AgustaWestland has decided to invoke the ‘arbitration’ clause after the suspension of its contract for supply of 12 VVIP helicopters even as IAF chief Air Chief NAK Browne on Friday said a decision has to be taken fast as the present fleet of MI-8 helicopters will be phased out by next year.
Mentioning that the IAF has informed the operational situation to the Government, Browne said the contract for 12 AgustaWestland VVIP helicopters was frozen in February this year. At that point of time, UK-based company had supplied three helicopters and remaining nine were to be inducted over a period of one year.
He said the present fleet of Russian made MI-8 helicopters have entered the last phase of their operational life and will be grounded by next year. The three Agusta helicopters, including two passenger and one cargo helicopters, are now used for routine flying so as to maintain them in flying condition, Browne said, adding the IAF has limited spare parts for these machines.
The Defence Ministry had suspended the contract following allegations of kickbacks worth over Rs 360 crore in the nearly Rs 4,000 crore deal on the grounds that the company had violated integrity pact which prohibits lobbying and commissions for contracts.
Denying any wrongdoing, AgustaWestland maintained all along that it did not violate any conditions of the contract. In the latest development, the company in a statement on Friday said it was compelled to go in for arbitration as the Defence Ministry refused to have a dialogue with it over all these months. “Following the suspension of the contract to supply AW101 VVIP helicopters to India — a sanction not provided for the under contract — a request was made to India’s Ministry of Defence by AgustaWestland in April 2013 invoking the contractual provision for bilateral discussions. Since then there have been a series of further requests for discussions. Regrettably, to date, there has been no response from India’s MoD,” the statement said.
“The company’s earnest desire is to have a dialogue with the Indian authorities. AgustaWestland remains totally committed to working with the Government of India to resolve the issues confronting us and to allow the Indian armed forces to receive the equipment they need,” it said. “However, we do not see how we can achieve this if a dialogue is not established. The ongoing need to resolve this issue has left AgustaWestland with no option but to invoke arbitration through Counsel; the next step prescribed by the contract. This is not a step we take lightly,” according to the statement.
While the arbitration proceedings themselves are confidential, the issues in question relate to the unilateral suspension of the contract. Neither the contract nor the associated Integrity Pact confers such rights on the Indian MoD, the company said.