* GMR to lose control of airport from Dec. 8-minister
* Singapore court earlier stayed project cancellation
* GMR to continue to operate airport as normal-company
* Cancellation raises fears over foreign investment
(Recasts, adds defence minister comments, updates shares)
By J.J. Robinson
MALE, Dec 3 (Reuters) - Maldives will wrest control of its
international airport from India's GMR Infrastructure,
cancelling its biggest foreign investment project, despite an
order from a Singapore court suspending the project's
The standoff over the $511 million project threatens to
cloud foreign investor sentiment on Maldives, which is seeking
overseas cash for many of its tourism projects. The country
terminated an agreement with GMR last week, rattling its
relations with India.
"We will continue the airport takeover and Inshallah next
Saturday onwards MACL (state-controlled Maldives Airport Company
Ltd) will be running the airport," Mohamed Nazim, defence
minister and acting transport minister, told a press conference
in the capital Male on Monday.
Earlier in the day, GMR won a stay order from a Singapore
court, which the company says has jurisdiction over disputes in
the agreement, on cancellation of the airport contract. GMR said
it would continue to operate the airport as normal.
"We have obtained an injunctive stay on the operations of
that (contract termination) letter," said Arun Bhagat, spokesman
for the GMR group.
The government of the Maldives, a tropical island chain
south-west of India famous for its luxury beach resorts and
white sands, cancelled the 2010 agreement saying that it was not
The cancellation follows President Mohamed Waheed's failure
to renegotiate terms, sources close to president's office told
Reuters, and comes after a year of political turmoil that saw
the ousting of its former president and months of unrest.
Shares in GMR closed up 5.4 percent at 19.60 rupees in a
Mumbai market that ended down 0.2 percent.
"We would fight for our rights all the way, through the
court. That is very clear," Andrew Harrison, chief executive
officer of the GMR airport project, told CNBC-TV18 news channel.
"We expect that under the terms of the concession agreement
... any orders issued by the (Singapore) court would be
respected, because that is enshrined within the agreement."
Imad Masood, a spokesman for the President of Maldives said
he had not received the court's order, when contacted by
The project cancellation exacerbated already strained
relations with neighbouring India, which last week warned it
would "take all necessary measures to ensure the safety and
security of its interests and its nationals in the Maldives".
The move sent a "very negative signal" to foreign investors,
"If they don't comply (with the stay order), the Maldives
will no longer be respected as upholding its obligations under
international law, which will be very detrimental to future
foreign investment," Fayyaz Ismail, a lawyer for GMR told
Reuters. "Hopefully they will be reasonable."
The contract to upgrade and operate the airport and build a
new terminal came after a global tender overseen by the World
Bank and signed under former president Mohamed Nasheed's
The project was implemented through a joint venture company
comprising GMR Infrastructure Limited and Malaysia Airports
However, Nasheed's rivals filed legal action saying the
contract was invalid as it contained a $25 airport development
charge per outgoing passenger which was not authorised by
"Waheed cannot ignore international law at his whim and
fancy. Rules are rules and they must be respected," Nasheed told
Reuters in an e-mail on Monday.
(Additional reporting by Kaustubh Kulkarni and Aradhana
Aravindan in MUMBAI and Shihar Aneez in COLOMBO; Writing by
Henry Foy; Editing by Muralikumar Anantharaman)