EXCLUSIVE: SRT faces HEFTY BILL in Hopewell case

[rooster59]

EXCLUSIVE: SRT faces HEFTY BILL in Hopewell case

By NOPHAKHUN LIMSAMARNPHUN 
THE NATION WEEKEND

 

 

RAIL COMPANY BELIEVES DAMAGES COULD TOTAL BT25 BILLION ONCE THE INTEREST OF 7.5% INTEREST IS ADDED 

 

THE STATE RAILWAY of Thailand (SRT)’s liability in the Hopewell compensation case could top Bt25 billion once interest charges are included, according to deputy SRT governor Ek Sittivaekin.

 

On April 23, the Supreme Administrative Court upheld an arbitration committee’s ruling in favour of Hong Kong-based Hopewell Co, whose Bt80-billion elevated road and train project in Bangkok was scrapped by the government in 1998.

 

As a result, SRT, which had signed the 30-year concession contract with Hopewell (Thailand) Co, has been ordered by the court to pay Bt11.88 billion in compensation at 7.5 per cent interest per annum.

 

According to Ek, the interest works out to approximately Bt13 billion plus the principal of Bt11.88 billion.

 

Dr Samart Rajpolasit, a former deputy governor of Bangkok and Democrat Party member, suggested that the SRT initiate negotiations with Hopewell to settle the massive compensation issue and the government should avoid using an arbitration mechanism to settle contractual disputes with the private sector in the future.

 

According to Samart, the government is at a disadvantage when an arbitration committee settles |disputes, even though in the Hopewell case the government chose to terminate the contract after the private firm only managed to complete 13 per cent of the project in more than seven years. 

 

Earlier, Hopewell’s lawsuit against the SRT had been dismissed by the lower Administrative Court, which said the case had run out of the statute of limitations.

 

The government officially terminated the contract in 1998, after Hopewell missed several construction deadlines and appeared highly unlikely to complete the project according to schedule. 

 

After signing the 30-year concession in 1990, Hopewell ran into financial and liquidity problems, but its argument was that the SRT was not able to hand over land plots as scheduled, as a result construction could not go ahead. 

 

When the contract was terminated in 1998, Hopewell only had two years left to build the remainder of the 60-kilometre system. 

 

Samart said the Administrative Court had previously dismissed the Hopewell compensation case on grounds that the case’s statute of limitations had expired in 2003 – five years after the contract was terminated. 

 

However, Hopewell approached the Supreme Administrative Court, which upheld the arbitration committee’s ruling in favour of the company. 

 

It is understood that the high court counted the case’s statute of limitations from 2001 when the administrative court system was set up in Thailand – rather than the contract’s termination date in 1998.

 

Samart said court verdicts are based mainly on the legality of the arbitration committee’s ruling, which is stipulated in the concession contract as a mechanism to settle any dispute between the government and the private company.

 

According to the Hopewell contract, the arbitration committee has three members – one each from the Thai government and the private firm, with the third member jointly chosen to perform the arbitration duty. 

 

Samart said new contracts between state and private firms should stipulate that disputes be settled in court, so judges are empowered to examine the merits of each case in detail, rather than just the legality of dispute-settlement mechanisms as in the Hopewell case.

 

The SRT board of directors met yesterday to discuss the court ruling for the agency to pay the compensation within 180 days. Ek said the government might have to obtain a loan for the SRT to pay this massive amount in instalments. 

 

Source: http://www.nationmultimedia.com/detail/national/30368429

 

-- © Copyright The Nation 2019-04-27

[Chang_paarp]

22 minutes ago, rooster59 said:

Dr Samart Rajpolasit, a former deputy governor of Bangkok and Democrat Party member, suggested that the SRT initiate negotiations with Hopewell to settle the massive compensation issue and the government should avoid using an arbitration mechanism to settle contractual disputes with the private sector in the future.

 

A little late to start negotiating methinks. 10 or 20 years too late. They could start by learning how to negotiate rather than dictate.

As to not using arbitration to settle disputes, it is seen as one way of avoiding expensive and drawn out legal processes.   

Whoops.

 

[colinneil]

SRT face a hefty bill, ok but getting them to pay up is a completely different matter.

[Cadbury]

1 hour ago, rooster59 said:

Hopewell ran into financial and liquidity problems, but its argument was that the SRT was not able to hand over land plots as scheduled, as a result construction could not go ahead. 

So the incompetence of SRT was a big factor in the contract being delayed and damages awarded in favour of Hopewell.

SRT are already 100 billion baht in debt not counting this additional 25 billion. It is on par with Thai Airways for it's incompetence. 

Even though they are cashless and have a massive debt they still want to get involved the bidding race for the U-Tapao Don Mueang and Suvarnabhumi high speed rail link. Perhaps the reason being is the prospect of fat envelopes for senior management. 

