Maldives cabinet passes to annul GMR agreement

Nov 27, 2012 - 06:28 1 comment
  • The signing ceremony held on June 28, 2010 of the agreement awarding the airport to GMR group for 25 years. FILE PHOTO

Cabinet has passed to annul the agreement made with GMR Group to operate the Ibrahim Nasir International Airport (INIA).

Attorney General (AG) Aishath Azima Shakoor revealed that the decision to annul the agreement signed on June 28, 2010 awarding the airport to GMR for 25 years was made with the necessary legal expertise and the decision has been conveyed to Maldives Airports Company Limited (MACL). Azima further said that GMR has also been informed of the decision.

During a press conference held at the President's Office, Azima revealed that GMR had been given a notice of seven days, but the company will receive a 30 day period to remove its assets. Legal assessment showed that the agreement was invalid from day one, she added. However, the AG refused to disclose any further details of her statement.

In response to a question from a reporter, Azima said the compensation payable to GMR could be minimized, while adding that the government might not even have to pay a single cent to the Indian company. AG expressed confidence that the decision would not undermine relations between India and Maldives. She said that the decision to terminate the agreement was made based on the legal expertise of lawyers from Singapore and UK.

The government statement read out by Azima stated that the process to annul the agreement through arbitration would be initiated by the government.

After the Civil Court had ruled that GMR cannot charge USD27 from passengers as Airport Development Charge (ADC) and insurance surcharge, the Indian infrastructure giant had taken the case to Singapore arbitration.

GMR had been deducting USD27 from each passenger since January after former MACL Chairman Ibrahim ‘Bandhu’ Saleem had issued a signed consent letter to GMR to deduct the USD27 from the concession fee paid by the company to MACL.

Meanwhile, MACL had approached the High Court of Singapore in October, to get the injunction in favor of GMR, restraining MACL from taking any step in the Civil Court of Maldives preventing GMR from adjustment/set-off of the Airport Development Charge and insurance surcharge, vacated.

However, Singapore High Court had dismissed the application filed by MACL. The court also ruled that the validity of the consent letter would be decided in the arbitration proceedings in Singapore.

The cabinet's decision came in the wake increasing pressure from the pro-government political parties to annul the agreement.

The agreement signed between GMR and former President Mohamed Nasheed’s government to develop INIA, has been labeled as “illegal” alleging that it was signed despite objections from the Parliament.

President Mohamed Waheed Hassan Manik himself recently told an Indian newspaper that the agreement is a “bad contract” signed “conceivably under dubious conditions” by the previous government.

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