Civil Court: No grounds to enforce USD 12 million settlement to Sea Life

Justice Building, an office complex which houses the Civil Court. (File Photo/Sun/Mohamed Afrah)

The Civil Court ruled on Wednesday that there are no grounds to enforce a USD 12 million settlement the State previously agreed to pay to Sea Life Maldives Private Limited.

Sea Life had filed a lawsuit against Housing Ministry, asking for a court order to enforce a USD 12 million settlement agreement signed on February 26, 2018.

The State signed an agreement with Sea Life for the construction of 80 housing units on January 17, 2011. The agreement was later terminated, and a settlement agreement was signed in 2018.

The State had denied the charge, declaring that the agreement had been terminated in March due to provisions of the agreement warranting further scrutiny.

The Civil Court, in its ruling in the case, noted that the Corruption and Asset Recovery Commission had established the settlement agreement in question was designed to confer a larger compensation to Sea Life than it was entitled to, disproportionate to its actual expenses, and facilitate corruption.

In the settlement agreement, the State agrees to pay Sea Life USD 12 million in compensation for the USD 3.4 million it spent on the project.

Sea Life had raised questions over the date the settlement agreement was signed, but the Civil Court ruled that motive for the settlement agreement, the amounts of money involved, and the information on the letter corresponded, and that the court therefore cannot establish that the letter can be judged based on the incorrect date alone.

Sea Life had argued that the State signed the settlement agreement after due diligence, and how the two parties reached the settlement amount is clear. They also argued that the company’s costs due to the disruption of the project amounted USD 41 million, and total costs to USD 44 million.

The company argued that the State’s claim that the USD 12 million settlement was disproportionately large therefore lacked weight.

However, the State argued that while Sea Life listed its costs as USD 3.4 million in the settlement agreement, documents submitted by the Housing Ministry to Corruption and Asset Recovery Commission show the actual costs to be USD 1.1 million.

The Civil Court ruled that given the Corruption and Asset Recovery Commission established found the company listed USD 3.4 million as its costs in the settlement agreement without proper evaluation to gain an undue settlement disproportionate to the actual cost, there is no room to established the validity of the amount on the settlement agreement based on a letter declaring the validity of the amount alone.

Civil Court said that the only point raised by Sea Life to assert the validity of the amount is that it provided opportunity for the Housing Ministry to confirm the amount.

The court said that though the second party was given the opportunity to confirm the amount, the court cannot compel the payment of an invalid amount, and that doing so would mean conferring an undue benefit.

The court also said that it found that if the amount on the settlement agreement as Sea Life’s costs is invalid, it provides grounds to terminate the agreement.

The court therefore ruled that there are therefore no grounds to order the State to make the payment to Sea Life in accordance with the settlement agreement.