High Court has quashed a Civil Court ruling over the government’s seizure of Gaafu Alifu atoll Kaashihulhudhoo, finding that the state acted in breach of its agreement.

The island had been leased in 2013 to Sunny Farm for agriculture and poultry farming. The government repossessed it in 2020, citing failure to carry out the agreed development.

Sunny Farm contested the move, arguing that its work had been obstructed by the presence of a third party on the island.

The company initially filed a claim seeking USD 4.8 million in compensation, but the Civil Court ruled in favor of the state, finding that the seizure did not violate the agreement.

That ruling has now been overturned on appeal, with the High Court determining that the termination of the lease was unlawful.

While the High Court did not award compensation, it said Sunny Farm has the right to pursue damages through a separate legal claim.