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After scrapping VVIP chopper deal, India set for arbitration process with AgustaWestland

Thursday, 2 January 2014 - 8:02pm IST | Place: New Delhi | Agency: PTI

After cancelling the scam-tainted helicopter deal with AgustaWestland, India is now set to face the arbitration process invoked by the Anglo-Indian company besides initiating the process of encashing the bank guarantee of Rs 2200 crore furnished by the firm.

India may also levy damages of more than 500 million Euros (around Rs 4000 crore) on the company while invoking the clauses under the Integrity pact of the deal, sources said.

AgustaWestland had invoked the arbitration clause in the deal in October last year, contending that the Defence Ministry could not "unilaterally" freeze the payments in the Rs 3600 crore deal. Of the amount, India had already paid 30 per cent.

India had then refused to be drawn into arbitration process but after cancelling the deal yesterday, it decided to participate in it. It nominated Justice (retd) B P Jeevan Reddy as its nominee for the arbitration process on the advice of the Attorney General.

AgustaWestland has nominated Justice (retd) B N Srikrishna as its nominee for arbitration.

As per the rules, in case the two parties do not have an agreement on the payments within 60 days, a three-member tribunal is expected to be set up for arbitration.

The tribunal is expected to 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.

The Defence Ministry has also set in motion the process of encashing the bank guarantee of over 260 million euros (around Rs 2200 crore) furnished by AgustaWestland.

Stating this, Defence Ministry sources asserted that India will not lose any money in the Rs 3600 crore deal in which payment of 30 per cent has already been made.

The deal was for supply of 12 AW-101 helicopters out of which three had already been delivered before the contract was frozen after allegations of kickbacks surfaced in February last year.

"MoD is not going to lose any money. India will not lose any money," a ministry source said amid concerns over the fate of the money already paid.

Yesterday, after the Defence Ministry announced its decision to cancel the deal, AgustaWestland said it will take all steps to "robustly defend" its reputation.

"AgustaWestland has not received any communication from India's MoD in line with the reports today. The company is, therefore, unable to comment beyond reiterating the denial of allegations of wrongdoing and the continued intention to robustly defend the company's reputation," it said in a statement.


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