The Italian contractor sacked for delaying the Dock 1 regeneration project has started legal proceedings to retain the bank guarantees the Maltese government wants it to forfeit.

Finance Minister Tonio Fenech confirmed the legal action launched by Marinelli Costruzioni SpA over the remaining €575,000 the government wants to seize over the contractor’s failure to deliver.

The delay in the project was caused when Marinelli was sacked for abandoning the project that should have been concluded last May.

The Dock 1 embellishment project was announced in February 2008 when the government had applied for EU funds, which were approved in August that year.

A call for tenders was issued in May 2010. There were four bids, with the contract being awarded to Marinelli, which submitted the cheapest offer. The work started in January last year and was meant to be completed last May.

However, in March, Transport Minister Austin Gatt sacked the contractor for “unacceptable delays” and a fortnight later initiated legal proceedings against the contractor over breach of contract.

As part of its legal action, the government is seeking the forfeiture of nearly €1 million in bank guarantees.

Mr Fenech told Parliament Marinelli had made a bank guarantee of €957,000 when it was granted the contract. The government had withdrawn €382,816 and also sought to withdraw the remaining €574,224.49 but the contractor took court action in Padua to keep the money.

A Finance Ministry spokesman said the government had appointed a lawyer to represent it during court proceedings in Italy. He pointed out that the contractor had asked the court to stop the bank from passing on the funds guaranteed to the Director of Contracts.

The next court sitting in Italy is scheduled to be held in October.

In the meantime, the Dock 1 project is attempting to move ahead with the issue of a number of calls for tenders not to miss out on the EU funds. One of the tenders covered works on the quay along Dock 1 and works around the Cospicua Regatta Club.

The Contracts Department is expected to award tenders by the end of July with the whole project expected to be completed within one year from when the last tender is awarded – between July and September 2013.

The project aims to redesign the public areas and convert the site into a recreational and leisure space, improving access from the dock, both from the Vittoriosa and the Cospicua side.

Once all the projects in Cottonera are ready, there will be a continuous link along the Three Cities.