Hermes said in violation of concession if airports not expanded

A London-based panel has ruled in favour of the Republic, finding that Hermes Airports is in contractual violation if it does not carry out expansion works at the island’s two airports on schedule.

The committee of experts, acting as an expedited dispute resolution body, said that Hermes not proceeding with the second phase of developing the airports in Larnaca and Paphos constituted a violation of the concession agreement it has with the Cyprus government.

Hermes is the operator of the two airports. In 2006, it undertook the operation and management of Larnaca and Paphos international airports under a 25-year BOT (Build-Operate-Transfer) concession agreement with the Republic of Cyprus.

In July 2017 Hermes asked for an indefinite suspension of its obligation to proceed with the second phase of works at the two airports. The transport ministry rejected its request. Later, in January 2020, the company sought relief via an expedited dispute resolution mechanism.

The panel in London, presided over by the Rt. Hon. Lord Dyson, also ordered Hermes to cover the costs of the arbitration process.