VINCI - 2005 annual report

G. DISPUTES AND ARBITRATION
To the Company’s knowledge, there is no exceptional event or litigation
likely to affect substantially the business, financial performance, net assets
or financial situation of the Group or the Company. In respect of the cases
described below, provisions have been taken, where necessary, that the
Company considers sufficient given the current state of affairs.
– On 23 May 2004, part of the shell structure over the passageway of
Roissy airport’s 2E terminal collapsed. The structure had been built for
Aéroports de Paris, which in this project acted as principal, architect and
main contractor. The construction work on terminal 2E was carried out
under multiple separate contracts by numerous different companies. The
passageway shells (superstructures) were constructed by a consortium
comprising several VINCI subsidiaries. The incident is currently subject
to a criminal investigation and court-ordered expert appraisal to establish
the reasons for the collapse. The financial implications of the incident,
in terms of, on the one hand, reconstruction costs and, on the other
hand, damage caused, and the terms under which financial liability will
be allocated to the various parties involved, have yet to be determined.
The Company considers that this dispute will not have a material unfavourable
effect on its financial situation.
– On 28 December 1998, the Grenoble Administrative Court ordered
VINCI, jointly and severally with Italimprese Industrie, an Italian
company now in liquidation, to pay Nersa the sum of FRF 96 million
(€14.6 million) in compensation for the damage caused by the collapse
of the roof of a building belonging to Nersa. EDF, implicated by VINCI,
was also ordered to guarantee VINCI for 40% of the consequences of
this event, which reduced VINCI’s liability to €13.6 million in principal
and interest. This sum has been settled almost entirely by VINCI’s
insurers. Following an appeal lodged by VINCI, the Lyon Administrative
Appeal Court pronounced judgement on 16 December 2004, quashing
the ruling of 28 December 1998 and ordering a new expert appraisal.
The Company considers that this dispute will not have a material unfavourable
effect on its financial situation.
– In 1997, SNCF lodged multiple claims with the Paris Administrative
Court against a large number of construction and civil engineering
enterprises, of which several belong to the VINCI Group, with a view
to obtaining financial compensation for the damage it claims to have
suffered between 1987 and 1990 during the award of tenders for
the construction of the TGV Nord and Rhône-Alpes lines (and their
interconnection). This claim was the consequence of the finding by the
competition authority against the enterprises concerned in 1995, which
the Paris Appeal Court upheld overall (making a second ruling after its
1997 decision was overturned). The Paris Administrative Court ruled
on 15 December 1998 that the findings of the competition authority
regarding the anti-competitive practices entitled SNCF to claim that its
consent was impaired with respect to the contracts that are the subject
of two of the petitions and the Court ordered an appraisal to establish
the impact of such practices. On 22 April 2004, the Paris Appeal Court
delivered judgements confirming this ruling. Following this ruling, the
Paris Administrative Court decided to resume consideration of all
other proceedings on which it had not yet pronounced judgement. On
15 February 2005, the expert appointed by the Paris Administrative
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VINCI 2005 ANNUAL REPORT
Court submitted two reports in which it was concluded that SNCF had
incurred extra costs significantly lower than the claims made by SNCF
(€6.1 million compared with €43.1 million excluding financial
expenses). In June and July 2005, the Paris Administrative Court delivered
several rulings ordering further examination of some of the other
proceedings. The total amount sought from consortiums in which
VINCI companies have holdings amounts to €193 million, half of
which corresponds to financial expenses. VINCI considers that SNCF did
not suffer financial prejudice on the award of these tenders to its
subsidiaries given that each contract was subject to detailed negotiation
by SNCF, which is a highly experienced and qualified project owner.
VINCI considers that these disputes will not have a material adverse effect
on its financial situation.
– A dispute between VINCI and the US company Global Industries was
taken to the Paris Commercial Court, regarding the consequences of the
failure of the sale of ETPM by GTM to Global Industries, each party
claiming compensation from the other for damages resulting from the
breakdown of their discussions. On 19 November 2003, the Court
ordered Global Industries to pay compensation to VINCI of US$25
million plus interest for the period from 25 November 1999 together
with an amount covering any exchange loss arising from fluctuations
in the euro/dollar exchange rate. Global Industries lodged an appeal
against the ruling and, despite a provisional enforcement order, failed
to comply with the ruling. On 24 May 2005, the Paris Appeal Court
delivered a judgement upholding all aspects of the ruling. Global Industries
has not complied with the judgement and VINCI has therefore
initiated enforcement proceedings in the US and will implement the
procedures required to recover its claim.
– In the dispute between VINCI and Bouygues Bâtiment, as co-shareholders
of Consortium Stade de France (CSDF), the Paris Appeal Court,
in its judgement on 21 January 2005, dismissed the ownership transfer
claim submitted by Bouygues Bâtiment in respect of CSDF and confirmed
VINCI’s right to retain ownership of two-thirds of CSDF’s equity. However,
the Court considered that VINCI should have offered Bouygues Bâtiment
the opportunity to acquire the disputed shares at the time of the merger
between VINCI and GTM in 2000 and ordered VINCI to compensate
Bouygues Bâtiment for the damage suffered in this respect. The Court
valued the damage at €3.7 million (after rectification of a material error).
The ruling has not been challenged in the Court of Cassation and has
consequently become final.
– VINCI’s subsidiary CBC has been brought before the Mexican courts in
several cases. One of the shareholders of Prodipe Inc. and a Mexican state
organisation allege that CBC did not fulfil the terms of its contract
concerning a tourist site development in Baja California, the financing
of which was guaranteed up to US$7.2 million by Coface, which was
in turn counter-guaranteed by the Mexican state organisation in question.
Given the current state of affairs, VINCI does not expect this dispute to
have a material impact on its financial situation.
– VINCI’s subsidiary CBC built a hotel in Bratislava (Slovakia) for Intertour,
part of whose equity it held. This transaction was financed through