Taiwan fines Thales Euro 630 million for breach of contract in frigate deal

Thales has been notified of the award handed down on 3 May, 2010, in the arbitration against the Republic of China (Taiwan). This award has been made as a result of an alleged breach of the terms pertaining to the use of intermediaries contained in a contract entered into in 1991 by Thomson-CSF (now Thales) for the supply of six Lafayette frigates to Taiwan. The total amount of the award is set to 482 million US dollars and 82 million euros, bearing interest as from August 2001; as well as around 15 million euros, bearing interest as from today, i.e. a total of around 630 million euros (including interest). Thales disputes the very grounds of this decision. The company will initiate all available proceedings and actions against this award, and will in particular file petition for nullity in front of the Paris Court of Appeal. The share of Thales in this litigation represents 27.463% of the total, and corresponds to its industrial share in the supply contract. Taking into account the provisions previously booked, an additional provision of about 35 million euros (pre-tax) will be booked on a protective basis in the company’s accounts as of 30 June, 2010.