Civil Court Orders FAM to Repay MVR 1.5 Million to STO for Breach of Contract

The Civil Court has ruled in favor of the State Trading Organization (STO), ordering the Football Association of Maldives (FAM) to repay MVR 1.5 million. This ruling comes after FAM failed to deliver on a sponsorship agreement for the “STO South League.”

Background: The STO-FAM Sponsorship Agreement

The dispute between STO and FAM stems from a sponsorship deal signed on October 18, 2022. Under the agreement, STO was set to sponsor the southern edition of FAM’s Dhivehi League, contributing MVR 1.5 million to support the tournament. This was seen as a significant partnership that would elevate football in the southern regions of the Maldives. However, the planned tournament never took place, prompting STO to take legal action to recover the sponsorship money.

FAM's Absence from Court

FAM’s lack of participation in the legal process played a significant role in the court’s decision. The organization did not attend any court hearings, nor did it collect the chargesheet and related documents. This absence was interpreted by the court as an implied denial of the charges, which ultimately weakened FAM’s defense in the case. The court, viewing the situation as a breach of contract, ruled in favor of STO.

STO’s Efforts to Resolve the Issue

According to STO, the MVR 1.5 million sponsorship fee was paid to FAM in three separate installments, all of which were transferred directly to FAM’s bank account. Despite the payments, the tournament was never organized. STO made several attempts to get updates from FAM, including a formal request on October 29, 2023, asking for a new date for the tournament. When FAM failed to respond to these inquiries, STO issued a termination letter on December 6, 2023, demanding the return of the sponsorship money.

Court Ruling and Repayment Deadline

The Civil Court found FAM in breach of contract for not fulfilling its obligations under the sponsorship deal. As a result, FAM was ordered to repay the full MVR 1.5 million to STO by September 15, 2024. This ruling highlights the importance of accountability in business agreements, especially when large financial commitments are at stake.

Lessons for Organizations

This case serves as a reminder for organizations about the potential consequences of failing to honor contractual agreements. Both parties in any business arrangement are expected to uphold their responsibilities, and failure to do so can lead to legal and financial repercussions.

For FAM, the ruling is a setback that may affect its reputation and future partnerships. For STO, the court's decision brings closure to a drawn-out dispute, ensuring that the funds are returned.