Wed, Feb 02, 2000 - Page 1 News List

Eurotrain loses bid for injunction

HIGH-SPEED RAILWAY The Taipei District Court ruled yesterday that the consortium had failed to provide sufficient evidence to stop the deal with a Japanese group

By Irene Lin  /  STAFF REPORTER

The Taipei District Court threw out an injunction request by Alstom-Siemens Eurotrain yesterday, deciding that negotiations between Taiwan High Speed Rail Corpora-tion (THSRC) and Japanese-backed Taiwan Shinkansen Consortium (TSC) did not constitute a basis for legal action by the European consortium.

The judge in the case ruled that Eurotrain failed to provide sufficient evidence for an injunction against THSRC.

The court decision came a day after reports of a letter to Premier Vincent Siew (蕭萬長) from Christopher Patten, chairman of the EU's Exterior Relations Commission, suggesting the EU would withhold support for Taiwan's accession to the WTO due to the high-speed railway selection process.

The Eurotrain consortium, led by Germany's Siemens AG and France's Alstom, has yet to decide whether to appeal the decision in Taiwan court or to file a request with an international arbitration court in Singapore.

Both the Eurotrain consortium and THSRC agreed in a 1997 accord to seek resolutions to any disputes in the arbitration court.

"Both an appeal and international arbitration could be possibilities. The decision will be made after Chinese New Year," said Phai Hua Way (許偉勳), a Eurotrain spokesperson, responding to yesterday's court decision.

Furious at losing the construction bid to the Mitsubishi Heavy Industries-led Shinkansen consortium, Eurotrain requested a court order in mid-January to suspend any further negotiations and prevent the signing of a contract between THSRC and the TSC.

The filing of the injunction request was prompted by THSRC's announcement on Dec. 28 that it was awarding priority negotiating rights to TSC.

Eurotrain alleged the dramatic switch was in breach of the 1997 Eurotrain-THSRC agreement, which it claimed had obliged THSRC to sign a contract with it as long as its construction prices were considered reasonable.

In the 1997 deal, THSRC cited Eurotrain as its "preferred bidder" for the supply of train cars, locomotives, electronics and communication systems, and maintenance for the NT$440 billion rail project.

The court found, however, that the agreement did not give Eurotrain a guarantee on obtaining the construction contract, nor did it give the Europeans "exclusive" rights to negotiate with THSRC.

Furthermore, the court said, the provision on reasonable pricing implied that THSRC's negotiations with other parties could continue.

"The agreement does not exclude any other parties from negotiating with THSRC. And the plaintiff [Eurotrain], as a result, cannot assume it had the right to deter THSRC from signing contracts with other parties," the court reasoned.

"The agreement also required continuing negotiations for the parties to reach a common ground and to sign a binding contract. And in the course of negotiations, any disagreements could possibly prevent the contract from being signed," it added.

The court said Eurotrain still might have grounds to assert its negotiating rights on the basis of the 1997 agreement. It ruled, however, that the documents that Eurotrain had presented failed to provide grounds for blocking THSRC and TSC from signing contracts.

Eurotrain has used various means to protest THSRC's switch to the Shinkansen consortium. Prior to Patten's letter, Siemens AG chairman Heinrich von Pierer and heads of the German, French and British trade offices in Taipei had all met with high-ranking Taiwan officials to discuss the deal.

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