Starwood in $35 mn Asia lawsuit

Asia Hotel Investments is on the verge of dealing a blow to Starwood in the final phase of a $35 million lawsuit for breach of an agreement that it won in the Court of Appeal.In 2001, Asia Hotel Investments sought to purchase the majority ownership stake of the Grand Pacific Hotel in Bangkok from its then owner, Lai Sun Development Co Ltd, and had entered into a 12 month confidentiality and non-circumvention agreement with Starwood, who was to manage the property as a Westin hotel.

Yet, less than three months after signing the agreement, Starwood breached its agreement with Asia Hotel, and went on to manage the Grand Pacific property as a Westin hotel for the Narula family, the owner of Starwood’s flagship Sheraton Grande Sukhumvit Hotel in Bangkok and also a competitor of Asia Hotel.

As a result, Asia Hotel sued Starwood, seeking damages for Starwood’s breach of the confidentiality and non-circumvention agreement, including Asia Hotel’s lost profits resulting from Starwood’s breach.

On September 20, 2004, Singapore’s Court of Appeal, the highest court in the land, reaffirmed an earlier High Court decision which ruled that Starwood was guilty of breach of the agreement, and declared that Starwood was deliberately and directly responsible for causing Asia Hotel to lose the chance to purchase the majority stake in the Grand Pacific Hotel.

Castigating Starwood harshly, the Court of Appeal stated, “This is a case of a party who, having brazenly disregarded its contractual obligation to a second party…has the temerity to allege that its acts did not cause the second party to lose a real chance of acquiring the asset.”

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The Judges went on to say that “Starwood blatantly disregarded its obligations in spite of repeated warnings by (Asia Hotel). It was Starwood’s very own deliberate wrongful acts which shattered (Asia Hotel’s) dream.”

With its appeals exhausted, Starwood is now facing a potentially major damages payment in the suit which enters its final stages today in Singapore’s High Court.

“As we have contended from the beginning of this dispute, Starwood’s actions were unconscionable and we are now seeking damages to be awarded by the Court commensurate with the profits we would have made on this transaction had Starwood not breached our agreement,” said Gary Murray, President of Asia Hotel Investments.

“We remain deeply disappointed that a large NYSE listed company would conduct themselves in such a manner and we look forward to this final stage of the lawsuit.”
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