NEITHER THE CITY OF BUDAPEST NOR DBR CHANGE THEIR PREVIOUS POSITION – AND ASK NOT MORE EITHER, THAN THAT BAMCO UNDERTOOK UNDER ITS CONTRACT

Upon the request from the Head Mayor, managers of the DBR Project Directorate gave an account about the status of negotiations with BAMCO consortium to the leaders of caucuses at the five-party meeting on Budapest’s budget this morning. Opinions of the city of Budapest, BKV and DBR are still unambiguous: BAMCO consortium led by the French Vinci – abandoning its illegitimate attitude – should forthwith proceed with works. DBR again calls upon the tunnel builder to continue works done by the company and to use available legal options in lieu of threats and breach of contract and to confirm that whether it still complies with the financial and technical requirements undertaken at the time contract signing. The Client’s interest is still that that tunneling works should continue as soon as possible, but not for any costs, and if BAMCO does not comply with the instruction, DBR is ready to terminate the contract. By this otherwise DBR is still not asking more than to complete works undertaken in the contract in lieu of unrealistic claims. According to the involved international experts, if parties settled all disputed issues, it is eventually conceivable that BAMCO would owe to the Client.
BAMCO consortium led by the French Vinci and comprising the Austrian Strabag and the Hungarian Hídépítő suspended tunnel building and other works done by the company on 14th April, after its unrealistic claim of 35 milliard Ft noted under its ultimatum was not fulfilled by the DBR Metro Project Directorate. At the very same day the Client called upon the tunnel builder to proceed with works, and it has not been satisfied by the consortium up to date. DBR has been continuously examining the ever growing number of claims of BAMCO, by which the tunnel builder slowly want to double the contractual price of 62 milliard Forints undertaken originally. DBR unambiguously dispute that the stopping has merit: the amounts of claims and in most cases their reference ground also are unrealistic, moreover unfortunately the consortium is not attempting to settle the dispute through the legal way undertaken by it as well.

The arbitrary halt is illegitimate, since according to the contract if BAMCO disagrees with a decision of the Engineer it has to turn to an arbitration board and eventually to a chosen court of justice. It is unconceivable why BAMCO is disregarding the contract, since at the time of its stopping last summer the company was referring to the decision of an arbitration board. By the way, up to now the tunnel builder has taken a total number of three claims only of its 192 ones submitted in front of the three-member arbitration board, and yet not a single disputed issue got in front of the chosen court of justice. Supposedly by this BAMCO wants to avoid that on the claims decisions to be made based on real independent technical considerations.

Both the city of Budapest and BKV are interested in proceeding with tunneling works as soon as possible, but not for any price. DBR would like to achieve that BAMCO should continue works as per the contract, and if the company is not willing to, than, however, DBR is ready to initiate termination of contract within a week. At the same time DBR is awaiting answer in writing with regard to that whether the consortium still complies with the financial and technical requirements undertaken at the time contract signing. In addition to its own Engineer DBR had the BAMCO claims examined by several foreign experts as well. The examination unambiguously confirmed that DBR justly rejected most of the claims. According to the experts, at the technical modifications up to now the Contractor mainly achieved savings, thus eventually it could occur also that BAMCO owes the Client, and not the opposite.

DBR is ready to negotiate with the Contractor on proceeding with works in compliance with the contract up to the last possible point in time. If DBR were a private company there would be a theoretical possibility to start an agreement process, at the end of which the parties would agree to an intermediate amount. But the metro construction is implemented from public funds, hence there is no possibility for similar market agreement. DBR is not in a position to pay a single Forint for claims without merit. If it were like that, then the Hungarian and European Union organizations supervising the project would rightly ask the account for that on what ground DBR gave in to the pressure.

In contradiction with recent press news, the consortium does not have any legal options either for taking the TBMs away, but it would also not be financially reasonable for the company, as the commissioning costs for the TBMs were already paid by the city of Budapest, and moreover these TBMs could not be used elsewhere. Further, all such extra costs and damages will be the onus of the consortium, which arose due to its contract breaching attitude. It is unallowable and not European solution at all to leave the contractual frame and put pressure on the Client.

Budapest, 21st April 2009

DBR Metro Project Directorate