Hilton, Sun agree that Civil Court can implement arbitration verdict

Sun Travel has agreed to Hilton Group’s claim that Civil Court had jurisdiction to implement verdicts delivered by a foreign Arbitration court, over the agreement of Irufushi Resort.

Irufushi Resort is now operating as The Sun Siyam Irufushi, owned by Meedhoo Constituency MP and Leader of Government coalition partner MDA, Ahmed Siyam Mohamed. Singapore’s arbitration had decreed that Sun Travels had violated the agreement made with Hilton and had taken over the resort illegally. Arbitration had ordered Sun Travels to pay US$ 24 million (MVR 370 million) to Hilton.

Hilton had submitted the case to High Court. In Monday’s hearings of the case, Hiltons lawyer, Mohamed Shahudhee Anwar noted clause 73 (a) of the Arbitration Act. The clause states that any decision by an arbitration court must be submitted to a local court if the party wished to implement it. As such, the decision will be implemented in the Maldives based on the verdict issued by the Court.

In addition, the lawyer also noted clause 16 of the same act, which states that arbitral award will be implemented as per the procedures set by the Court. As such, Hilton requested that the verdict issued by Civil Court must be nullified and the case be included within the Courts jurisdiction.

Sun Travels lawyer Ahmed Muizz agreed that the case must first be reviewed by Civil Court. Adding that this fell within the Court’s jurisdiction, he requested for the same. However, he disagreed that the Arbitral award of US$ 24 million cannot be awarded.

Hilton’s lawyer argued that the company had not filed the case in the mandated three-month period, as stipulated in clause 70 (a) of the Arbitration Act. If unfiled in the period, the company cannot request to nullify the award.

Responding to this Muizz said that there were two ways to submit arbitration cases, with the other being through the implementation of the arbitration award. Muizz noted that Civil Court verdict in March, proves that the arbitration award cannot be implemented.

The Civil Court verdict stated that Sun Travels had serious concerns over the initial projections raised by Hilton for a period of five years. A revised projection, had inflated occupancy rates, room rates and profits for the period.

The verdict stated that the initial agreement between the two parties were based on these projections. However, the verdict said that Hilton had failed to reach their targets during this period and had failed to offer a reason for the low performance.

Civil Court verdict stated that Hilton had failed to prove evidence beyond doubt that the projections were based on real terms. As such, there was enough room to judge that the projections were merely used as a tool to just sign the agreement, on fraudulent terms.

The verdict says the agreement had been effectively nullified under clause 13 of the Contract Act, referring to clauses 12 and 16 of the same Act and under the rights granted to Sun Travel as per the Act. Additionally, the verdict said that due to the fraudulent nature of the agreement, Sun Travels have to be compensated for their financial losses as per clause 23 of the same Act.

Therefore, Civil Court had ordered Hilton to pay US$ 16 million within a period of six months.

The island was handed over to Hilton Worldwide in 2009 and taken over in 2013.

Hilton had also filed suit against Sun Travels to implement the arbitration ruling. However, Civil Court had this month decreed that due to the arbitration laws, only High Court can make a decision on the ruling.

READ MORE: Civil Court orders Hilton to pay USD 16 million to Sun Travel