Civil Court Halts State Takeover Move at Baa Kihaadhuffaru Resort

The Civil Court has issued an interim order restraining the Ministry of Tourism from enforcing its decision to terminate the head lease for Kihaadhuffaru in Baa Atoll, following a case filed by Athama Marine International, the head-lessee of the island.

In filings to the court, Athama stated that a ministry team arrived on the island and demanded the keys, indicating the state intended to assume control of the property. The resort, branded as Kihaa Madlives and operated under sublease by Coral Islands (Maldives), has been at the centre of a prolonged compliance dispute.

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The Ministry announced at the end of August that the resort’s conditional operating licence had lapsed in September 2019 and that the property had continued to host guests without authorisation. The Ministry said Athama had twice been fined for operating without a valid licence and warned tourists against visiting while “additional measures” were being pursued.

Athama’s statement to court acknowledged the resort had fallen short of tourism standards but argued deficiencies were being remedied once flagged by the regulator. The company linked the deterioration to the COVID-19 shutdown and said that, although permission to reopen was granted in December 2020, significant renovation was required. Coral Islands’ business had weakened to the point it could not meet sublease rent obligations, Athama added.

According to documents before the court, a compliance inspection in December 2023 identified arrears in some employee salaries, unresolved tax issues, maintenance needs across the property, and lapsed facility registrations. Athama told the court that operations ceased the day the ministry’s notice was served and that work has since focused on obtaining permits and closing compliance gaps.

The Tourism Ministry had allowed 15 days after the notice period for the issues to be corrected. Athama argues the notice itself breached terms of the lease agreement.

Issuing the temporary injunction in the ministry’s absence, the Civil Court said the matter was urgent and that Athama risked irreparable harm without relief. The order also states that the notice to terminate the agreement is to be “postponed until 2 October 2025” and that no enforcement action should proceed so as not to prejudice third-party rights. The plaintiffs are required to file a substantive motion within the timeframe set by the order.

Athama has held the island since August 1997 and told the court it has invested USD 56 million in Kihaadhuffaru over the past 28 years.