Lawsuit over 2010 cruise ship contract dismissed

Wed Jun 10, 2009 5:43pm EDT
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VANCOUVER, British Columbia (Reuters) - A U.S. judge has dismissed a lawsuit over a failed C$55 million ($49.5 million) contract to supply cruise ships to house security forces during the 2010 Winter Olympics in Vancouver.

A North Carolina-based management firm sued the Royal Canadian Mounted Police, alleging the police force improperly canceled the contract so it could take advantage of the weak economy to get a better price.

Judge James Robertson of U.S. District Court in Washington, D.C., granted on Tuesday a motion to dismiss Cruise Connections Charter Management's lawsuit. Robertson plans to issue a written ruling with his reasons at a later date.

The RCMP and Canadian government had argued that the U.S. court did not have jurisdiction over the contract dispute because it did not occur within the United States.

The police also argued it was Cruise Connections that backed out of the deal because the strengthening of the Canadian dollar had eliminated its profit margin.

The police in April struck a new C$76 million deal with two units of cruise line operator Carnival Corp to supply three ships that will serve as floating hotels for the thousands of expected security personnel.

Olympic planners decided to use cruise ships for temporary housing and food service for security forces during the Winter Olympics and Paralympics because of a shortage of regular hotel space in the Pacific Coast city.

($1=$1.11 Canadian)

(Reporting Allan Dowd, editing by Peter Galloway)