Government to Appeal Against Italian Court Decision On Encashment of Bank Guarantees in AWIL Contract
(Source: Indian Ministry of Defence; issued March 18, 2014)
The Government of India will be filing an appeal against the order of the Italian Court in Milan in the case relating to encashment of bank guarantees in the contract for the procurement of 12 VVIP/VIP helicopters from AgustaWestland International Ltd. (AWIL).
Simultaneously, the Government will vigorously pursue all options for encashment of the bank guarantees. (ends)
Contract with India - The Civil Court of Milan Confirms the Prohibition to Pay Collateral
(Source: Finmeccanica; issued March 17, 2014)
ROME --- Finmeccanica informs that today the Court of Milan – upholding the appeal lodged by its subsidiaries AgustaWestland S.p.A. and AgustaWestland International Ltd seeking an emergency interim ruling on the resolution by the Indian Defence Ministry of the contract to supply 12 AW 101 VVIP/VIP helicopters – confirmed the ruling issued last January 8, prohibiting, as a preventive measure, Deutsche Bank S.p.A. to pay the collateral of over EUR 278 million deposited in relation to the contract.
The decision of the Milan Court upheld almost all the claims made by the two companies, recognizing the patently abusive behaviour of the Indian Defence Ministry in demanding the payment of the collateral on the grounds of generic allegations in relation to the unspecified non-performance of contractual obligations.
Limitedly to the roughly EUR 28 million in warranty bonds, which have already been paid out by the State Bank of India and by Deutsche Bank A.G., and to the earnest money deposit of approximately EUR 350,000, the Court of Milan declared lack of jurisdiction and refrained from deciding on the issue.
AgustaWestland is represented by Cleary Gottlieb Steen & Hamilton Law Firm.
(EDITOR’S NOTE: In this case, AgustaWestland sought to stop several banks from paying to the Indian government several performance bonds and guarantees it had deposited as part of the now-cancelled €560 million contract to supply 12 AW-101 helicopters.
The Indian government claims AW indulged in prohibited corrupt practices, and so must surrender the bonds, but the Italian company has refused since no evidence to support the contract cancellation has do far been provided.
Furthermore, the Indian government has accepted arbitration.
AgustaWestland said in a March 18 Twitter post that “India: Court recognized the Group acted in accordance with principles of fairness in the fulfillment of the contract.”)