GMR win helps reset India-Maldives ties
With arbitration inching to a close in the Male international airport case, involving the Maldivian Government and the Indian infrastructure giant GMR, it is hoped that a major irritant in bilateral relations between India and Maldives will be resolved soon. On Thursday, a Singapore-based international tribunal ruled in favour of GMR and upheld the corporate's stand that Male's unilateral cancellation of their agreement to modernise and operate the Ibrahim Nasir International Airport, amounted to “wrongful repudiation”. For now, the tribunal has asked Maldivian authorities to pay GMR four million dollars in legal costs but the total amount in damages is yet to be decided. GMR is reported to have claimed as much as $1.4 billion; however, given that the amount exceeds the annual budget of the tiny island nation, more negotiations are expected. But overall, it is heartening that the Government of President Abdullah Yameen has accepted the tribunal's ruling. The $500 million contract, signed in 2010 between GMIAl (a consortium of GMR Infrastructure and Malaysia Airport Holdings) and the Government of Maldives, then headed by President Mohamed Nasheed, was the biggest foreign investment project in that country. Its sudden termination in 2012 — following a tumultuous regime change earlier in the year that resulted in the ouster of the staunchly pro-India Mr Nasheed — upset New Delhi and sullied foreign investor sentiment in Maldives. By now agreeing to honour the tribunal's decision, the Male has sought to correct its course.
At the crux of the dispute was the Airport Development Fee which the Nasheed administration had allowed GMR to collect from passengers under a concession agreement. When the ADF revenue did not meet its target, GMR asked Male to bridge the shortfall, as per the agreement. The Maldivian Government, then headed by President Mohammed Waheed, refused to pay. It declared the agreement invalid from the outset and gave GMR seven days to leave the country, thereby precipitating a diplomatic crisis that threatened to derail long-standing ties between India and the Maldives. Sure, much water has flown under the bridge since then and the present regime in Male is committed to strong ties with New Delhi but there is no denying that former President Waheed had cynically brewed anti-India sentiments to convert the dispute into a political tool with which he could disparage the Nasheed regime. But in the process, he only brought trouble upon his own country — legal experts believe that Male trashed the agreement in the worst possible way, even though there were provisions for lawful termination. In fact, Maldives would have been on the verge of bankruptcy had it not been for one particular clause in the concession agreement, inserted by the Nasheed regime, that allows the Maldives Airport Company ltd to terminate the agreement for reasons of public interest as well as imposes a cap on losses.