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AgustaWestland invokes arbitration process

Tribunal in three months; pressure on CBI to conclude probe.

Written by Manu Pubby | New Delhi |
October 5, 2013 1:41:59 am

More than eight months after the government froze the contract for AW 101 VVIP helicopters due to serious corruption allegations,Italian firm AgustaWestland has invoked the arbitration clause,kicking off what could be a lengthy legal process that will decide the fate of the Rs 3,546-crore deal.

With the Defence Ministry refusing to make payments to the firm since February after The Indian Express reported that the name of a former Air Chief had surfaced in the Italian anti-corruption probe into the deal,AgustaWestland Friday said it had invoked the legal process as there has been no response to its requests for discussion from the government.

The announcement by the company for arbitration came hours after Air Chief Marshal N A K Browne pushed for an early decision on the VVIP choppers,saying the government has been told that the Mi-8 helicopters being used to ferry dignitaries would be phased out from next year. “Some decision has to be taken soon on how to move forward. That particular contract has been frozen with effect from February 1,” the IAF chief said on the status of the contract.

By evening,the company issued a statement on the arbitration process,“The ongoing need to resolve this issue has left AgustaWestland with no other option but to invoke arbitration through counsel; the next step prescribed by the contract. This is not a step we take lightly.”

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Taking on the Defence Ministry for stopping payments — three out of the 12 choppers have been delivered till now — the firm has claimed that the ministry has no right to suspend the contract as per the defence procurement rules.

“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,” AgustaWestland,which is facing a critical case against two of its former CEOs in Italy too on charges of corruption in the Indian deal,has stated.

As per the rules,now that the arbitration clause has been invoked,in case the two parties do not have an agreement on the payments within 60 days,a three-member tribunal will be set up for a judgment. The tribunal will have one member from each party and the third member will be mutually decided but will not be from either of the two nations or any nations that either party has an objection to.

In case the third member cannot be decided mutually,the president of the International Chamber of Commerce in Paris would have the authority making an appointment within 90 days. The pact also ensures that the tribunal would function out of New Delhi or any other city in India and will be conducted under the Indian Arbitration and Conciliation Act,1996.s

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