The Dhaka-Ashulia Elevated Expressway project -- a 24-kilometre overhead highway stretching from Dhaka Airport to Dhaka EPZ in Savar -- has plunged into legal dispute over payments, eventually risking the project progress.
The project's main contractor China National Machinery Import and Export Corporation (CMC) and its local agent Epic Solutions have taken their disputes to court.
Insiders say that a case between CMC and Epic is currently pending before the High Court, with the possibility of it being referred for arbitration in Beijing.
This comes after a legal battle over project shares stalled funding of the Dhaka Elevated Expressway.
The Tk 175.53 billion Dhaka-Ashulia Elevated Expressway project aims to ease traffic congestion in Savar, Ashulia, Nabinagar and EPZ areas. It has achieved 20 per cent physical progress so far and has a deadline of June 2026.
According to court documents, CMC appointed Bangladeshi Epic Solutions as its local agent to follow up the project. An agreement signed on January 7, 2015, stipulated that CMC would pay Epic Solutions a commission of 6 per cent of the project's contract value.
Sources said that although the contract was intended to last until project completion, CMC terminated the agreement with Epic in 2017.
Despite receiving five instalments from the Bridges Division, CMC allegedly has not made any payments to Epic. Documents show that CMC received its first instalment of $32.41 million on September 27, 2022, followed by a second instalment of $170.59 million on October 28, 2022. Project sources expect CMC to receive two more instalments in June this year.
According to sources, the Chinese company stopped communication with Epic Solutions after these payments were made, seemingly to avoid fulfilling its contractual obligations to the local agent.
Epic commission at the core of court battle
Shahed Rahman Bashir, proprietor of Epic Solutions, last year filed a writ petition with the High Court seeking an order to preserve a portion of the project payments for his company.
The High Court heard the petition and directed the Bridges Division Secretary and Economic Relations Division secretaries to preserve payments for Epic Solutions from CMC bills for six months.
The court also issued a rule to the government bodies, questioning their inaction on Epic Solutions' claim while authorising payments to CMC.
The High Court bench of Justice Naima Haider and Justice Kazi Zinat Hoque issued the order on December 7, 2023.
Subsequently, CMC's project manager filed a leave-to-appeal petition with the Appellate Division, seeking a stay on the High Court order.
After a hearing, the apex court issued a status quo order on the matter and directed a different High Court bench, led by Justice Farah Mahbub, to settle the rule within two months.
CMC's lawyer Saifullah Mamun told The Financial Express that the agreement stipulates the China International Economic and Trade Arbitration Commission in Beijing as the designated forum for resolving disputes between the parties.
He said Bangladeshi courts are not the right forum for this case.
Funding concerns raised
A project official told the FE that the Bangladesh Bridge Authority has forwarded the High Court order to the Law Ministry for advice. They will proceed based on the ministry's guidance.
The Export-Import Bank of China is providing 85 per cent of the total Tk 175.53 billion project, while the remaining 15 per cent is provided by the government.
The project official said withholding 6 per cent of the project funds, as per the High Court order, could lead to complications with the Export-Import Bank of China.
The official feared the Chinese bank might create difficulties releasing future instalments if a portion is withheld.
The official said the legal battle could be protracted as both parties have the option to pursue the dispute in other forums.
A clause in the contract between CMC and Epic Solutions says that "all disputes arising from this agreement shall be finally settled by arbitration in Beijing."
The clause specifies the China International Economic and Trade Arbitration Commission as the designated forum and outlines the arbitration process.
If both parties stick to this clause, the dispute could be settled through arbitration in Beijing after Bangladeshi legal proceedings conclude.
Project authority maintains neutrality
Dhaka-Ashulia Elevated Expressway Project Director Shahabuddin Khan told the FE that they have no involvement in the CMC-Epic Solutions contract.
He emphasised that they will strictly follow the court's order.
The First Dhaka Elevated Expressway Company Limited (FDEE) is facing similar challenges after the project's contractors are embroiled in a Supreme Court dispute over a share transfer issue. This legal battle has impacted funding.
The project's lenders, Export-Import Bank of China (CEXIM) and Industrial and Commercial Bank of China (ICBC), suspended loan disbursements in January this year due to the main contractor Italian-Thai Development Public Company Limited failing to comply with terms.
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