Maldives got a favorable ruling Thursday from the Singapore Court of Appeal which allowed it to cancel a $511-million airport development contract with India’s GMR Infrastructure.
The ruling set aside an order won by GMR Monday from the Singapore high court that suspended the South Asian island nation’s decision to cancel the contract with the Indian infrastructure developer to run the GMR Male International Airport (GMIAL).
"The Maldives government has the power to do what it wants, including expropriating the airport," Sundaresh Menon, the Chief Justice of Singapore, said in the court, Reuters has reported.
On Tuesday, the government announced that it would take over the operations of the airport at midnight Friday despite the injunction from the Singapore high court. However, the new ruling that is in its favor will allow Maldives to take over the airport from GMR with immediate effect.
"We don't see any hiccups now. There won't be any problem. They will hand over to us by December 7. All senior managers and consultants are working on that now," a Maldives government official was quoted as saying by Reuters.
The Maldives government Nov. 27 cancelled the $511-million agreement with the GMR-led consortium to run the GMIAL for a period of 25 years. The government accused that the agreement signed during the previous government’s term to upgrade the airport with a new terminal was not in the interests of the nation.
It alleged that the conditions were dubious and detrimental to the interests of the nation which is heavily dependent on revenue from tourism.
Maldives accused the company of stubborn stands and said that it had tried renegotiating with GMR on the terms and conditions but the company had not responded positively.
Scrapping of the deal has raised concerns among the foreign investors at a time when the island nation is trying hard to woo capital for infrastructure developments. The move is going to rattle its equations with its neighbor India.
Although Maldives said last week that it had made efforts to reach Indian Prime Minister to brief about its stand and explain why it wanted to scrap the contract, India warned its neighbor of serious consequences in diplomatic relations if the legal course was not followed, PTI reported.
According to the contract, the law of Singapore or the UK would apply in case of any dispute between the parties.
After the Singapore court’s order, the GMR shares dropped over 4 percent to 20.05 rupees in the National Stock Exchange and Bombay Stock Exchange Thursday.