Asian International Arbitration Centre (AIAC) on Sunday, ordered Housing Development Corporation (HDC) to pay USD 22.8 million (MVR 352 million) in compensation to WZR Property over the development of a 25-storey office complex in reclaimed suburb Hulhumale'.
Malaysian company WZR Property was contracted with constructing the office complex during former President Abdulla Yameen Abdul Gayoom's administration.
According to AIAC, WZR has yet to receive the payments for invoices issued in May 2018, adding that the total adds up to USD 22,823,432.68 at the current exchange rate.
HDC was ordered to pay the aforementioned amount to WZR within a period of seven days.
The Malaysian company sought to receive the total funds for the project, approximating around MVR 462 million. However, the arbitration centre ruled for HDC to compensate WZR for the work done by the company.
WZR Property Sdn Bhd group's Chairman Datuk Sazmi confirmed to Malaysian news outlet Malay Mail that the arbitration was filed at the Asian International Arbitration Centre in September 2019. The case concluded on July 5.
Sazmi had told Malay Mail that WZR Property won the bidding process conducted by the Maldivian Ministry of Finance and Treasury to develop a 25-storey office complex on Phase Two of reclaimed suburb Hulhumale' and was awarded the contract on February 1, 2016.
According to Housing Development Corporation (HDC), the office complex was set to be developed with state-of-the-art features found similar to those in well-developed nations. The project was to be completed in 2018.
The total cost of the project, which was officially signed on March 1, 2016, amounts to nearly USD 123 million.
However, WZR Property claimed that it has not received a single payment despite completing 20 percent of the total work in addition to 60 percent of the pilings for the structure.
Highlighting that the contract was signed during the previous government, the Malaysian company stated that the current administration was reluctant to continue the project.
"... and our outstanding claim of USD 29 million was not being entertained", Sazmi had told Malay Mail.
Despite the progress made on the office complex, the incumbent administration decided to pull the plug on the project, adding that the state was attempting to reach a solution for breaching the contract outside of arbitration.
HDC formerly said that the agreement stated that loans must be arranged prior to commencing work on the project, but construction began before the necessary loans were granted, which led to the project grinding to a halt due to complications in funding.
However, HDC noted that the negligence fell on the former administration, adding that the Malaysian company claimed they must, therefore, receive compensation.
As per the agreement, the contractor would fund the project out of pocket, and the state would pay off the contractor in 20 years, with a grace period of three years.
The office complex, titled "U Building" was initially designed to be established in Male' City, but was later relocated to Phase Two of Hulhumale' due to the challenges that will arise in constructing such a large building in the congested capital.