Sun Travels has paid USD 31.2 million to Hilton as compensation for the cancellation of an agreement to manage the Irufushi resort.
Sun Travels said in a statement yesterday that it has settled the damages awarded to Hilton by the Singapore International Arbitration Centre. The amount determined as compensation by the arbitration process was USD 24 million. But a total of USD 31,252,874.46 (MVR 489.1 million) has been paid including interest, Sun Travels said.
Legal expenses for lawyers and experts and other related expenses in the case amounted to USD 5.5 million (MVR 84.8 million), the company said.
When the figures are tallied, Sun has spent more than half a billion Rufiyaa over the Irufushi dispute.
In the four-page-long statement released on the case, Sun Travels explained the dispute from the company's perspective. As previously argued at both the arbitration and Maldivian courts, the company accused Hilton of fraud and deception in the signing of the resort management agreement.
Offering details, Sun Travels said Hilton proposed the management of Irufushi with promises of huge profits. On several occasions, Hilton reviewed and proposed estimates of profits and revenue from operating the resort, it added.
On each occasion, Hilton inflated the estimated revenue from the resort, Sun alleged. However, shortly after taking over management of the resort, Hilton proposed revised estimates with smaller profits and 50 percent lower revenue per room.
According to Sun, the agreement was signed for Hilton to cover all resort operation expenses. However, during the three years of its management, Hilton operated the resort at high costs that caused losses to Sun, the local company said. As a result, the previously profitable resort started making losses, it added.
Hilton proposed the management of the resort with estimated profits of USD 21.8 million in 2010, USD 24.05 million in 2011 and USD 28.46 million in 2012. But Hilton failed to produce results anywhere close to the figures, Sun said.
Hilton's failure to generate the expected profits forced Sun Travels to reschedule loans and seek funds from sister companies in order to pay resort rent and taxes, the company said. But Hilton continued to charge the management fee despite the losses, Sun said.
Defending the decision to take back the resort, Sun said it had been necessary to save a company facing bankruptcy. The company was still recovering from losses caused by Hilton, Sun said, indicating that it was prepared for further legal action.
The compensation payout in the case came 10 years after the Singapore arbitration ruled in favor of Hilton.
After the arbitration ruling, Sun filed a lawsuit contending that foreign arbitral awards cannot be enforced in the Maldives. But at the end of the appeal stages, the Supreme Court ruled that international arbitration decisions must be enforced in the Maldives.
After the Supreme Court judgment, the Civil Court ruled in a case filed by Hilton that enforcement cannot be delayed any further. However, the High Court overturned an order for Sun to settle the compensation payout.
