GMR gets stay on Maldives airport contract termination

NDTV Profit Desk

03 Dec 2012, 02:02 PM IST

GMR Infrastructure has won a stay order from a Singapore court on the Maldives government's cancellation of its $511 million airport development contract, the company said, adding that it would operate the airport as normal.

The court order on Monday suspends the government's decision to cancel its biggest foreign investment project, GMR said, which raised fears over foreign investor protection in the country and rattled its relations with India.

"We have obtained an injunctive stay on the operations of that (contract termination) letter," said Arun Bhagat, spokesman for the GMR group.

"So which, in effect means, we continue to operate (the airport) as normal business."

The government of the Maldives, a tropical island chain south-west of India famous for its luxury beach resorts and white sands, last week terminated GMR's contract to develop and operate an international airport at Male, its capital.

Shares in GMR were up 4.3 per cent at Rs 19.35 at 1:15 p.m. in a Mumbai market that was down 0.15 per cent.

The cancellation of the deal signed in 2010 follows President Mohamed Waheed's failure to renegotiate terms, sources close to president's office told Reuters.

The cancellation follows a year of political turmoil that saw the ousting of its former president and months of unrest.

"If they don't comply (with the stay order), the Maldives will no longer be respected as upholding its obligations under international law, which will be very detrimental to future foreign investment," Fayyaz Ismail, a lawyer for GMR told Reuters. "Hopefully they will be reasonable."

Imad Masood, a spokesman for the President of Maldives said he has not received the court's order when contacted by Reuters.

The contract to upgrade and operate the airport and build a new terminal came after a global tender overseen by the World Bank and signed under former president Mohamed Nasheed's administration.

The project was implemented through a joint venture company comprising GMR Infrastructure Limited and Malaysia Airports Holding Berhad.

However, Nasheed's rivals filed legal action saying the contract was invalid as it contained a $25 airport development charge per outgoing passenger which was not authorised by the parliament.