London Court dismisses Dredging Corp’s arbitration award appeal against Mercator

MUMBAI | RAJKOT – In a press communication submitted to the Indian Bourses on Monday, Mumbai headquartered shipping company Mercator Ltd said of London Court having dismissed appeal filed by Dredging Corporation of India (DCI) Ltd, regarding the the arbitration award of 500 million (50 crore) rupees, payable to Mercator.

According to Mercator press statement, the company was awarded with 500 million rupee arbitration award payable by Dredging Corporation of India, against which the Dredging Corporation of India had filed an appeal in the London Court.

“On 25th January 2019, the appeals filed by DCI have been dismissed with costs and the English Court has upheld the Awards made in favour of Mercator. The Company is awaiting the written order and will start the process of enforcement and execution of the award, post the receipt of the same,” the statement read.

In past the company had communicated regarding the legal dispute with DCI vide the release issued on April 26, 2018, the statement read. The company also said, “will keep its stakeholders informed of any further update in the matter.”


BACKGROUND

In three separate arbitrations commenced by the Company against DCI under contracts relating to the dredging of Sethusamudram Ship Canal project, the Arbitral Tribunal had passed Awards in favour of Mercator Ltd.

The tribunal had upheld the deductions made by DCI and awarding damages for termination by DCI of two of the three Contracts.

The Awards found that Mercator Ltd. had not committed any breach of its contracts with DCI, declared the termination of the two contracts by DCI was “wrongful and illegal” and further awarded damages to Mercator Ltd. for the losses suffered, which had resulted out of contract termination by DCI.



With regards to the Third Contract which was not terminated, the Tribunal confirmed the in-situ dredging done by Mercator and awarded the full payment in this regards.

On 15 March 2018, the Company has in total been awarded a gross sum of approx. INR 50 Crores (~500 million) plus interest, to be paid by DCI, on account of various deductions made by DCI for work duly done, demobilisation costs, payments towards the in-situ quantity dredged and damages due to termination of two charter party contracts by DCI.

DCI had also simultaneously challenged the awards in the Delhi High Court on various grounds and the said challenges have also been dismissed by the Delhi High Court, vide its order dated October 1, 2018.


IMPACT ON SHARE PRICES

Announcement in form of press release was submitted by the company on Monday before the markets opened in India, while the Indian Bourses were gearing to witness the trading for a day, after having opened over a weekend holiday.

In few minutes after the announcement hit the exchange, before the trading floor opens, Mercator shares were seen trading in GREEN Zone on positive counters with a minor upward spike and later on continued trading flat, as the trading session closed for the day on Monday on Indian Bourses.


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