AEV said the award arose from a turnkey contract in which Transfield Philippines Inc. (TPI) agreed to design, construct, commission and hand over to LHC a 70-megawatt (MW) hydroelectric power project in Ilocus Sur.
AEV said the award also represents payment for lost revenue during the rectification period.
However, LHC was ordered by the arbitration tribunal to pay TPI its final contractual installment payment of $5.9 million, to return the security on the Bakun project in the amount of $17.9 million and to reimburse TPI for part of the arbitration and legal costs it incurred in the amount of $12.5 million.
While LHC is still consulting with its external auditors and while there are pending legal proceedings before Philippine courts between LHC and TPI related to the same or similar matters as in the arbitration proceeding, AEV said it believes the resulting award will not have a material adverse effect on AEV’s financial statements.
AEV clarified this would not make any substantial impact since it already made a provision of P433 million in its books in the years 2000 and 2001 for any costs or amounts which could arise in connection with the arbitration proceedings.
The case stemmed from a complaint filed by TPI’s parent company Transfield Group of Australia at the Supreme Court of Victoria in Melbourne, seeking damages arising from AEV’s supposed untimely call on its letters of credit and for alleged refusal to extend the repair works on TPI’s construction of the $150-million Bakun hydropower plant.
In February 2003, LHC and TPI jointly filed an arbitration case with the International Court of Arbitration in Singapore. LHC sought $90 million in damages for project delays and the cost of repairing the Bakun hydropower plant’s tunnel lining.