UAE firm seeks $15 million compensation after Ashraf Ghani revokes contract

Olive Group, a company based in the United Arab Emirates, is seeking $15 million in compensation from Afghanistan due to a breach of a security contract previously canceled by Ashraf Ghani.

The Olive Group was responsible for providing security for Afghanistan’s international airports under the contract.

On Wednesday, July 24, the company requested a regional court in the United States to enforce a ruling by Canadian Judge Victor Leginiski. The ruling mandated that the former Afghan government pay Olive Group $15 million plus interest for the contract breach.

Judge Leginiski had previously ordered in a Dubai court, led by the Permanent Court of Arbitration in The Hague, that the Afghan government compensate Olive Group for the contract.

Although the former Civil Aviation Authority no longer exists, Olive Group continues to pursue the compensation with the aid of legal representatives.

The company filed its claim in 2021, alleging that the breach of the $38 million contract for four Afghan international airports warranted more than $24 million in compensation.

According to Olive Group, beyond the contract breach, the Civil Aviation Authority also withheld certain guarantees and 10% of the monthly revenue that should have been allocated to the company.

The claim also noted issues with personnel fees and work visas, which eventually led to the company’s contract with the Canadian embassy in Afghanistan being terminated.

Reports indicate that in 2020, the Civil Aviation Authority announced its intention to terminate the contract but faced resistance from Olive Group.

The Emirati company’s officials claimed that the former authorities later awarded a similar contract to another company without a proper bidding process and at a higher cost.

According to reports, this decision was made at the direct instruction of former President Ashraf Ghani, who favored awarding the contract to a company of his choice.

Due to the regime change, the former Civil Aviation Authority did not attend the relevant court proceedings and later cited issues with the Taliban’s non-recognition as a barrier to finding foreign consultants.

The court, however, rejected the former officials’ argument that they lacked sufficient opportunity to present their case, stating that the Civil Aviation Authority had ample time to hire legal representation and defend itself.

Both parties agreed that guarantees were obtained from Olive Group, but the Civil Aviation Authority argued that this was due to doubts about the contract’s equipment.

The judge found this reasoning contradictory and noted that retaining 10% of the monthly revenue had no legal or contractual basis.

It is noteworthy that Ashraf Ghani had previously canceled the contract with Olive Group and awarded it to a newly established company with no prior experience in civil aviation.

It was eventually revealed that Ghani, with the assistance of the newly appointed company, fled to the UAE in August 2021.

The legal and financial disputes surrounding Olive Group and Hogan Lovells highlight the complexities and consequences of contract breaches and political changes in Afghanistan.

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