Contingent liabilities, contingent assets and commitments

Contingent liabilities

 Litigation

The Group records contingent liabilities in respect of litigation arising in the ordinary course of business from which no significant liabilities are envisaged other than the amounts provisioned. The most relevant litigation giving rise to contingent liabilities is described below:

  • Risk of an increase in the cost of expropriations for the R-4 toll road and other toll roads in Spain

    During 2007, the Madrid High Court sent notice of rulings relating to the valuation of land in toll road expropriations in the Madrid region.

    In general, with respect to the land expropriated to build the radial toll roads, the rulings state that the land must be valued based on its classification and, therefore, that non-building land must be valued as such rather than under the general system. However, the rulings significantly raise the value of non-building land initially envisaged by including, on occasions, other elements such as expectations and indemnities for the infringement of rights. Moreover, as regards the land expropriated to execute the Madrid ring roads (M-45 and M-50), the rulings from the Madrid High Court state that the land expropriated forms part of a general system and must therefore be valued as building land, irrespective of the specific classification of that land.

    There is consequently a risk of a highly significant increase in the value of the land, mainly the non-building land, above the amount initially paid.

    Although these rulings mark a trend, it is as yet difficult to assess their impact, particularly as many of the rulings have been appealed to the Supreme Court. 

    In any event, and if this trend is confirmed, the Company considers that its concession holder companies will reasonably be entitled to receive indemnities to restore the financial balance of the concession.

  • Claims of Promociones Habitat S.A. in connection with the contract for the purchase of Ferrovial Inmobiliaria S.A.

    During 2007, a number of claims were received from Promociones  Habitat S.A. in relation to the guarantees granted under the contract for the purchase of Ferrovial Inmobiliaria S.A. These claims relate basically to the existence of certain charges and encumbrances on land owned by Ferrovial Inmobiliaria, as well as to certain tax contingencies.

    The majority of the claim has been or is being discussed by Habitat and Ferrovial out of court, barring two claims that have been submitted to arbitration.

  • Other litigation

    In addition to the above-mentioned litigation, the Group companies are involved in a number of lawsuits in the ordinary course of business, as listed below:

    • Claims relating to defects in construction projects executed or services rendered.

    • Claims for third-party liability in connection with the use of the Group's assets or the actions of Group employees, the most relevant of which relate to road accidents on the toll roads managed by the Group.

    • Employment-related claims.

    • Environmental claims.

    • Tax claims.

    A part of the above-mentioned risks are covered by insurance policies (third-party liability, construction defects, etc.).

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