Supreme Court Decision in Manila Stipulates Compensation from the Philippine Government

Fraport's Compensation Claims Basically Confirmed / - World Bank Arbitration Continues

Frankfurt am Main (ots) - Fraport AG has now received via its lawyers yesterday's Philippine Supreme Court decision, which confirms its early decision of May 2003 that concession contracts between the Philippine government and the PIATCO consortium for constructing and operating the new passenger terminal in Manila were invalid. This latest decision comes as no surprise to Fraport AG - which has a 30 percent share in PIATCO - and is by no means a "final end" to the company's claim for compensation. Rather, in view of the previous Supreme Court decision Fraport already applied last summer for an arbitration procedure at the World Bank to receive compensation from the Philippine government for the nearly completed International Passenger Terminal 3 project (NAIA IPT 3).

In this latest decision, the Philippine Supreme Court confirms for the first time that the government can only take over the terminal following payment of compensation. Page 40 of the Supreme Court's written decision states word-for-word: "This court, however, is not unmindful of the reality that the structures comprising the NAIA IPT 3 facility are almost complete and that funds have been spent by PIATCO in their construction. For the government to take over the said facility, it has to compensate respondent PIATCO as builder of the said structures. The compensation must be just and in accordance with law and equity for the government can not unjustly enrich itself at the expense of PIATCO and its investors.

" The Supreme Court decision unmistakeably calls on the Philippine government to negotiate a compensation agreement with PIATCO or its shareholding partners. Fraport is striving to get respective talks with the government resumed - without jeopardizing, in any form whatsoever, the arbitration procedure now in process at the World Bank in Washington.