French aerospace company, Dassault Aviation, and the Indian ministry of defence (MoD) signed an agreement a few days back finalising details of a maintenance contract for the Indian Air Force's fleet of Mirage-2000 fighter aircraft The agreement follows resolution of all differences on technical matters, and also the settlement of a ticklish issue related to charges on liquidated damages.
This last matter had held up finalisation of the contract for nearly six months.
Dassault insisted on renewing the maintenance contract only if liquidated charges were calculated at the rate of 0.5 per cent of the total contract on a monthly basis. The Indian side wanted the 0.5 per cent charges to be calculated on a weekly basis.
Liquidated damages (also referred to as liquidated and ascertained damages) are damages whose amount the parties designate during the formation of a contract for the injured party to collect as compensation upon a specific breach (e.g., late performance).
Lacking details it may be reasonable to assume that it would be delays in implementation of the contract that the Indian side would have been trying to safeguard itself against, given their experiences in such matters with a country like Russia.
Reports suggest that the stalemate was finally resolved with the Indian side acceding to the French company's demands. Apparently, Dassault had even threatened to take the matter to the courts.
This had the potential to lead to longer delays in repairs of the aircraft.
Half of the IAF's 46 Mirage 2000-H aircraft would have had to be grounded if the stalemate had persisted, air force officials said. The 5 August agreement now reflects the French position on the matter.
The repair contract originally was signed in 1982, when the first Mirage deliveries were made. It was due for renewal in 2007.