The Australian Government has decided to pay $830m (€555m) to compensate French company Naval Group for terminating the Attack-class submarine programme.

The contract was terminated by the former government.

In a press statement, the Australian Prime Minister Anthony Albanese said: “The former government made the decision to terminate the contract based on advice about capability requirements for the Australian Defence Force, advice that was accepted by Labor in opposition.

“We have reached a fair and equitable settlement of €555m (around A$830m) with Naval Group.”

In April 2016, Naval Group was selected as the preferred design partner for the Royal Australian Navy (RAN)’s 12 Attack-class submarines.

This was followed by a strategic partnership agreement signed between Naval Group and the former Australian government in February 2019.

The company signed its first design contract in March 2019.

According to Naval Group, the decision to discontinue the Attack-class submarine programme was due to the Australian authorities’ plan to acquire nuclear submarines in collaboration with the US and the UK.

Together the three nations form a trilateral security pact known as AUKUS.

With the compensation to French company, the Australian government is now aiming to improve the relationships between France and Australia.

Anthony Albanese added: “Given the gravity of the challenges that we face both in the region and globally, it is essential that Australia and France once again unite to defend our shared principles and interests.

“I look forward to taking up President Macron’s invitation to visit Paris at an early opportunity, and to continuing to work closely with him as we deepen the strategic partnership between our nations.”