Arbitration decision proves government will not have to pay full $1.4 billion to GMR: AG

The verdict by international arbitration tribunal in Singapore on Wednesday also proves that the Maldives government will not have to pay the full compensation claim of $1.4 billion to GMR Infrastructure, Maldives Attorney General Mohamed Anil has said.

GMR Infrastructure said in a filing with the Bombay Stock Exchange (BSE) 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).

“It is clear now that we won’t have to pay the $1.4 million in compensation claimed by GMR. This has also decided that we won’t have to pay anything close to the amount they demand,” said Attorney General Mohamed Anil.

The compensation payable to GMR by the Maldivian government will be decided in the second phase of the arbitration process, which will take about a year to begin, Anil said.

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' (to be treated as invalid from the outset) due to irregularities in the bidding process.

The Attorney General also revealed today that the arbitration tribunal in Singapore has decided on a formula to calculate the compensation amount and said that the amount will heavily depend on grounds that the agreement was cancelled with regard to the best interests of the public.

The arbitration tribunal's decision was a win for the Maldives government because the it had aimed to reduce the compensation amount, during the first phase of the arbitration process, Anil said.

The Singapore tribunal has directed the Government of Maldives and Maldives Airports Company Limited to pay $4 million to GMR Male’ International Airport (GMIAL, a subsidiary of GMR Infrastructure) as compensation for legal costs within 42 days. However, the tribunal has yet to declare compensation amount for the unlawful termination of the contract.