A Singapore court ruled for Maldives in the South Asian island nation's move to cancel a USD$511 million airport development contract with India's GMR Infrastructure, clearing the way for it to take over the airport.
The ruling comes after an order won on Monday by GMR that had suspended the government's decision to cancel the contract, although the Maldives had still been pressing ahead with plans to take over the airport.
"The Maldives government has the power to do what it wants, including expropriating the airport," Sundaresh Menon, the Chief Justice of Singapore, said in court.
Shares in GMR Infrastructure were down 4.2 percent following the ruling after earlier being in positive territory on the day. It later pared back some of those losses.
A GMR spokesman declined comment.
"We will take over. We will enroll all those people from GMR who wish to join. Those who don't can go home. By Friday midnight we will take over," Imad Masood, the Maldives president's media spokesman, told reporters, adding that the Maldives would pay compensation to GMR.
The two sides have not yet agreed on terms of compensation.
The standoff over the project threatens to cloud foreign investor sentiment towards Maldives, which is seeking overseas cash for many of its tourism projects. The country terminated an agreement with GMR last week, rattling its relations with India.
The government of the Maldives, a tropical island chain southwest of India famous for its luxury beach resorts popular with honeymooners and scuba divers, cancelled the 2010 agreement, the largest foreign investment in the country, saying that it was not valid.
The cancellation follows a year of political turmoil that saw the ousting of its former president and months of unrest.
The contract to upgrade and operate the airport and build a new terminal came after a global tender overseen by the World Bank and signed under former president Mohamed Nasheed's administration.
The project was implemented through a joint venture company comprising GMR Infrastructure and Malaysia Airports.
However, Nasheed's rivals filed legal action saying the contract was invalid as it contained a USD$25 airport development charge per outgoing passenger which was not authorized by parliament.