The Singapore High Court stayed the unilateral termination of GMR's $500 million Male airport project by the Maldivian government. However, the Maldivian government made it clear that they will not honour the HC order
Singapore/Male: Indian infrastructure company GMR on Monday won a reprieve from Singapore High Court which stayed the unilateral termination of its $500 million Male airport project by the Maldivian government, which, however made it clear that they will not honour the order, reports PTI.
After the Maldivian government terminated the contentious project under domestic political pressures, GMR moved the Singapore High Court against the decision. As per the project contract, in case of any differences between parties, the law of either Singapore or UK would apply.
"The High Court of Singapore has today granted injunctive relief against the applicability and operations of Letter dated 27th November issued by the Ministry of Finance & Treasury (MoFT), Government of Male," GMR said in a statement in Singapore.
The Maldivian Airport Company Ltd (MACL), based on Maldivian government's instructions, had on 27th November terminated the contract, which was given to GMR in 2010 during the previous regime of President Mohamed Nasheed.
Immediately after the Singapore High Court verdict, Maldives made it clear that its termination decision was "non -reversible and non-negotiable" and said no such injunction can be issued against a sovereign state.
"The government's decision is very clear. It is non-reversible and non-negotiable. Our decision was based on legal advice we got from our lawyers in UK and Singapore," Maldives President Mohamed Waheed's press secretary Masood Imad told PTI in Male.
"We have asked MACL to go ahead with the takeover process that would be done later this week," he said, adding, "We believe the judge was incorrect in interpreting the law".
He also argued that "Where compensation is adequate, an injunction cannot be issued. A court cannot issue such an injunction against a sovereign state.
"The laws of Singapore and Britain are very clear. It does not permit issuing an injunction where compensation is adequate".
The official said Maldivian government has initiated the arbitration process and "GMR will be compensated".
Meanwhile, Indian officials said they were studying the court verdict as the entire issue required a "more considered view."
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The insurance regulator allowed insurers to use only as users (protection buyers) of CDS subject to condition to hedge their risks
New Delhi: Insurance Regulatory and Development Authority (IRDA) has permitted the use of credit default swap (CDS), a derivative instrument that offers credit protection, for insurance companies to hedge their risk, reports PTI.
Insurers are allowed only as users (protection buyers) of CDS subject to condition, IRDA said in a final guideline for investment in CDS.
The CDS is a guarantee in which the buyer of a credit swap receives credit protection, whereas the seller of the swap guarantees the credit worthiness of the product.
By doing this, the risk of default is transferred from the holder of the fixed income security to the seller of the swap.
The permission by IRDA comes almost a year after RBI allowed banks and financial institutions to deal with such instruments.
The guidelines said: "The CDS are permitted as a hedged to manage the credit risk covering the credit event. The category of the investment will not change pursuant to buying CDS on such underlying."
Insurers are allowed to use CDS on listed corporate bonds as underlying. Companies can, however, buy unlisted rated bonds of infrastructure companies. Also, insurers can invest in unlisted and unrated bonds issued by the special purpose vehicles set up by the infrastructure companies.
It has disallowed companies from any CDS transaction between entities belonging to a promoter group. Insurers cannot be purchased on short-term instruments with maturity up to one year such as commercial papers, certificates of deposit, non-convertible debentures.
Besides, the regulator directed that "all CDS transactions shall be reported to the investment committee, audit committee and to the board on a quarterly periodicity".
It also said the board of the insurance companies should amend its investment policy and put in place necessary risk management framework covering including type of assets on which protect can be bought, valuation norms and reporting and monitoring norms.
Recently, market regulator SEBI allowed mutual funds to participate in CDS transactions. SEBI said mutual funds can participate in the CDS market for hedging their debt risks, but can not enter into short positions in the CDS contracts.
In April, the Reserve Bank had allowed all financial institutions to participate in CDS market.
All India financial institutions, namely, EXIM Bank, NABARD, NHB and SIDBI were allowed to participate in the CDS market as user to hedge the underlying credit risk in corporate bonds in their portfolio, RBI had then said.