GMR wins Maldives airport legal battle, demands compensation

The outcome of an 18-month long legal tussle between GMR Infra and the Maldives government on the issue of government cancellation of the company’s contract to develop and operate the country’s main airport is in favor of the GMR. A Maldives’ tribunal hearing the case has adjudged the government’s cancellation of the contract “wrongful”. It has ordered Maldives and the state-owned Maldives Airports Company (MACL) to pay $4 million legal cost to GMR within 42 days. In addition to this, GMR has demanded an indemnification of $1.4 billion for losses incurred in the last one year on its bid amount and investments in developing the airport.
GMR vs Maldives case:
On July 28, 2010, a contract for development and operations of Ibrahim Nasir International Airport at Male was awarded to a joint venture between GMR Infra (77%) and Malaysia Airports (Labuan) Private Limited (23%) at a bidding price of $511 million. The contract was signed when Mohammed Nashid was the President of Maldives. However, in 2012, Mr. Nashid was forced to resigned under a coup d’état and Mohammed Wahid Hassan became took over as the President
Nasheed’s rivals filed a legal action holding the contract with GMR as invalid because the contract contains a $25 airport development charge per outgoing passenger which was not authorized by the parliament. The contract was thus cancelled.

Month: Current Affairs - June, 2014