GMR Infrastructure Ltd (GMR) said on Thursday that an international tribunal has declared that its concession agreement for Maldives airport was valid. The quantum of compensation, which GMR has pegged at $1.4 billion (Rs 8,408 crore), will be decided by the tribunal in the next phase.
GMR Male’ International Airport Limited (GMIAL), a subsidiary of GMR had entered into a concession agreement with the Maldivian government and Maldives Airport Company Limited (MACL) for the modernisation and operation of Ibrahim Nasir International Airport in November 2010.
The contract was unilaterally terminated by MACL on November 29, 2012 based on the Maldivian government’s advice, which initiated arbitration proceedings seeking a declaration that the concession agreement was void ab initio.
GMIAL had disputed this wrongful termination. After detailed proceedings lasting for more than 18 months, the tribunal has now issued an award and directed Maldives government and MACL to pay GMIAL $4 million (Rs 24 crore) by way of costs within 42 days.
In a filing to the Bombay Stock Exchange, GMR said the tribunal declared that the concession agreement was valid and binding and “was not void for any mistake of law or discharged by frustration”. “Government of Maldives and MACL are jointly and severally liable in damages to GMIAL for loss caused by wrongful repudiation of the agreement as per the concession agreement,” GMR said in a filing, citing the tribunal award.
“It has always been our firm belief that the cancellation of our concession agreement amounted to wrongful repudiation and the tribunal has upheld this stand,” GMR said.
GMR and Malaysia Airports Holdings had won the $500-million (Rs 3,000 crore) airport project — the biggest foreign investment project in country — for 25 years through a tender process overseen by the World Bank.