GMR awarded damages in Maldives airport arbitration

Infra giant to also get compensation for project loan from Axis Bank

An arbitration tribunal in Singapore has ruled in favour of the GMR group of companies on its dispute with the Maldives government on the airport project in that country.

GMR, the tribunal has decided, is entitled to payment of damages for termination of its contract in Maldives for the airport. This will include all the money it had borrowed from Axis Bank for the project. The payment is to be completed by the third quarter of this calendar year.

A subsidiary of GMR had signed an agreement with the government of that country and Maldives Airport Company Ltd for modernisation and operation of the airport in Male, the capital city, in 2010. The GMR company had won the right to build and operate the Ibrahim Nasir International Airport for 25 years, extendable by another 10 years. GMR had planned to invest a little over $500 million in the project, which included a debt component of $358 mn, arranged by Axis.

GMR stated the ruling in its favour came on Tuesday; the damages awarded would be in addition to those decreed in an earlier arbitration award of 2014.

At the time, the tribunal had ruled the original concession agreement was valid and binding and that the Maldives government had unlawfully repudiated it.

An Axis bank official said the bank is awaiting formal order. However it is a positive development for a lender as the ruling by the  tribunal favours payment of dues to the bank.