Indian newspaper The Financial Express has reported that the arbitration process has begun between GMR Infrastructure and the two banks that provided GMR with a loan of $160 million for the development of Ibrahim Nasir International Airport (INIA).
A consortium consisting of Axis Bank and Indian Overseas Bank had provided $160 million to GMR for the development of INIA. The $529-million INIA development project involved a debt of $358 million. The Maldives government had given a sovereign guarantee to the lenders in case of termination of the contract.
The agreement between the consortium of two banks and the Maldives government says that in case of termination of the contract, the Maldives government will be liable to pay the consequent damages.
The Financial Express reports that the agreement stipulates that the Maldives government has to pay the damages within 60 days of the termination of the contract.
The Maldives government had argued that the agreement between them and the GMR regarding the INIA management contract has to be considered Void ab initio (to be treated as invalid from the outset). The Maldives government has argued that they are not liable for the financial loans obtained by GMR for the project, and had informed Axis Bank of their decision to treat the agreement as Void ab initio.
Following the termination of the agreement between the Maldives government and GMR, the two parties are also in the arbitration over the contract where GMR is looking to get the contract reinstated, or else get compensation of $800 million.
The GMR Male International Airport (GMIAL) is pursuing a third arbitration case at the Singapore High Court relating to its dispute with the Maldives government over collection of an airport fee, a case that precedes the decision to terminate the concession.
The parties have agreed to abide by the English and Singapore Laws during the arbitration process. The three separate arbitration processes are happening simultaneously under these laws.