MANILA, Philippines - The government may have to postpone plans to rebid the North Rail project until the international arbitration proceedings with China on the aborted $500-million project are resolved with finality, Sen. Edgardo Angara said yesterday.
“As long as the case is pending, you cannot hire another contractor,” Angara said during a weekly forum where he likened the deal and the arbitration process to what the country had with Fraport, a German company involved in the construction of the Ninoy Aquino International Airport (NAIA) Terminal 3.
“Like what happened to NAIA 3. As long as the arbitration between Fraport and the Philippines remains pending in Singapore and Washington, we cannot operate the NAIA 3,” he said, as he explained that international contracts usually undergo arbitration.
“There are at least three centers of arbitration for commercial dispute, one is in Hong Kong, one in Geneva and another in Singapore. I think either party can go and ask for arbitration,” he said, adding that such “is part and parcel of commercial transaction.”
Costly process
Angara, however, recognized that such arbitration process could be costly, especially to the losing party.
In the arbitration with Fraport, he said the Philippines spent almost P100 million in lawyers’ fees alone.
“The penalty, you should reimburse the amount spent by your opponent. International arbitration is really costly because international lawyers charge high. In Fraport, the government spent much, almost over a hundred million pesos, in lawyers’ fees alone. We lost much with the North Rail,” Angara said.
The Aquino administration is bent on paying only a portion of the loan used in the North Rail project, estimated at about $180 million in the next two years.
Angara was reacting to the statement of Transportation Secretary Joseph Emilio Abaya who said last Monday that the Philippines will have to bring the North Rail contract to a third party arbitration court abroad to determine the amount to be paid for the delivered parts of the $500-million project.