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GMR gets stay on Maldives airport deal termination

GMR-MALDIVES-AIRPORT:GMR gets stay on Maldives airport deal termination

Reuters  |  Mumbai 

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

The court order on Monday suspends the government's decision to cancel its biggest foreign investment project, 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 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 at Male, its capital.

Shares in were up 4.3 percent at 19.35 rupees at 1:15 p.m. in a Mumbai market that was down 0.15 percent.

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 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 told Reuters. "Hopefully they will be reasonable."

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

The contract to upgrade and operate the 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 Infrastructure Limited and Malaysia Airports Holding Berhad .

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

First Published: Mon, December 03 2012. 13:52 IST