MMC, Gamuda JV to pay RM109m to settle 2008 dispute

  • Business
  • Thursday, 02 Feb 2017

KUALA LUMPUR: The protracted dispute between the MMC Corporation-Gamuda joint venture and Wayss & Freytag (Malaysia) Sdn Bhd, dating back to 2008 over the SMART Tunnel project  has been settled.

Gamuda Bhd announced on Thursday the MMC Engineering Group-Gamuda Joint Venture (MMCEG-Gamuda JV) had agreed to pay  Wayss & Freytag a lump sum of RM109.14mil  inclusive of interest as full and final settlement of the arbitration proceedings.

Gamuda, which has a 50% interest in the JV, said both parties had jointly proceeded to take steps to terminate the arbitration proceedings.

“The board of Gamuda has deliberated on the settlement and is of the opinion that it is in the best interest of the JV to agree to the settlement.  This is in view that the settlement would save further costs and time as opposed to continuing with the protracted legal process that has been ongoing since 2008.

“The settlement will not have any material impact on the earnings of the Gamuda Group for the financial year ending July 31, 2017.  The settlement sum had been expensed off in prior years,” it said.

The JV had earlier contested the dispute adjudication board's decisions where the JV was to pay Wayss & Freytag RM102.36mil.

Recall that on Nov 14, 2008, Gamuda announced that Wayss & Freytag served on Gamuda’s solicitors a writ of summons and a statement of claim.

The court action was for inter-alia, a court declaration that the JV was in breach of the sub-contract dated April 16, 2003 by failing to make payment for RM102.36mil awarded by the dispute adjudication board to Wayss & Freytag. This was for various claims arising out of the sub-contract and for damages of the same amount.

By the sub-contract, the JV awarded to Wayss & Freytag the sub-contract to construct and complete the North Tunnel Drive of the SMART project.

Gamuda had then stated the due to Wayss & Freytag’s inordinate delay in the progress of its work, the JV terminated the sub-contract on Jan 23, 2006 in accordance with the terms and conditions therein the sub-vontract.

Both the JV and Wayss & Freytag submitted various claims against each other to be adjudicated by the dispute adjudication board. 

The JV’s total claims against Wayss & Freytag was RM161.21mil.  Wayss & Freytag’s total claims against the JV was for RM153.81mil.

The final effect of the dispute adjudication board’s decisions was that the JV was to pay Wayss & Freytag RM102.36mil.

Under the terms of the sub-Contract any party who is dissatisfied with the decision of the dispute adjudication board may issue a notice of dissatisfaction and require the matter to be referred to arbitration for final adjudication. 

The JV had served on Wayss & Freytag the relevant notices of dissatisfaction on the dispute adjudication board's decisions (in respect of both the JV’s claims and Wayss & Freytag’s claims.

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