Thailand's court of appeals on Tuesday overturned an earlier ruling that had required the country's top coal miner Banpu Pcl to pay more than $1 billion in compensation to partners in a former Laos joint venture.
The verdict is a positive for Banpu, whose shares have been under pressure due to the lawsuit - filed seven years ago - and a persistent decline in global coal prices in a market awash with supplies.
A group led by Thai businessman Siva Nganthavee alleged that Banpu entered into a pact in 2004 to jointly develop the Hongsa coal mining and power plant with the group in order to obtain information about the project and access to feasibility studies.
In 2006, the government terminated the project, as well as the mining contract won by Nganthavee's group, citing a lack of progress. The group alleged that Banpu had misinformed the Lao government on the project.
Later that year, Banpu won a deal to develop the project when the Lao government reopened bids. Nganthavee's group alleged that Banpu had used the information obtained from their joint venture to win the $3.7 billion project for itself.
"The court has ruled that the claim made by the plaintiffs is not rational," a judge read the verdict. "The termination of the contract was the result of the mistake made by the plaintiff, and the defendant has no authority to order the Lao government to terminate the contract."
Banpu shares, which jumped 11 percent last week, dropped 2.2 percent after trading resumed on Tuesday afternoon as the stock traded ex dividend. The overall index was 0.13 percent lower.
The 2012 ruling had helped push Banpu's shares to a four-year low in July last year.
Billions of baht
Under a 2012 ruling by a Thai civil court, Banpu and a subsidiary were to pay Nganthavee and his group damages of 4 billion baht ($125 million) with 7.5 percent interest per annum. That was on top of other damages, including compensation for loss of business opportunity, of about 33 billion baht. The group had earlier sought damages totalling 63.5 billion baht.
"The Appeal Court decided to dismiss the claim made by the plaintiffs based on the rationale that Banpu had acted in good faith in developing the Hongsa Project both before and after the entering of the related contracts with the plaintiffs," Banpu said in a statement.
The lawyer of the Nganthavee group said they would consider appealing to a higher court.
Banpu, also Indonesia's fourth-largest coal miner, has said the court case would not affect the Hongsa project. The concession is operated by Hongsa Power Co Ltd, a joint venture between Banpu, Ratchaburi Electricity Generating Pcl and the Lao government.
Banpu owns 40 percent of the Hongsa lignite power plant, due to begin operations next year. The 1,800 megawatt plant is currently 90 percent complete.