Can anyone imagine the disaster that would result if the blundering management of the State Railways of Thailand were let loose on this project? It would end up being another monument to infrastructure madness such as the Hopewell elevated road and train project.

I expect for those who live long enough there will be many years of quality entertainment ahead with these high speed rail projects.

 

 

[Eric Loh]

Hopeless case. Pay up.

[lopburi3]

This 25B would amount to about 360 baht for every man/woman/child in Thailand if my calculator fingers worked right.  Amazing is truly the word.

[ThomasThBKK]

1 hour ago, Chang_paarp said:

 

A little late to start negotiating methinks. 10 or 20 years too late. They could start by learning how to negotiate rather than dictate.

As to not using arbitration to settle disputes, it is seen as one way of avoiding expensive and drawn out legal processes.   

Whoops.

 

 

Yes true but they are international courts usually and not thai-based, so they rule fair, based on international standards.

 

Prolly the best thing you can do in a land where you have a massive disadvantages as a foreigner usually. 

[mercman24]

any news on the bus contract that was cancelled, that was dam expensive for someone , are they still in Thailand , such a waste, not enough brown envelopes methinks

[Chang_paarp]

33 minutes ago, mercman24 said:

any news on the bus contract that was cancelled, that was dam expensive for someone , are they still in Thailand , such a waste, not enough brown envelopes methinks

If that was the busses stuck on the port, I believe that has all been filed under "misunderstanding" . ????

[PETERTHEEATER]

4 hours ago, ThomasThBKK said:

 

Yes true but they are international courts usually and not thai-based, so they rule fair, based on international standards.

 

Prolly the best thing you can do in a land where you have a massive disadvantages as a foreigner usually. 

Prolly?

[toolpush]

5 hours ago, Cadbury said:

So the incompetence of SRT was a big factor in the contract being delayed and damages awarded in favour of Hopewell.

SRT are already 100 billion baht in debt not counting this additional 25 billion. It is on par with Thai Airways for it's incompetence. 

Even though they are cashless and have a massive debt they still want to get involved the bidding race for the U-Tapao Don Mueang and Suvarnabhumi high speed rail link. Perhaps the reason being is the prospect of fat envelopes for senior management. 

Can anyone imagine the disaster that would result if the blundering management of the State Railways of Thailand were let loose on this project? It would end up being another monument to infrastructure madness such as the Hopewell elevated road and train project.

I expect for those who live long enough there will be many years of quality entertainment ahead with these high speed rail projects.

 

 

A case in point is the Airport Rail Link. First they cancelled the Airport Express, then the Airport Check in at Makassan (which was stupid in the first place), now the tracks are getting worn out at the big curve. Also the carriages are showing their age. And so on.....

[Sir Dude]

They might just Section 44 it to a smaller level or nothing at all ... wouldn't surprise me at all. Not as if there will be a new government anytime soon and if there is then it will be same old same old. 

[Fex Bluse]

1 hour ago, toolpush said:

A case in point is the Airport Rail Link. First they cancelled the Airport Express, then the Airport Check in at Makassan (which was stupid in the first place), now the tracks are getting worn out at the big curve. Also the carriages are showing their age. And so on.....

I hate to say it, but Thais (generally, in my experience) are unable to run a business properly.

 

They don't seem to be able to think systematically and anticipate things that educated people from many other parts of the world find obvious. 

 

I don't know why they can't think. 

[hansnl]

6 hours ago, Cadbury said:

So the incompetence of SRT was a big factor in the contract being delayed and damages awarded in favour of Hopewell.

SRT are already 100 billion baht in debt not counting this additional 25 billion. It is on par with Thai Airways for it's incompetence. 

Even though they are cashless and have a massive debt they still want to get involved the bidding race for the U-Tapao Don Mueang and Suvarnabhumi high speed rail link. Perhaps the reason being is the prospect of fat envelopes for senior management. 

Can anyone imagine the disaster that would result if the blundering management of the State Railways of Thailand were let loose on this project? It would end up being another monument to infrastructure madness such as the Hopewell elevated road and train project.

I expect for those who live long enough there will be many years of quality entertainment ahead with these high speed rail projects.

 

 

Ever seen the bloody mess private companies can make of projects?

Any Idea why the SRT accumulator s much debt?

Wasn't it because the government of the day (not the current) found a populist way to woo the people by making travelling free and/or blocking the ticket proces, by blocking and hindering the sale of unneeded land or vetoing rental to private companies?

Amongst others.

Rather cheap to blame the management of the SRT for something they were ordered to do!

 

Edited April 27, 2019 by hansnl

[TallGuyJohninBKK]

6 hours ago, Cadbury said:

Can anyone imagine the disaster that would result if the blundering management of the State Railways of Thailand were let loose on this project? It would end up being another monument to infrastructure madness such as the Hopewell elevated road and train project.

I expect for those who live long enough there will be many years of quality entertainment ahead with these high speed rail projects.

