The Maldives government has decided to renew a cancelled agreement with Indian giant Tata to build luxury flats in the capital Malé.
The government was “forced” to accept a deal to avoid a US$250 million payout, Ahmed Nihan, the ruling party’s parliamentary group leader, revealed at a press briefing Sunday.
“Where can we go when it was written in the agreement that the arbitration court is the Bombay High Court?” he told reporters.
It was “100 percent certain” that the arbitration outcome would have been unfair to the Maldives, the lawmaker said.
An out-of-court settlement was reached after Tata Housing filed its claim with the Mumbai Centre for International Arbitration, local media reported, citing the housing ministry.
The housing project was signed by former president Mohamed Nasheed’s administration in May 2010 with Apex Realty Pvt Ltd, a joint venture between Tata Housing and SG18 Developers. In exchange for building 280 flats in the former Gaakoshi and Arabiyya School plots in Malé, the government awarded two other land plots, Odion and Naadhee, to develop and sell luxury apartments.
The island of Lhossalafushi in Lhaviyani atoll was also leased to Tata for resort development.
But the project was stalled due to contractual disputes after Nasheed’s successor took over the vacant Naadhee site to build a new Supreme Court complex. After failed renegotiation attempts, President Abdulla Yameen’s administration terminated the agreement in April last year, reportedly citing delays in commencement.
As part of the recent settlement, the government has decided to give back the Naadhee plot as well as a 100,000-square feet plot at the old dump site instead of the Odeon plot, deputy housing minister Ibrahim Nazeem told Mihaaru.
The new agreement would be signed following legal advice from the Attorney General’s office, he added.
The outgoing administration previously lost two arbitration cases in Singapore. In November 2016, Indian firm GMR was paid more than US$270 million for the cancellation of a concession agreement to develop the international airport. A month later, Malaysia-based security firm Nexbis Solutions won an arbitration award of US$15 million for the termination of a border control project.