Phl forming legal team for North Rail arbitration

MANILA, Philippines - The Philippine government is finalizing its legal team that would bring the arbitration case with the Chinese government on the botched $500 million North Rail project that was supposed to put up a high speed train to the Clark International Airport in Pampanga from Manila.

Transportation Secretary Joseph Emilio Abaya said in an interview with reporters that the legal team would be headed by the Office of the Government Corporate Counsel (OGCC) as well as foreign consultants.

“I believe we have already commissioned the OGCC as our lead counsel and we are waiting for the go signal on who would be the firms assisting us,” Abaya added.

He pointed out that the arbitration case would be filed in Hong Kong.

“The decision is to wind down. So we are now entering into an arbitration case with the Chinese government, the purpose of which is to determine how much and who pays who,” he said.

The Aquino administration decided to scrap the anomalous rail project with a Chinese contractor following a Supreme Court ruling it violated the country’s procurement law.

The 80-kilometer North Rail project was supposed to link the northern part of Metro Manila with the Diosdado Macapagal International Airport in Clark, Pampanga. It was suspended in March 2010 pending review of the contract with China National Machinery Industry Corp. (Sinomach).

The North Rail project, initiated by the Arroyo government in 2004, was also burdened by other anomalies such as poor construction and overpriced materials by the Chinese builders. Last year, President Aquino shelved the North Rail project to renegotiate the terms of the contract with the Chinese.

However, the Chinese government is demanding the payment of the $500 million loan obtained by the Philippines for the botched rail project over the next two years.

Abaya said the government is still assessing whether there is a need to put up a high-speed train service to the Clark International Airport which is being considered to become the country’s second international gateway.

“We are studying it to see the viability of the rail,” he said.

According to him, the Aquino administration has not yet decided whether it would adopt a single-gateway or two-gateway system.