The United Arab Emirates-based Olive Group is seeking $15 million in damages from Afghanistan for breaching security agreements that President Ashraf Ghani previously scrapped.
Under the contract, Olive Group was responsible for security at Afghanistan’s international airport.
On Wednesday, July 24, the company asked a U.S. district court to enforce a ruling by Canadian Judge Victor Leginiski, which ordered the former Afghan government to pay Olive Group $15 million plus interest for breaching a contract.
Judge Leginiski had previously ordered the Afghan government to pay contract compensation to Olive Group in a Dubai court led by the Permanent Court of Arbitration at The Hague.
Although the former Civil Aviation Authority no longer exists, Olive Group continues to seek compensation with the help of legal representatives.
The company filed suit in 2021, alleging it was owed more than $24 million in damages for breaching a $38 million contract for Afghanistan’s four international airports.
In addition to breaching its contract, Olive Group said the Civil Aviation Authority also withheld certain guarantees and 10 percent of the company’s monthly revenues that should have been allocated to it.
The lawsuit also cited issues with labor costs and work visas, which ultimately led to the company’s contract with the Canadian Embassy in Afghanistan being terminated.
The Civil Aviation Authority reportedly announced its intention to terminate the contract in 2020 but faced resistance from Olive Group.
UAE business sources alleged that the previous authorities then awarded a similar contract to another company at a higher cost and without going through a proper bidding process.
The decision was reportedly made at the direct instruction of former President Ashraf Ghani, who wanted the contract awarded to a company of his choice.
Due to a change of government, the former Civil Aviation Authority did not attend relevant trials and later cited the issue of Taliban non-recognition as an obstacle to finding foreign consultants.
But the court rejected the former officials’ argument that they were not given an adequate opportunity to defend themselves, saying the Civil Aviation Authority had had enough time to hire lawyers and defend itself.
Although both parties agreed that guarantees had been obtained from Olive Group, the Civil Aviation Authority argued that this was due to doubts about the fit-out of the contract.
The judge found this logic inconsistent, noting that there was no legal or contractual basis for withholding 10% of monthly revenue.
Notably, Ashraf Ghani had previously cancelled a contract with Olive Group and awarded it to a start-up company with no experience in civil aviation.
It was eventually revealed that President Ghani fled to the UAE in August 2021 with the assistance of his newly appointed company.
The legal and financial dispute surrounding Olive Group and Hogan Lovells highlights the complexities and consequences of contract breaches and political change in Afghanistan.