High Court rules termination of Farukolhu Airport contract as valid

High Court has ruled in favor of the State’s decision to terminate its contract with Araam Travel Private Limited to develop a domestic airport at Sh. Farukolhu.

Araam Travel was contracted to develop an airport at Farukolhu on June 25, 2013. And the State, on August 5, 2013, signed a contract with Araam Travel for a 50-year lease on G. A. Innahera, G. A. Medhahera, G. A. Mathuhera, G. A. Medhuburiya and G. A. Maafehela for tourism development as consideration for the airport development project.

The State terminated the contract for the Farukolhu Airport project in 2014 citing an Environment Impact Assessment report which warns of irrecoverable environmental damage in the project proceeds. The State also said proceeding with the project as requested by Araam Travel would pose a constitutional violation.

The Civil Court, in 2016, ruled the termination of the contract to be valid. But the court’s decision was appealed by Araam Travel with the High Court.

The High Court determined the Environment Ministry had grounds to instruct termination or amendment of a project if it found the project could result in unacceptable or irrevocable environmental damage.

It also found that the State terminated the contract in face of an unforeseen circumstance which did not result in any act of negligence or criminal activity on the State’s part.

The High Court ruled that it therefore cannot conclude the termination of the contract was a violation of Contract Act.

The court also found that the two contracts signed between the State and Araam Travel were linked with each other as the islands were leased to the company as consideration for development of an airport in Farukolhu.

The High Court ruled that it cannot, therefore, force the State to enforce the contract for the lease of G. A. Innahera and its nearby islands stated in the contract.

The High Court, with the unanimous consensus of all three presiding judges, ruled to uphold the original ruling issued by Civil Court in the case.