Article Posted on : - Jun 10, 2011

A file photo.

PARIS (AFP): The French government Thursday said it would have to pay Taiwan 460 million euros after defence giant Thales lost an appeal over its wrongful payment of commissions on a warship order.

Prime Minister Francois Fillon's office announced that the state would have to cover 72.5 per cent of the massive bill the group now faces after an appeal court threw out its challenge to an abitration panel's ruling.

France had guaranteed the "Bravo" contract when it was signed in 1991, and an emergency amendment to the government operating budget will now be sent to parliament in order to settle the matter, an official told AFP.

In April last year an arbitration panel employed by Thales and the Taiwanese navy to settle their differences found that the French firm had wrongly paid commissions to intermediaries to secure the contract.

Thales appealed the private panel's decision in a civil court, but on Thursday its complaint was thrown out, leaving it facing a bill of at least USD 591 million (407 million euros) plus interest and legal fees.

The French defence and electronics firm signed the original contract to supply Taiwan with six Horizon-class frigates in 1991. The deal specifically excluded the payment of sweeteners to go-betweens.

Thales can still appeal the latest ruling -- which was based not on a re-examination of the case itself but on the conduct of the arbitration -- in France's top appeal court, the Court of Cassation.

It was not immediately clear whether it would do so.