MALAYSIA: Tribunal rules against MAS in ACL case

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After three years of proceedings, an arbitration tribunal has ruled that Malaysian Airline System Bhd (MAS) breached its obligation under a cargo ground handling agreement with Hahn, Germany-based ground handling company, ACL Advanced CargoLogistic GmbH.

The tribunal proceedings against MAS at the ICC International Court of Arbitration in Paris, France, were initiated by ACL managing director, Uwe Beck in September 2004, claiming more than 60 million euros (RM240 million) for reneging on the cargo handling agreement that had been concluded between the two parties inNovember 1999.

In a statement, MAS said the tribunal upheld the validity of the November agreement, under which MAS and ACL agreed to develop a cargo hub at the former military airbase in Hahn. The tribunal concluded that MAS breached its obligation under the contract to maintain its European cargo hub at Frankfurt-Hahn airport for 10 yearsfrom 1999.

In a fi rst comment on the decision by the ICC International Court of Arbitration, Beck said he was “extremely pleased” with the outcome of the proceedings. “The decision shows that we had a valid contract with MAS, which was unilaterally revoked without any attempt on the part of MAS to negotiate an exit.” Beck added that subsequent media statements on the case by MASkargo, had damaged his personal reputation and that of hiscompany.

In May 2005, a director of MAS lodged a police report over alleged irregular practices in the award of a cargo project. According to local news reports at that time, a MAS spokesman was quoted as saying that: “the cargo project caused Malaysia Airlines to suffer heavy losses from December 1999 until it was terminated in December2000.”

The reports also insinuated that fraud charges could be brought against several former senior executives of MAS and Beck. In January 2002, Malaysia Airlines lodged a similar police report on suspected wrong-doings involvingthe same project.

Beck said that although the International Court of Arbitration had made no ruling on the quantum of the damages, which will be decided at the next stage of the arbitration proceedings, the decision against MAS meant “a newstart” for ACL.

“Once we will have fi nished this arbitration, we plan to expand our warehouse facilities at Frankfurt-Hahn and we are looking at developing other handling operations in Europe and theMiddle East, possibly by establishing joint ventures with local partners,” he said.