AW101

The Indian Ministry of Defence (MoD) is taking steps to recover €278m from Finmeccanica’s unit AgustaWestland, following the cancellation of a contract to purchase 12 AW101 VVIP helicopters on 1 January.

Last week, an Italian court allowed the MoD to encash €228m worth bank guarantees after cancelling the AgustaWestland’s €556 helicopter deal.

While an Italian magistrate granted the request of MoD on 17 March, the Court of Milan has now overturned this.

On 8 February 2010, the Indian Government entered into a deal with AgustaWestland International for 12 AW101 helicopters.

However, the contract was unilaterally terminated on 1 January following investigations into allegations by Italian authorities over bribery and corruption involving head of Finmeccanica and Indian officials.

AgustaWestland delivered three of the helicopters prior to the termination of the contract.

MoD said in a statement: "The appellate court in Milan, Italy, in its judgement on Friday 23 May 2014, has substantially upheld the claims of Government of India against AgustaWestland International Ltd (AWIL), A W Spa and Deutsche Bank, Italy on the encashment of Bank Guarantees and Performance Bond in the VVIP helicopter case.

"The court also ordered AWIL and A W Spa to reimburse legal costs of Government of India."

Commenting on the court order, AgustaWestland said that the company will assert its rights to recover the amounts in the arbitration process already initiated.

The AW101s were originally made to replace ageing Russian helicopters. They were subsequently used by India’s top politicians and part of the country’s efforts to modernise its fleet of combat planes, helicopters, warships, tanks and artillery.

Image: AW101 at MAKS2013. Photo: courtesy of AgustaWestland.

Defence Technology