Paris - A French court ordered defence giant Thales, which was also involved in South Africa's controversial arms deal, to pay the Taiwanese navy more than $500m on Thursday, rejecting the group's appeal against a 2010 arbitration ruling.
In April last year an arbitration panel employed by two parties to settle their differences found that the French firm had wrongly paid commissions to intermediaries to secure a huge warship contract.
Thales appealed the private panel's decision in a civil court, but on Thursday its complaint was thrown out, leaving it facing a bill of at least $591m plus interest and legal fees.
The French defence and electronics firm signed the original contract to supply Taiwan with six Horizon-class frigates in 1991. The deal specifically excluded the payment of sweeteners to go-betweens.
French Prime Minister Francois Fillon's office announced that the state would have to cover 72.5% of the massive bill.
France had guaranteed the "Bravo" contract.
An official said an emergency amendment to the government operating budget will now be sent to parliament in order to settle the matter.
Thales can still appeal the latest ruling - which was based not on a re-examination of the case itself but on the conduct of the arbitration - in France's top appeal court, the Court of Cassation.
It was not immediately clear whether it would do so.
The French government said on Thursday it would have to pay Taiwan 460 million euros after defence giant Thales lost an appeal over its wrongful payment of commissions on a warship order.