Bad Business Practices: France Unwilling to Follow Mistral Contract Clause

Earlier this week, Louis Gartier, the head of France's Secretariat-General for National Defense and Security, arrived to Moscow in attempt to find a solution out of the failed Mistral deal.

However, it turns out that the official representative from France had no idea about the details of the arms deal contract, French weekly Paris Match reported.

The arms export contract was signed between DCNS, a French company that specializes in naval defense and energy, and Rosoboronexport, Russia's agency for defense-related exports and imports, in 2011.

The Russian side already paid 1.2 billion euros for two Mistral-class helicopter carriers. The first ship should have been delivered in November 2014 and Russia expected the second ship in 2015. However, France cancelled the delivery, citing Russia's alleged involvement in the Ukrainian crisis.

The contract signed between the two parties in June 2011 said that in case DCNS cannot fulfill its obligations, the company will have to refund Rosoboronexport all payments made according to the contract. Meanwhile, the government of France will take all appropriate measures to ensure that DCNS makes all required payments or reimbursements on time.

Earlier, Gartier said that France could only refund 785 million euros. The amount is much less than the actual sum that the French side must pay back. According to experts, the refund of 785 million euros offered by France does not even cover Russia's down-payment amount.