How International Arbitration helps to keep the Contract Provisions intact and how an Affected Party Claim Compensation under the Arbitration for the loss sustained?
GMR Group won against Maldives Government in an International Arbitration Case:
GMR Infrastructure , which owned GMR Male International Airport (GMIAL), said the arbitration award was given by a three-member international arbitral tribunal.
Siddhartha Kapoor GMR Group today said it has won an international arbitration against the Maldives government and has been awarded USD 270 million as compensation from the island nation after its contract to build an international airport in Male was arbitrary cancelled.
GMR Group today said it has won an international arbitration against the Maldives government and has been awarded USD 270 million as compensation from the island nation after its contract to build an international airport in Male was arbitrary cancelled.
The original claim was for about USD 500 million and against that the award has come at USD 270 million, he said, adding that he is happy with the outcome. He also said that this USD 270 million will cover the entire debt and equity of the company along with 17 percent returns. In terms of the total debt at the GMR Group, about USD 300 million will get erased thanks to this award.
It is almost a process of almost four years. One was of course the legal process when we were in arbitration which took almost four years and there were three interim decisions and one final decision after which this final award has come. Plus of course there has been lot of other discussions and struggle from our side.
We went to even the chairman of IFC Washington we went to the World Bank chairman because they were involved in the bidding process and plus of course working with the Indian government. So, it has been a long struggle and it has vindicated our stand that in terms of corporate governance, in terms of ability to effectively and efficiency manage airports in the global arena as well as ensuring that as a global airport developer our reputation is untainted and comes out very clean.
Now, Maldives government is under obligation is to fulfil the arbitration award as refusal to fulfil the award will have the following repercussions.
1. No sovereign government would want a debt remaining outstanding like this.
2. It affects their international credit rating.
3. It affects their international reputation.
An international arbitration offers an early solution to the dispute as it just took 4 years to get the final award from Arbitration process, whereas in a court process, it will take many more years to get a relief.
Courtesy : Money Control