Gujarat NRE will find out on Monday whether it will be forced to repay more than $US8 million to a Singaporean company after Gujarat failed to provide it with thousands of tonnes of coal.
The Illawarra miner is set to discover its financial fate in the Federal Court after the company and its executive chairman, Arun Jagatramka, challenged the court's original decision.
In August, Gujarat NRE was ordered to repay $US8.5 million ($9.1 million) to Coeclerici Asia, along with nearly $US305,000 in interest and £12,232.85 sterling in arbitration costs over the failed deal with the Asian company.
In September 2011, Gujarat contracted to sell 40,000 metric tonnes of coke to the Singapore corporation, agreeing to deliver the coal within the first three months of 2012.
Coeclerici handed the company $US10 million as a prepayment, on the proviso that Gujarat would repay the money, along with $US750,000 in damages, if the coal was not delivered.
But shortly after the contract was made, the companies could not agree on a price for the coal so Gujarat did not deliver it.
Coeclerici then demanded its prepayment back.
Gujarat repaid $US2 million in the middle of last year but did not make any further payments, forcing Coeclerici to launch arbitration proceedings against it.
But in January, the parties agreed to suspend the matter to give Gujarat a chance to pay the money back, setting a March deadline for the outstanding amount, plus an additional $US500,000.
If the company failed to pay, Gujarat agreed that Coeclerici would be entitled to the money, without a legal fight.
When Gujarat did not pay the money, Coeclerici moved to enforce the agreement.
But Gujarat challenged the move, telling the arbitrators it had not been given a reasonable opportunity to present its case and requested more time.
Coeclerici's lawyers labelled the request "a further cynical attempt to delay recovering [the money]" and pushed the arbitrators to enforce the agreement.
The agreement was enforced on February 14.
Gujarat then sought to have it set aside in the English High Court of Justice in July but the matter was dismissed with costs. Coeclerici then turned to the Australian Federal Court, calling for Judge Lindsay Foster to enforce the award.
Gujarat again resisted, claiming it had not been given a chance to put its case forward during the arbitration.
Judge Foster decided to enforce the award, finding Gujarat had been given "ample opportunity and more than reasonable time to put their case before the arbitrator".
But he opted to stay the proceedings on August 13, giving Gujarat a chance to repay the debt.
The appeal judgment is set to be delivered on Monday.
Uncertainty of payment in spotlight
Gujarat NRE management spent Friday in meetings with its workforce and union representatives after staff were told there was no guarantee they would be paid in coming weeks.
The Association of Professional Engineers, Scientists and Managers Australia, which has about 100 workers at the Russell Vale and Wongawilli mines, had a meeting with staff and the company yesterday to discuss the situation.
Hundreds of employees were left out of pocket on Wednesday afternoon when the company failed to pay workers’ weekly wages.
Gujarat told the Mercury on Thursday that it was ‘‘experiencing difficult times’’ but hoped to make the payments ‘‘as soon as possible’’.
It expected operations to stabilise after the acceptance of the Jindal Steel and Power share offer on October 16.
A Construction, Forestry, Mining and Energy Union (CFMEU) spokesman told the Mercury yesterday that discussions about the company’s financial difficulties, including late payment of wages, had been ongoing and involved appearances before Fair Work Australia.
Earlier this month, the Mercury revealed the union and the company had been battling for months over late wage and superannuation payments. CFMEU is set to hold more meetings with its members early next week.