PH, Germany seek to boost maritime trade, put ‘Fraport’ behind


THE Philippine Department of Transportation and the German Federal Ministry of Transport signed a letter of intent on Tuesday with an aim to boost maritime trade between the two countries.

“We have considerable trade volume between the two countries,” State Secretary Michael Odenwald of the Federal Ministry of Transport and Digital Infrastructure (BMVI) said during his speech at the Meeting on Cooperation in Maritime Transport at the Philippine International Convention Center (PICC).

DoTr Secretary Arthur Tugade signs a letter of intent with German Secretary of State of the Federal Ministry of Transport Michael Odenwald to boost maritime trade between the two countries. SOURCE: DOTR

Odenwald said that the trade volume recorded between the two countries in 2016 amounted to 5-billion Euros.

“We should enforce and increase our development cooperation,” Odenwald said.

The agreement involves conducting regular talks between Germany and Philippines to discuss proposals, developments or projects for mutual interests, exchange of information for investigation on maritime accidents, and research training and staff development in the field of maritime transport.

Transportation Secretary Arthur Tugade emphasized that the Philippines was now open to do business with the government of Germany, after settling the Fraport issue.

“The Fraport issue is history, a history that should not be repeated,” Tugade said.

“We would like to start a relationship that is predicated on mutual trust, on mutual faith,” said Tugade.

“The Republic of the Philippines is now open for business…and there shall be no corruption,” Tugade said.
Meanwhile, Odenwald said that Germany was open to share expertise to the Philippines in the railway sector and also to continue aviation ties.

“We are willing to promote economic ties with the Philippines,” Odenwald said.

It can be recalled that the administration of then President Fidel Ramos awarded the contract to build the Ninoy Aquino International Airport Terminal 3 (NAIA 3) to the consortium of Philippine International Airport Terminal Co. (Piatco) and German firm Fraport in 1997.

Former President Gloria Macapagal-Arroyo, however, voided the contract in 2002 because of alleged irregularities.

The Philippine government and Piatco fought a legal battle over the NAIA 3 project, which delayed the opening of the terminal.

On Dec. 21, 2004, the Office of the Solicitor General filed an expropriation case at the Pasay regional trial court to enable the government to operate the terminal at the soonest possible time. The Pasay court issued a writ of possession to the government, but ordered it to pay Piatco P3 billion as downpayment on compensation still to be determined.

Piatco went for separate arbitration at the Singapore-based International Chamber of Commerce (ICC) tribunal.
On Aug. 23, 2006, the ICC ordered the Philippine government to return the project to Piatco until a valid writ of possession was issued by a domestic court. It said the writ released by the Pasay court in 2004 could be considered valid only if there was proof that the P3-billion downpayment had been paid.

In September, Piatco received P3 billion from the government, clearing the way for the Manila International Airport Authority (MIAA) to work on the terminal for its opening. NAIA 3 partially opened in 2008, operating at about 50 percent of its capacity.

On May 23, 2011, the Pasay court ordered the government to pay Piatco $175.79 million (or about P7.6 billion at that time) less the P3 billion downpayment that the government had paid to Piatco as compensation.

Piatco’s damage claim in the ICC was rejected but the builder of NAIA 3 asked the High Court of Singapore to reverse the ruling of the tribunal. Its petition was also denied by Singapore’s High Court on Nov. 15, 2011.

In August 2013, a Court of Appeals ruling modified the order issued by the Pasay court. The appellate court ordered the government to pay Piatco “just compensation” of $371,426,688.24 (about P16.2 billion at that time), an amount much higher than what the Pasay court had ordered.

The appellate court later amended its ruling, saying the annual interest on the $371,426,688.24 compensation should be 6 percent annually—not 12 percent, which the court initially set—until it was fully paid and once the decision became final.

While the government appealed the decision of the Court of Appeals, NAIA 3 finally operated at full capacity starting August 2014.

In October, the Court of Appeals said the government may not exercise full ownership rights over NAIA 3 until it had paid in full the P16 billion in just compensation, a ruling the appellate court affirmed in early 2015.

Apart from the case against Piatco, the government also faced an arbitration case filed by Fraport, Piatco’s foreign partner, in the International Center for Settlement of Investment Disputes (ICSID), the arbitration arm of the World Bank based in Washington.

The arbitration was concluded in December 2014 and the ICSID ordered Fraport to pay the Philippine government $5 million in damages for violating the Anti-Dummy Law.


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