GMR moves Singapore court to pare Maldives losses

Indian construction and development company GMR Ltd today sought a compensation of $1.4 billion from the Maldives for "wrongful termination" of its contract to develop and operate the Male International Airport for 25 years.

Male AirportThe contract was abruptly terminated when a new government seized power in the island nation; and GMR was virtually thrown out of the country along with its personnel.

Seeking to recover some of its losses, GMR filed a claim before an arbitration court in Singapore. A final order in the matter is unlikely before March-April next year.

According to Press Trust of India (PTI) sources, the papers for the claim run into 75 pages apart from annexures and attachments.

The figure of $1.4 billion was arrived at after taking into account loss of profit, payments made to subcontractors, and other heads.

The PTI report said the arbitration process will go on and the Maldivian government along with the Maldives Airport Co Ltd - both parties in the suit - will give their responses in due course of time.

The over $500 million airport project contract for modernising and operating the Ibrahim Nasir International Airport (INIA) was awarded to GMR in 2010 during the previous regime of Mohamed Nasheed. It was unilaterally terminated by the current government on 27 November last year.

The airport was taken over by the Maldives Airports Co after a high-voltage legal tussle in which GMR had initially got a stay order on the termination from the Singapore High Court.

However, the Singapore Supreme Court ruled on 6 November, a day before the notice period expired, that Maldives has the power to take over the airport.

The abrupt termination of the contract had raised tensions between India and Maldives.

Various Maldivian political parties, all coalition members of the current regime headed by President Mohamed Waheed, had carried out a series of protests and campaigns against the Indian company.

The Maldives government's stand is that the contract was terminated because it was "void ab initio"" (invalid from the outset) and hence the government does not have to bear any compensation for the termination.

Earlier this week, a Maldives anti-corruption watchdog had ruled out any graft in the leasing of the international airport development to GMR.

However, the government had said, "The report does not change the government stand that the contract given by former President Mohamed Nasheed was illegal.

"The contract was not terminated on the ground that there was corruption but because it was done against the law of the land."