Thailand’s Ministry of Transport fails to halt ฿25.4 billion payment order to Hong Kong based firm linked to 1990 contract

Construction News
The boss of Hopewell Sir Gordon Wu Ying-sheung (left) blames political instability and corruption in Thailand for the debacle which commenced in 1990 when the government of Prime Minister Chatichai Choonhavan (far right) awarded a contract to build a 60km elevated rail link between Don Mueang Airport and Bangkok. The current Minister of Transport Saksayam Chidchob (centre) has vowed to exhaust all avenues in order to avoid paying the ฿25.4 billion judgement plus interest due to Hopewell following a definitive 2019 Supreme Administrative Court order which the government has been trying to set aside to avoid paying the monies due for breach of contract after it cancelled the project in 1998.

Thailand’s Ministry of Transport fails to halt ฿25.4 billion payment order to Hong Kong based firm linked to 1990 contract

The ongoing saga began with a rail contract in 1990 which was hampered by corruption in acquiring land, a coup, a government suspension and finally the 1997 Asian Financial Crisis before it was cancelled by the cabinet in 1998. Since then, there has been a 23-year legal battle which Minister of Transport Saksayam Chidchob is determined to fight to the bitter end.

The Thai government and Minister of Transport Saksayam Chidchob are running out of options after the Supreme Court on Wednesday refused an injunction seeking to halt the payment of ฿25.4 billion plus annual interest of 7.5% awarded to Hong Kong based construction firm Hopewell in April 2019 which is linked to a contract to build a railway line from Don Mueang Airport to Bangkok city centre first awarded by the government nearly 31 years ago and which has been plagued by misfortune for all concerned.

The Thai government, through the Minister of Transport, failed again on Wednesday to legally challenge a compensation order made by a tribunal nearly 14 years ago against the ministry and the State Railway of Thailand which relates to a contract first awarded to a Hong Kong based property development firm in 1990 or thirty-one years ago.

The contract was awarded by the government of Prime Minister Chatichai Choonhavan, popularly elected in 1988 but which was subsequently removed by a military coup in February 1991 accused of corruption.

60km elevated rail link from Don Mueang Airport to Bangkok dogged with problems from the outset
The original contract was to construct a 60km long elevated rail link between the country’s main international airport at that time, Don Mueang Airport, and the centre of Bangkok.

Allegations of underhand dealings plagued the project from the outset which was not unusual for that government which although it generated impressive rates of growth in double digits with rising provincial support, was caricatured by the press for rampant corruption with the cabinet in particular lampooned as the ‘buffet cabinet’.

Suspended once by a post-coup government and finally halted due to the Asian Financial Crisis in 1997

After the project commenced amid controversy over the acquisition of land, it was suspended by the later, post-coup government of Prime Minister Anand Panyarachun which held power in 1991 and 1992 before commencing again under the government of Prime Minister Chuan Leekpai, the current President of the Thai Parliament.

However, the Asian Financial Crisis brought the curtain down on the initiative in 1997 leaving only 10% of the work completed.

Thailand’s ‘Stonehenge’ can be seen in central Bangkok, a monument to the failure of the project
The half-complete structures for the light rail system are still visible today in Bangkok as eyesores on the route from Don Mueang Airport to the city and have been referred to jocularly as Thailand’s ‘Stonehenge’ which is also a reference to its lack of progress and a ghostly reminder of another era.

To other locals, the ugly stanchions are a symbol of corruption and the lack of planning during the heady days of Thailand’s breakneck development in the 1990s before the 1997 crash.

In 1998, the government made the decision to formally cancel the project citing the lack of progress made by the contractor.

Hong Kong boss Sir Gordon Wu Ying-sheung blames the debacle on political instability and corruption

However, the boss of the Hong Kong based firm which had registered in Thailand to undertake the project, Sir Gordon Wu Ying-sheung blamed the debacle on Thailand’s political instability as well as rampant corruption which stalled and delayed the purchase of the land needed to progress the transport link.

This was countered by Thai government officials who suggested the property development firm did not have adequate financial resources to move the project forward while on the other hand, the 1997 Financial Crisis had a devastating impact on all those involved and saw a large number of similar giant contracts aborted in Thailand especially in Bangkok which in the late 1980s and 1990s had become a property developer’s dream.

Protracted legal battle ensued leading, in 2014, to the building firm’s claim being quashed
A protracted legal battle ensued with Thailand’s state railway company suing Hopewell for ฿200 billion and the Hong Kong based firm demanding ฿56 billion on the basis of breach of contract.

After four years of arbitration from 2004 to 2008, a tribunal awarded the building firm ฿11.8 billion in damages stating that the original contract had been arbitrarily and unfairly terminated by the government agency.

However, the Ministry of Transport and railway company took the case to the Central Administrative Court which cancelled the arbitration order in March 2014 saying the claim was barred based on the time that had elapsed.

Reversal in 2019 as Supreme Administrative Court gave final judgment to Hopewell of ฿25.4 billion
However, the final legal word on the matter came in April 2019 when the Supreme Administrative Court rescinded the lower court’s order and awarded ฿25.4 billion to the firm based on a 7.5% annual charge which still applies.

Since then, both the ministry and the State Railway of Thailand have made several legal moves to have the award overturned.

In July 2019, it asked the Central Administrative Court to resurrect the case with additional facts to be considered. This was thrown out.

In June 2020, it challenged the legal registration of Hopewell’s Thai based entity which was updated in 2010 on the grounds that it contravened Thailand’s company ownership laws. This failed.

In July 2020, the Special Administrative Court dismissed an application for a retrial and ordered the government and its agencies to pay Hopewell what had been awarded to it.

There has followed a long battle in which various state bodies have been linked to the legal wrangle including the Office Of the Ombudsman.

All the complex legal moves have failed, so far, to have the April 2019 Supreme Court decision set aside in favour of the earlier 2014 ruling citing the statute of limitations. This legal scorched earth strategy has also failed to have the court order voided.

Ministry refused an injunction halting the payment of Hopewell on Wednesday. Is this the end?
On Wednesday, the Supreme Administrative Court rejected an application for an injunction to halt the payment to Hopewell of the ฿25.4 billion awarded in 2019 in addition to interest at a rate of 7.5%.

The battle against Hopewell has been vehemently fought by Minister of Transport Saksayam Chidchob who in July 2020 told the press ‘The legal execution, in this case, can still be further delayed and we aim to try every channel.’

He further declared ‘The compensation is more than ฿20 billion. We will only bow to it after we have tried all possible avenues.’

The question is now, has that time come?