Govt, China firm settle rail dispute
The Philippine government concluded an out-of-court settlement over its dispute with China National Machinery & Equipment Corp. or Sinomach, the former contractor of the 80-kilometer Caloocan to Malolos segment of the North Rail Project.
The Trade Department said the settlement agreement, which was approved by the Commission on Audit, was reviewed and certified legal and enforceable under Philippine law by the Office of the Government Corporate Counsel.
It is expected to save the Philippine government more than $100 million or over P5 billion in potential payment of claims to Sinomach, as well as hundreds of millions of pesos in legal fees and arbitration costs.
Under the terms of the settlement agreement, the parties agreed to waive their claims against each other and declared that there would be no more payment by Northrail to Sinomach, and vice versa.
The settlement will put an end to the arbitration proceedings initiated by Sinomach in 2012 after it was notified by Northrail that it could no longer proceed with the implementation of the project due to serious legal issues in the contracts.