After 16 months of rigorous struggle, the Nepal Investment Bank Ltd (NIBL) has won its legal battle against its Italian counterpart, Intesa Sanpaolo SPA, to secure a counter-guarantee payment of nearly NPR 2.1 billion.
A three-member panel of judges of the Italian high court has ruled out in favor of NIBL on June 9, 2020.
In September 2018, Intesa Sanpaolo SPA issued counter-guarantees to NIBL for the amount of NPR. 2.10 billion on account of their client Cooperativa Muratori e Cementisti di Ravenna (CMC), in relation to Tanahu Hydropower Ltd.
However, in February 2019, NIBL had received guarantee claims from Tanahu Hydropower, stating that they have terminated the contract with CMC over its dismal performance to build the hydropower project.
As per the conditions of the guarantee, NIBL had settled the claim of Tanahu Hydro Power Ltd. in March 2019.
However, when NIBL lodged the claim to Intesa Sanpaolo SPA for the amount, the latter has rejected the payment claim citing a stay order from the Italian court Tribunale Di Bologna.
Even in the subsequent hearings since March 2019, the court had refused to revoke its stay order. However, on June 9, 2020, a full-bench of the same court has revoked the stay order allowing the Italian bank to release the guarantee amount to NIBL.
“The court decision to quash its previous order has paved the legal way for us to claim the bank guarantee from the Italian bank. With the release of the money, we would not be required to provision the losses by mid-July,” said Jyoti Prakash Pandey, the NIBL’s CEO.
“The verdict of the Italian court gives confidence to Nepali banks when it comes to issues of international bank guarantees,” expressed Pandit.
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