days. However, the tribunal has yet to declare compensation amount for the unlawful termination of the contract. GMR is seeking $1.4 billion in damages from the Maldives government.

The contract to develop and manage INIA was terminated by the Maldives government on 29 November 2012 after declaring that the concession agreement was void ab initio (invalid from the outset) due to irregularities in the bidding process.