 

The funny/sad part is every time I head out toward Don Mueang Airport, I see the new rail line and its structure supports under construction out there, and right next to those in some areas, I see the very similar looking now remaining support structures from the Hopewell line that have never been demolished as yet.

 

I think at some point, if memory serves, the Thai government rail planners were talking about whether they could re-use the Hopewell structures for the current line, but in the end they decided not to.... I think.... because the ones left behind had been sitting there so long and been exposed to the elements so long that they likely were not going to be structurally sound for the future.

 

 

Edited April 27, 2019 by TallGuyJohninBKK

[CGW]

6 hours ago, lopburi3 said:

This 25B would amount to about 360 baht for every man/woman/child in Thailand if my calculator fingers worked right.  Amazing is truly the word.

Are you suggesting we pass the hat around? ????

 

I was living in Bangkok when this all "started" back in the "good old days" a chap would awaken in the morning and read the Bangkok Post along with your Bloody Mary and coffee, to sum up what I remember, brown envelopes were a lot bigger back in the day! As usual nobody was prosecuted....................

[Cadbury]

46 minutes ago, hansnl said:

Ever seen the bloody mess private companies can make of projects?

Any Idea why the SRT accumulator s much debt?

Wasn't it because the government of the day (not the current) found a populist way to woo the people by making travelling free and/or blocking the ticket proces, by blocking and hindering the sale of unneeded land or vetoing rental to private companies?

Amongst others.

Rather cheap to blame the management of the SRT for something they were ordered to do!

 

A pitiful attempt to deflect the blame away from SRT which is is a state owned institution and failed organisation. Are you seriously claiming that free travel on SRT from 1st August 2008 to 31st January 2009 is what caused the present debt and the mess it is in now? What a laugh. You make a habit of presenting yourself as the defender of the indefensible.

First you start to talk about private companies then make a rapid switcheroo to the government and the SRT. The SRT is part of the government and susceptible the same inglorious incompetence as the government itself, whether it be military or otherwise. 

The SRT hasn't got two satang to rub together. It is presently 125 billion baht in debt and it didn't get into that dreadful financial position by good management by the dimwits who run it. That 125 billion would have been better spent on health and education.

Private companies can make business failures also but at least they lose their own and investors money, not the taxpayers. But when have Thai fatcats and politicians worried about wasting taxpayers money? Never!

Fat envelopes is their primary developmental motivation and driving force; not feasibility, economic analysis or efficiency and cost.

[kkerry]

As a side note, maybe I missed it but I didn't see any coverage in the Thai media about the latest development in the Kingsgate Chatree mine dispute... an Australian company locking horns with the Thai government... still ongoing... and could also cost Thailand a lot of money. 

 

https://smallcaps.com.au/kingsgate-wins-tafta-lawsuit-closure-chatree-gold-mine-thailand/

[hotchilli]

9 hours ago, rooster59 said:

RAIL COMPANY BELIEVES DAMAGES COULD TOTAL BT25 BILLION ONCE THE INTEREST OF 7.5% INTEREST IS ADDED

What goes around comes around, they thought they'd get clean away with this one but good they have to pay-up!

The rest of the world is watching & getting tired of doing business with Thailand !

[Srikcir]

17 minutes ago, kkerry said:

As a side note

Note that the company's lawsuit filed in Australian court that was awarded more than $82 million in damages was against its political risk insurers regarding the illegal expropriation in 2016 of its Chatree gold mine by the government of Thailand and not against the government of Thailand. The insurers will have the right to be reimbursed for their payout from any compensation the company might still receive against Thailand through the mandatory binding arbitration required by the Thailand-Australian Free trade Agreement.

 

[Srikcir]

10 hours ago, rooster59 said:

Samart said court verdicts are based mainly on the legality of the arbitration committee’s ruling, which is stipulated in the concession contract as a mechanism to settle any dispute between the government and the private company.

TRANSLATION:

The Thai courts had no choice but to agree to the decision of the arbitration committee's ruling. In fact the courts could have / should have simply refused to hear SRT's challenge to the compensation ruled by the arbitration committee as the court had no standing to make any legal decision over any matter falling within the authority of the free trade arbitration committee.

If Thailand wants to maintain 100% sovereignty over foreign development of its resources and infrastructure, don't use free trade agreements. And don't expect much from foreign investments.

Welcome to the wacky world of free trade agreements.

[kkerry]

3 hours ago, Srikcir said:

Note that the company's lawsuit filed in Australian court that was awarded more than $82 million in damages was against its political risk insurers regarding the illegal expropriation in 2016 of its Chatree gold mine by the government of Thailand and not against the government of Thailand. The insurers will have the right to be reimbursed for their payout from any compensation the company might still receive against Thailand through the mandatory binding arbitration required by the Thailand-Australian Free trade Agreement.

 

I'm reliably informed things will get interesting again later in the year... anyway, better get back to SRT chat ????