Malaysia is seeking compensation of 226 million euros (US$257 million) from a Norwegian defence firm after a deal to deliver a naval missile system was cancelled, despite the Southeast Asian country having paid about 95 per cent of the contract value.

The claim comprised 129.86 million euros in direct losses, including payments already made by the government, and 96.26 million euros for additional costs and consequential damages, Defence Minister Mohamed Khaled Nordin told parliament on Friday, as quoted by the Malay Mail newspaper.

“The actual additional costs, or ‘overrun costs’, to be borne by the government have yet to be finalised as they depend on the settlement method agreed upon and the replacement weapons system currently under evaluation,” Khaled said.

Malaysia signed a deal with Kongsberg Defence & Aerospace to procure Naval Strike Missiles for its navy’s littoral combat ships in 2018. It had paid nearly 126 million euros towards the deal and was expecting initial delivery in March when Norway abruptly withdrew its export licences for the deal.

In blocking the deal, Norwegian authorities cited a new policy of restricting sensitive defence exports to Nato members and their closest partners.

Though they said the cancellation was not directly targeted at Malaysia, it provoked a furious response from the country’s leaders.