The Bangladesh High Court has blocked a deal for a US firm to build a $500m (£342m) private container terminal in what would be the country's largest foreign investment project.

Plans to build the terminal at Petenga have been dogged by labour unrest over job losses at the nearby port of Chittagong.

Officials of the shipping ministry said the court issued an injunction on Wednesday, after a writ was filed accusing the government of not putting the deal out to open tender.

But a minister said the government had not done anything wrong in the tender process.

Tender controversy

Shipping Secretary Golam Rahman said a government panel and the Stevedoring Services of America (SSA) on Wednesday reached an understanding to build the new port.

"This is not all final yet. The government will engage a reputed international firm for a study on the sites for the terminals before signing the final deals," he said.

Mr Rahman added "there is no law that makes calling a tender mandatory for offering contract to any company".

"We have heard about the British company vying to build the terminals, but it never pursued the matter."

Britain's Port Venture Limited lodged a proposal in 1999 with the Chittagong Port Authorit for a private sector container Terminal at Patenga.

Mr Rahman said the SSA officials had now gone back to the US and would return in the middle of next month to finalise the negotiation.

Port plan

SSA also plans to build a land terminal at Pangaon near the capital Dhaka, ministry officials said.

The company is the largest terminal operator in the US and has a presence in over 150 locations worldwide including Chittagong, and also Kakinada and Dhamra in neighbouring India.

Chittagong, which handles 80% of Bangladesh's exports and imports, is 216 kilometres southeast of the capital, Dhaka.