Northrail, Chinese firm ink out-of-court settlement

MANILA, Philippines — The North Luzon Railways Corp. (Northrail) has reached a settlement with China National Machinery Industry Corp. (Sinomach) in connection with an arbitration case involving the 80-kilometer railroad linking the northern part of Metro Manila to the Clark International Airport.

In a statement yesterday, the Department of Transportation (DOTr) said Northrail and Sinomach have recently concluded an out-of-court settlement.

Under the terms of the settlement agreement, the parties have agreed to waive their claims against each other and declared there will be no more payment by Northrail to Sinomach, and vice versa, and to share the remaining arbitration fees in equal proportions.

The settlement puts an end to the arbitration proceedings initiated by Sinomach in 2012 in Hong Kong after being notified by Northrail it could no longer proceed with the implementation of the project due to serious legal issues in the contracts.

Initiated by the Arroyo administration, the project was supposed to link the northern part of Metro Manila with the Diosdado Macapagal International Airport in Clark, Pampanga.

The project was scrapped by the Aquino government due to legal questions and allegations of corruption.

“The historic settlement agreement, which was approved by the Commission on Audit and was likewise reviewed and certified legal and enforceable under Philippine law by the Office of the Government Corporate Counsel, will save the Philippine government upwards of $100 million, or more than P5 billion in potential payment of claims to Sinomach, as well as hundreds of millions of pesos in legal fees and arbitration costs,” the DOTr said.

The settlement would also ensure the development of the Manila to Clark Railway project would proceed without issues.

The P255-billion Manila to Clark Railway is among the priority projects under the Duterte administration’s Build, Build, Build program.

Through the project, the government would want to decongest Metro Manila and bring growth to the regions north of the capital, particularly Central Luzon.