Taiwan High Speed Rail to compensate railway consortium

The Taiwan High Speed Rail Corp (THSRC, 台灣高鐵) said yesterday it will pay Eurotrain US$65 million in compensation for dumping the consortium and choosing a Japanese consortium to build Taiwan's high-speed rail system.

THSRC the settlement agreement on the Taiwan Stock Market online bulletin board.

"Following arbitration by an international arbitration court, THSRC agrees to pay US$65 million to Eurotrain, which -- plus interest -- totals US$89 million," the document said.

THSRC's office said the arbitration was made on March 5 by an international arbitration court in Singapore.

Compared an arbitration ruled by the International Chamber of Commerce (ICC) early this year, the new settlement saves THSRC US$24 million, according to THSRC. Eurotrain filed for arbitration with the ICC in 2001.

The ICC issued an arbitration award on March 15, 2004, wherein THSRC was ordered to pay US$73.04 million in damages and interest to Eurotrain.

Eurotrain a consortium led by Germany's Siemens AG and France's Alsthom -- claims THSRC gave it priority negotiating rights for building Taiwan's first high-speed rail in 1997, but awarded the US$14-billion-contract to a Japanese consortium in 1999. But THSRC denied there was any contract.

The 345km railway linking Taipei to Kaohsiung is scheduled to start operating in October next year.

There were rumors that THSRC favored Japan's Shinkansen system over Eurotrain because former president Lee Teng-hui (李登輝) wanted to forge closer ties with Japan, but THSRC denied there were political considerations.