A Dutch company, Tulip Computers, won a case at a Dutch court for an embargo on the Dutch government funds to Bangladesh under international law, as Bangladesh refused to pay the company 4.2 million euro in damages over a contract cancelled last year.

The Royal Netherlands Embassy in Dhaka confirmed the court ruling to The Daily Star Tuesday night but said, "The Dutch government has decided to appeal against the court verdict. We will sort out how much money is involved in the verdict by this weekend and we will inform the government immediately."

A Dutch court in February compounded the Bangladesh government's worries after it ruled the cancellation of a contract to run an IT project here as illegal. It also ordered the government to pay 4.2 million euro or Tk 33.8 crore as compensation for investments already made for the project by Tulip, as reported by www.theregister.com

"We are very disappointed at the verdict. But we are sorting out the specifics of the impact of the court ruling," said a Dutch embassy diplomat, preferring anonymity. "The conflict, however, is one between the private party, Tulip Computers and the Bangladeshi government."

A high official of the foreign ministry, however, told The Daily Star on Tuesday they are still in the dark about developments on the matter and are unaware of any freeze on Dutch aid funds.

According to EU laws, if court order is not followed, ocean- and air-liners carrying Bangladesh flag would become liable to confiscation in European Union (EU) countries.

In December 2000, the Netherlands government agreed to provide about Tk 49.95 crore in grants to introduce computer courses at 3,382 secondary- and higher secondary-level educational institutions and the project was scheduled to be implemented by March 2001.

After a series of discussions with the Bangladesh government, the Dutch government selected Amsterdam-based Tulip Computers, the lone computer manufacturer of that country, to execute the project.

As part of the project, Tulip Computers was to train 7,700 teachers in IT, provide 10,388 computers and additional computer hardware under a project co-ordinated by the Dutch Ministry of Development Aid.

After change of government in October 2001, the previously approved 'price offer' of Tk 70,000 in the 'commercial contract' with Tulip was found to be higher than the prevailing market price by the new Bangladesh government.

The Cabinet Committee on Government Purchase cancelled the procurement initiative last year on the grounds that the price offer, in the terms of Education Minister Osman Farruk, was 'inflated and unsolicited'. The Dutch government also withdrew the funds afterwards.

Currently, the Dutch-Bangladesh co-operation comprises Dutch funds in integrated water resources management, primary health care, primary education and rural electrification. By 2000, the Netherlands had contributed some 1.36 billion euro and in recent years, the disbursement levels were around 25 to 27 million euro.