Sat, Jan 29, 2000 page1

• Europeans seek to block rail contract

  HIGH-SPEED RAILWAY Bitter at losing out to the Japanese over the multi-billion deal, Eurotrain wants an injunction to halt any further negotiations

  • By Irene Lin / STAFF REPORTER
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  In a hearing at the Taipei district court yesterday, the Eurotrain consortium -- which lost out to a Japanese group over the construction of Taiwan's high-speed railway line -- played tough to convince the court that the Taiwan High Speed Rail Corporation (THSRC) breached a binding agreement signed in 1997.

  The EU group also wanted an injunction preventing the planned exchange of contracts with Japan's Shinkansen consortium.

  At the same time, there was a high-profile meeting yesterday at the Taipei office of THSRC chairperson Nita Ing (殷琪), where the heads of the German, French, and British trade offices in Taipei sought reasons for THSRC's dramatic switch to Japan's Shinkansen.

  They expressed hopes the THSRC's final choice of partners would still be the European consortium.

  Furious at being sidelined by the Taiwan-Shinkansen consortium of Japan, Eurotrain -- a joint venture of France's Alstom and Germany's Siemens AG -- has filed a request at the Taipei district court for a temporary injunction on ongoing negotiations between the THSRC and the Shinkansen, which began in mid-January this year.

  The court set the hearing yesterday to clarify the legal relationships between THSRC and Eurotrain. Upon clarification it will determine whether the court will order the injunction.

  Wang Chia-hui (王佳惠), the district court judge in charge of the request, said after the hearing yesterday that no more hearings will be needed.

  He said a decision was expected soon, as injunctions of this kind were often needed urgently.

  Wang also said there was an obvious gap between the two parties' stories over their previous legal relationship.

  If granted, the injunction is expected to block a deal worth over NT$90 billion between THSRC and the Japanese consortium.

  But equally, if the petition is granted, then Eurotrain must also pay up to one third of the sum in dispute, as a deposit to ensure it will compensate THSRC for any damages it may suffer by the granting of the injunction.

  Despite lengthy negotiations with Eurotrain, the THSRC awarded priority negotiating rights to the Japanese group on Dec. 28 last year.

  Eurotrain, which has been vying for the high-speed rail project since 1997, has since protested to the THSRC over the switch and accused the company of breaking a 1997 agreement, which obliged THSRC to sign a contract with the European group if its price was considered reasonable.

  However, THSRC, which was formally established as a consortium in May 1998, denied the 1997 agreement was binding as it was signed by Eurotrain and five main shareholders of the company, not the consortium itself.

  Siemens AG chairman Heinrich von Pierer met with President Lee Teng-hui (李登輝) on Jan. 14, a day after the filing of the temporary injunction request, seeking to clear up speculation the Taiwan government had played an influential role in THSRC's switch from the Europeans to the Japanese.

  After a meeting with Minister of Transportation and Communication Lin Fong-cheng (林豐正) on Wednesday, Hilmar Kaht, director general of the German Trade Office in Taipei, Gerard Chesnel, director of the French Institute in Taipei, and David Coates, director general of the British Trade and Cultural Office in Taipei, met with Ing yesterday.

  Ing, appearing little affected by the meeting, later said THSRC's final choice of the core system would be made on an evaluation based on business perspectives.

  "THSRC is a private sector company and therefore the decision has to be made in the interests of its shareholders, as well as the public. Business is business," Ing said.

  Meanwhile, THSRC announced yesterday it is to sign a contract with a consortium of local banks on Feb. 2 for a NT$323.3 billion syndicated loan.

  For your information

  He says, she says

  * The THSRC gave priority negotiating rights to the Japanese group on Dec. 28 last year * Eurotrain has accused the company of breaking their 1997 agreement * THSRC denies the 1997 agreement was binding as it was signed by Eurotrain and five main shareholders of the company, not the consortium
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