KATHMANDU, JUNE 9

Nepal Investment Bank Ltd has today won its legal battle to recoup Rs 2.044 billion against Italian firm Cooperativa Muratori e Cementisti di Ravenna (CMC) after the Italian high court ruled in its favour in a case involving CMC’s performance guarantee to Tanahu Hydropower Ltd.

Earlier, a single bench of a lower Italian court had ruled against NIBL in the case. NIBL then moved the high court, arguing that the lower court’s decision was unilateral and was passed without considering the bank’s argument.

It has taken 16 months for NIBL to get justice in the case.

Gandhi Pandit, a senior lawyer who argued the case for the bank, told THT, “NIBL will receive the bank guarantee amount from Intesa Sanpaolo Bank within a week.”

The contractor company, CMC, had stopped working according to its contract with THL after it filed for bankruptcy in Italy. This forced Tanahu Hydropower Ltd to claim the guarantee amount from NIBL in March last year which NIBL paid.

“We had urged the Italian high court to refer to the international law related to bank guarantee as per the Uniform Rule for Demand Guarantee 7582,” Pandit told THT. The law refers to a set of guidelines first adopted by the International Chamber of Commerce in 1991 that set forth generally agreed-upon rules governing securing payments and meeting performance guarantees in contracts among global trading partners.

This win sets an international precedent for Nepal as such a huge sum that includes 8,749,239 euros is being brought back to the country, said Pandit. He added that it would help guide similar cases that had been pending for long.

The developer, a wholly-owned subsidiary of Nepal Electricity Authority, had terminated the contract for the construction package with the Italian builder CMC after the Italian party refused to comply with construction dates given by the developer.

Due to this case, the 140-megawatt storage project faced a huge setback in finalising a new contractor for more than a year.

A version of this article appears in e-paper on June 10, 2020, of The Himalayan Times.