Defense minister confirms new suit against France on arms deal

Thursday, October 13, 2011
By Joseph Yeh ,The China Post

Taiwan's defense minister yesterday confirmed that local military has filed a legal suit against the French government-owned shipbuilder Direction Construction Naval Internationale (DCNI) over the DCNI's alleged violation of a clause in a purchase agreement with Taiwan that articulately barred the payment of any commissions.
“We did find the French company has violated the clause and we already filed the lawsuit to ask for compensation,” said minister Kao Hua-chu yesterday during a legislative session.
Kao pledged that his ministry will insist on going through all related legal procedures, adding that he is optimistic about the final ruling result and confident about winning the legal battle.
Kao's comment came after Kuomintang (KMT) Legislator Lin Yu-fang asked the minister to confirm the ongoing legal suit yesterday during a legislative session.
According to Lin, Taiwan's Navy has recently found evidence that the DCNI of France has violated a clause in the “Basic Ordering Agreement” (BOA) which the two sides signed in May, 1996.
The clause in the agreement has barred the payment of any commissions, which the DCNI was later found to have violated, Lin said.
The agreement is part of Taiwan's deal with France's Thales defense group in the purchase of six Lafayette frigates, when it was still known as Thomson-CSF in 1991 The new scandal was revealed after local Navy officials were going through the legal documents regarding the previous ruling of the French defense group in favor of Taiwan.
The group was asked to pay local the military US$875 million as a sanction for the payment of commissions in the purchase of six Lafayette-class frigates after losing an appeal in a case.
Thales Group has been accused of violating a clause in the Lafayette frigates purchase contract with Taiwan that articulately barred the payment of any commissions.
NT$3 Billion Disbursement
According to Lin, the Navy has already filed a legal suit against the French shipbuilder. The court of arbitration on the case was previously held early April. An arbitration hearing and court debate is now scheduled to be held on April, 2012, said Lin.Taiwan could receive the disbursement of more than NT$3 billion once it ultimately wins the legal suit, said Lin.
Lin also noted that the military has allocated a nearly NT$75 million defense budget in preparation for the lawsuit in covering related attorney fees and refundable advance payments for filing for the arbitration procedure.
In response, Kao confirmed the legal suit but he did not go into details, saying only he is confident that the MND will win the lawsuit.
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source:www.ChinaPost.com.tw