EconomyWhat financial compensation after cancellation of the contract?

What financial compensation after cancellation of the contract?

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Time to take out the calculator. Emmanuel Macron and Joe Biden spoke by telephone on Wednesday, a few days after the diplomatic crisis caused by the cancellation of a contract to purchase 12 submarines by Australia. “An honest conversation that has led to several important gains,” said Gabriel Attal, the government spokesman. The two presidents have promised “commitments” to restore confidence between the two countries. If the diplomatic situation seems improving, at least with the United States, what will be the financial impact for France? 20 Minutes make the point.

What are the real losses for France?

The lost “contract of the century” concerned 12 conventionally propelled submarines (non-nuclear), for 50 billion Australian dollars, or the equivalent of 31 billion euros at the time of signing with the French industrialist Naval Group. , in 2016. But if we take into account inflation over the duration of the program and cost overruns, this sum would actually represent 90 billion, or 56 billion euros. In other words, the most important contract for defense equipment ever signed by a French industrialist or by Australia.

However, the overall amount of this contract, of which only the first phases have been concluded, should be put into perspective according to Jean-Vincent Brisset, research director at the Institute of International and Strategic Relations (Iris). “It is not actually a single contract, but a framework agreement signed in 2016, which was to be broken down into several stages over fifty years. “

The loss for France would therefore not be 56 billion euros. “This sum is an estimate of the cost estimated at the end of these fifty years. And of this amount, there was actually only about 11 billion euros that would go into the French coffers. 60% of the program money was to be spent in Australia, and half of the remaining 40% concerned combat systems provided by an American company, ”says the expert. “This failure illustrates French diplomatic weakness, but the real economic impact is, as we can see, much less than the cries of politicians. “

Was there a cancellation clause?

The Minister of Foreign Affairs, Jean-Yves Le Drian, denounced a “blow in the back” and a “betrayal” from Australia. But a cancellation clause was visibly provided for in the contract signed in 2016. “Australia terminated the contract for” convenience “, assured the CEO of the French industrialist Naval Group, Pierre Eric Pommellet, at Figaro Wednesday evening. “This is a case which is provided for in the contract and which will give rise to payment of our incurred and future costs, linked to the physical“ demobilization ”of infrastructure and IT as well as to the reclassification of employees. (…) We will assert all our rights, ”added the leader. The French group said it would deliver “in a few weeks” to Australia a “detailed and costed proposal”.

What will happen now?

The compensation figure is not known, but the Australian press, quoted by West France, would evoke an amount of 250 million euros. “This type of contract generally includes cancellation clauses. France, for example, had paid compensation when it slammed two Mistral ships in the face of Russia [
lors de l’annexion de la Crimée en 2014], recalls Jean-Vincent Brisset. It depends on the contract and the services already provided, but it is generally difficult to know the sums in question, it is now the business of Australian and French lawyers, who will report on the negotiations to their departments, who will do it themselves. feedback to the ministers concerned ”.



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