The Maldives High Court has issued a stay order on a Civil Court ruling that required the government to compensate Singapore’s Chang Hua Construction for taxes paid on the Dharumavantha Hospital project. The ruling, initially issued by the Civil Court in March 2024, ordered the government to reimburse MVR 227,560 in Goods and Services Tax (GST) to the contractor. However, the Attorney General’s Office appealed the decision, leading to the High Court’s intervention.
Legal Proceedings and Stay Order
Chang Hua Construction was awarded the contract to build the 25-storey Dharumavantha Hospital in Malé during President Abdulla Yameen Abdul Gayoom’s administration in 2016. The project, valued at USD 140 million, was granted without tax considerations, prompting the company to seek reimbursement through the Civil Court.
In March 2024, the Civil Court ruled in favour of Chang Hua, instructing the government to settle the tax amount in a lump sum within one month. Following the government’s failure to comply, the contractor sought judicial enforcement of the ruling. However, the Attorney General’s Office challenged the decision at the High Court, arguing that executing the Civil Court’s judgment without further judicial review could cause undue harm to the state.
On February 6, 2025, the High Court granted a stay order, effectively suspending the Civil Court’s ruling until the appeal is decided. The three-judge panel overseeing the case—comprising Mohamed Saleem (President), Hussain Mazeed, and Huzaifa Mohamed—held that the absence of an injunction could result in an obstruction of justice, warranting the suspension of enforcement proceedings.
Controversy Surrounding the Contract
The Dharumavantha Hospital project has been the subject of controversy since its inception. The contract was awarded to Chang Hua Construction without a competitive bidding process, following amendments to financial regulations that permitted such direct awards. At the time, opposition parties and members of the public raised concerns over the project’s cost.
Reports from local media indicated that China Harbour Engineering Company Limited, a subsidiary of China Communications Construction Company (CCCC) and builder of the Sinamalé Bridge, had submitted a significantly lower bid of USD 53 million—USD 86 million less than Chang Hua’s USD 140 million proposal.
While the Anti-Corruption Commission (ACC) initially investigated the project for potential corruption, it concluded that no wrongdoing had occurred. However, following changes in the ACC’s leadership under the current government, the case has been reopened.
Implications of the Stay Order
With the High Court’s stay order in place, Civil Court Judge Zulaikha Sheeza has determined that Chang Hua’s request for judicial enforcement of the 2024 judgment can no longer proceed. The case now awaits further review at the appellate level.
The ruling illustrates the legal complexities surrounding government contracts and tax liabilities in state-awarded projects. As the High Court deliberates, the case will likely set a precedent for similar disputes involving public contracts and financial obligations in large-scale infrastructure projects.
