PORTLAND – The city of Portland must pay the former owner of the Scotia Prince ferry $1.2 million in a legal dispute involving a city-owned waterfront terminal, an arbitration panel ruled Friday.

Scotia Prince Cruises Ltd. had sought $164.5 million, claiming that mold growth, water leaks and ventilation problems at the International Marine Terminal destroyed its business. It abandoned its Portland-to-Nova Scotia route in 2005 after operating seasonally from 1970 to 2004.

The city and the company took the case to the American Arbitration Association, whose ruling is final.

Portland City Manager Joseph Gray said the ruling is a relief and upholds the city’s claims that it did all it could to fix the problems at the International Marine Terminal.

Officials with Scotia Prince Cruises could not be reached for comment. According to the Scotia Prince Web site, the Scotia Prince ship was sold in April and the company is no longer in the cruise business.

The International Marine Terminal is set to be replaced when the city builds a new Ocean Gateway terminal.