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The Australian umpire was reinstated by the ICC at its Executive Board meeting in Dubai on Tuesday.
ICC sources said the outgoing ICC CEO Malcolm Speed briefed the members, at its Executive Board meeting, about the possible legal challenges from Hair's lawyer, if he was not reinstated.
"The CEO pointed out that ICC had already spent around USD one million on legal costs after Hair filed a racial discrimination case last year against his suspension from supervising Tests and one-dayers despite being on the Elite panel of umpires," one source said.
"Speed said, despite an out-of-court settlement, there were indications that Hair's lawyers intended to initiate more court proceedings if he was not re-instated and this would have cost the ICC more and also forcing some of its top officials appear in the witness box," the source added.
The source said the logic even convinced Pakistani representative Nasim Ashraf and it was decided unanimously that Hair should be re-instated, but only for the next 12 months.
"The ICC Board felt that the ICC was in a weak position as per the brief prepared by its lawyers, on the issue.
"So it was decided that his contract be renewed but only for 12 months and he will be given minimum number of postings when possible. The Executive Board felt that this was the best way to close this chapter," the source said.
The source added that the cricket Boards from Pakistan and Sri Lanka agreed only on condition that Hair would not be allowed to supervise matches, involving their countries.
Meanwhile, former PCB Chairman Shaharyar Khan dismissed the ICC reasoning that that Hair had a strong case to challenge his suspension.
"I don't think so. A lot of details in the ICC adjudicators hearing didn't reflect well on Hair and secondly the fact that he demanded compensation immediately after the Oval Test to step down also went against him.
"There was strong legal ground to accept any legal challenge from his (lawyers) team," Khan said.
Khan was in-charge of Pakistan cricket affairs when the row with Hair broke out during the Oval Test in 2006.
He said he would be writing on the issue very soon and will bring out undisclosed details about the Australian umpire.

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