PETALING JAYA: GAMUDA BHD and MMC Corp Bhd have announced that their equal joint-venture (JV) entity – MMC Engineering Group Bhd, Gamuda Bhd – has decided to settle the protracted dispute with a contractor of the SMART tunnel project, Wayss & Freytag (M) Sdn Bhd.
In separate stock exchange filings, Gamuda and MMC said they would be paying RM109.14mil to Wayss & Freytag inclusive of interest as full and final settlement of the arbitration proceedings.
The legal process has been ongoing since 2008, and all parties have finally agreed to jointly terminate the arbitration proceedings.
“The JV and Wayss & Freytag have agreed to settle the matter amicably.
“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,” said Gamuda and MMC yesterday.
They said in the statement that the settlement to Wayss & Freytag would not have any impact on MMC and Gamuda for the financial years ended Dec 31, 2016 and ending July 31, 2017, respectively, as the settlement sum and related cost had been provided for in prior years.
Recall, the MMC-Gamuda JV had awarded to Wayss & Freytag the contract to construct and complete the north tunnel drive of the SMART tunnel project.
Due to Wayss & Freytag’s alleged delay in the progress of its work, the JV terminated the sub-contract on Jan 23, 2006, which resulted in both the MMC-Gamuda JV and Wayss & Freytag submitting various claims against each other followed by arbitration proceedings in 2008.
The JV’s total claims against Wayss & Freytag was RM161.21mil. Wayss & Freytag’s total claims against the JV, meanwhile, was for RM153.81mil.
The final effect of the dispute adjudication board’s decision was that the JV was to pay Wayss & Freytag RM102.36mil.
In August last year, the JV had said it intended to file an application to the Federal Court to seek leave to appeal against an order to pay Wayss & Freytag an arbitration sum of RM105mil.
The statement came after the Court of Appeal dismissed the appeal filed by the JV.
Shares in Gamuda closed seven sen higher to RM4.88, while MMC closed lower at RM2.33 yesterday.
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