Seychelles Supreme Court wants guarantee of €20 million payment as Savoy Hotel case continues

Vijay Construction was hired to carry out construction work for the Savoy Hotel in 2011 in the northern Mahe district of Beau Vallon. (Savoy Resort and Spa)

(Seychelles News Agency) - The Seychelles Supreme Court on Friday suspended a judgment ordering Vijay Construction to pay Eastern European Engineering Limited almost €20 million as compensation for breaking the terms of a contract for the development of Savoy Hotel.

The lawyer of Vijay Construction, Bernard Georges, told the press that the application brought before the court by the construction company to suspend the execution of the judgment has been granted under a condition while his client furthers his case before the Court of Appeal.

"The condition is that the construction company should provide the court with a bank guarantee equating to the sum of the judgment (€20 million) within the period of 14 days," said Georges. 

He said that if the condition is not met "the decision taken today will fall and the engineering company will be able to pursue with the execution of their judgment even if the case has not yet been heard before the Court of Appeal."

The Eastern European Engineering is a company registered in Seychelles and is a subsidiary of holding company Guta group which is a multi-national conglomerate with headquarters in Russia. The group is the owner and operator of the Savoy Resort and Spa located in the northern Mahe district of Beau Vallon.

The Eastern European Engineering Limited hired Vijay Construction to carry out construction work for company Savoy Hotel in 2011 through six contracts. Each of the six contracts included similar arbitration clauses, which provided that any dispute, disagreement or claim would be settled by arbitration in Paris.

A dispute indeed arose and the company filed a Request for Arbitration in September 2012 before the International Chamber of Commerce in Paris.

According to the ruling of June 30 by Justice Ellen Carolus, who is presiding over the case, Vijay Construction was to pay EEEL a little over €16.6 million in line with a UK court order from 2015 as well as €3.56 million in interest.

The court also ruled to unfreeze the account of the construction company.

"The court has access to the account of the company. The funds in the account are not enough to meet the guarantee asked by the court. Would its asset be sufficient to meet the guarantee? I doubt it," said Georges.

Georges said that unfreezing the account will help the company to carry on with its operations, especially paying off its workers.

A sole arbitrator delivered an award in November 2014 in favour of Eastern European Engineering Limited, but the costs to be incurred by Vijay Construction for breaking the contract were never paid.

This is partly because the award was not enforceable in Seychelles, an archipelago in the western Indian Ocean, which was not party to the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards. The award and its orders are now enforceable since Seychelles officially acceded to the Convention earlier this year.

The lawyer of the plaintiff, Alexandra Madeleine, did not comment on Friday's ruling.

Founded in Seychelles in 1979 by V.J. Patel, Vijay Construction has built and commissioned a large number of facilities.