Philippine Court Orders Payment To Airport Contractor

The Philippines' Supreme Court has ordered the government to pay USD$510.3 million to the local contractor of a controversial airport project after a more than decade-long legal row that raised doubts about the nation's investment climate.

Ninoy Aquino International Airport's (NAIA) Terminal 3 has been embroiled in legal disputes between the government and its contractor, Philippine International Airport Terminals (PIATCO), over what the government should pay the contractor. German airport operator Fraport is a shareholder in PIATCO.

"The government is hereby ordered to make direct payment of the just compensation due to PIATCO," the Supreme Court said in a ruling.

The government shall have ownership of NAIA Terminal 3 after it fully pays the amount to PIATCO, it added.

The compensation of USD$510.3 million was composed of a principal amount of USD$326.93 million plus interest accrued from September 2006 to December 2014.

PIATCO had sought a compensation of USD$846 million, but the Supreme Court said it cannot allow PIATCO to profit from the operation of Terminal 3 whose funds are sourced from the public coffers.

Fraport has been trying to take the Philippines to the International Centre for Settlement of Investment Disputes in seeking claims over the project.

NAIA Terminal 3 was due to be in service in 2002 but started full operations only last year because of the disputes.

It has a capacity of 13 million passengers and hosts foreign carriers such as Singapore Airlines, ANA, Cathay Pacific, Delta Air Lines, KLM and Emirates.