DCSIMG
23 Contingent liabilities and other financial obligations - Annual Report 2015 - DSM

23 Contingent liabilities and other financial obligations

The contingent liabilities and other financial obligations in the following table are not recognized in the balance sheet.

Table 1

 
2015
2014
     
Operating leases and rents
93
96
Guarantee obligations on behalf of associates and third parties
142
124
Outstanding orders for projects under construction
21
34
Other
4
27
     
Total
260
281

Guarantee obligations are principally related to VAT and duties on the one hand and to financing obligations of associates on the other. Most of the outstanding orders for projects under construction will be completed in 2016. Property, plant and equipment under operating leases primarily concerns catalysts, buildings and various equipment items.

The commitments for operating leases and rents are spread as follows:

Table 2: Operating leases and rents

Operating leases and rents
 
2015
2014
     
2015
-
52
2016
43
12
2017
5
2
2018
4
1
2019 and 2020
6
1
After 2020
35
28
     
Total
93
96
Litigation

DSM has a process in place to monitor legal claims periodically and systematically.

DSM is involved in several legal proceedings, most of which are related to the ordinary course of business. DSM does not expect these proceedings to result in liabilities that have a material effect on the company's financial position. In cases where it is probable that the outcome of the proceedings will be unfavorable, and the financial outcome can be measured reliably, a provision has been recognized in the financial statements and disclosed in note 19 Provisions.

During the year, an award was issued against DSM Sinochem Pharmaceuticals India Private Ltd. (DSP India) in a protracted arbitration case in India going back to 2004 involving a joint venture that DSP India had formed with Hindustan Antibiotics Ltd., which suspended its operations in 2003. DSP India is covered by an indemnity from Koninklijke DSM N.V. for this case. DSP India has made an application with the Civil Court in Pune (India) to set aside the arbitral award. The award amounts to approximately €18 million (excluding interest of 12% per annum). DSM has always viewed this case as unfounded and is of the opinion that the likelihood of the award being ultimately set aside is high. Therefore no liability is recognized in respect of this case.