2 minute readAgustaWestland invokes arbitration in #ChopperScam

Click to enlarge: AgustaWestland AW101 | Image credit: Shruti Pushkarna/StratPost

AgustaWestland AW101 | Image credit: Shruti Pushkarna/StratPost

AgustaWestland has issued notice to the Indian defense ministry invoking arbitration over the dispute over the suspension of the contract for the delivery of 12 AW-101 helicopters for VIP transportation in an order worth EUR 560 million.

In a statement issue today, the company said it was left ‘with no other option but to invoke arbitration through Counsel’.

This, it said, came after it made several requests to the defense ministry for invoking bilateral discussions as provided in the contract, beginning in April, 2013. “Regrettably, to date, there has been no response from India’s MoD,” said the statement. 

The contract concluded under the Indian Defense Procurement Procedure (DPP) provides for arbitration to be invoked in case of failure of bilateral discussions for resolution of any contractual dispute, which will be governed by the Indian Arbitration and Conciliation Act, 1996 and conducted in India. The contract provides for the appointment of three arbitrators. One each, by the buyer and seller and one appointed by mutual agreement.

The contract for the supply of the helicopters was placed on hold after allegations of corruption emerged in the course of investigations carried out in Italy and Switzerland, which included wiretaps of conversations of Italian middleman Guido Ralph Haschke.

The investigations led to the trial of Giuseppe Orsi, Chairman and CEO of Italian defense and aviation company, Finmeccanica, which owns part of of AgustaWestland, being held in Italy.

The Indian defense ministry only long placed the contract on hold long after the allegations of corruption emerged, by which time, the company had already delivered three of the 12 aircraft.
AgustaWestland said in its statement, “While the arbitration proceedings themselves are confidential, the issues in question relate to the unilateral suspension of the contract. Neither the contract nor the associated Integrity Pact confers such rights on the Indian MoD.”

The Chief of Air Staff, Air Chief Marshal Norman Anil Kumar Browne said at the annual press conference in advance of Air Force Day on Tuesday, “We’re doing the minimum amount of flying and training for the boys, there,” adding that there are no VIP flight operations taking place since there are only two aircraft with the VIP configuration and a third in cargo configuration.

Browne said the aircraft were conducting minimum flight operations with limited spares available, only to keep the pilots ‘current’. “We have informed the government that the Mi-8 choppers, which we were using now, are going to be phased out from next year.” India has already paid more than 60 percent of the value of the order.

Read more about the controversy here. View a graphic of the timeline of the controversy here.

So what do you think?