An Axis Bank-initiated arbitration into a USD 163.5 million-loan granted to India’s GMR company from the bank’s Singaporean branch, to develop the Ibrahim Nasir International Airport (INIA), has concluded with the Maldivian government not having to take responsibility, nor pay for that loan.
Following the nullification of a contract between GMR and the Maldivian government, the bank had sent a notice to the government to compensate for the loan payment, citing that the government had given a sovereign guarantee to the lenders in case of termination of the contract. However, as the government refuted the claims, the bank had filed the case to the arbitration court on April 2013.
During the conclusion of the hearings - which took place on March 2014, the Singapore-based arbitration court has ruled that neither the Maldivian government nor Maldives Airports Company have to take responsibility for the loan, and that the cases submitted to the court by the bank (regarding the issue) were unsubstantial.
The court added that, under standard procedure of the arbitration process, the bank has to pay for the expenses carried out by the Maldives.
Meanwhile, the heated arbitration between GMR and the Maldives government is still ongoing.
The first phase of the arbitration phase ended with the ruling that the termination of the GMR agreement was made unfairly. The case is now at the point of arranging means of compensation for the Indian infrastructure giant.