The most relevant updates from Middle East and Africa from the global International Arbitration and ADR practice group at Garrigues.
New ISCID claim filed against Algeria for urban park development
On 8 April 2018, ICSID registered a new case (Société des Parcs d’Alger and Emirates International Investment Company LLC v People’s Democratic Republic of Algeria (ICSID Case No. ARB/18/11) in a claim brought by Emirates International Investment Company (EIIC) and its subsidiary Société des Parcs d’Algiers against Algeria in relation to a contract for the development of a US$5 billion urban park. According to the ICSID website, the claim is being brought under a contract between the parties, though Algeria does have a bilateral investment treaty with UAE that has been in force since 2002.
Saipem settles with Sonatrach
Italian construction group Saipem has reached a deal with Algerian state oil and gas company Sonatrach to settle four ICC arbitrations worth billions of euros over projects that Italian prosecutors allege were procured through bribery. The agreement resolves disputes over four construction projects in Algeria that had been playing out in separate ICC arbitrations seated in Paris. Details of the cases were disclosed in Saipem’s interim financial report for 2017.
Turkish investor files ICSID claim against Azerbaijan for sewage project
Turkish businessman, Cem Selçuk Ersoy, has filed an ICSID claim against Azerbaijan alleging that his investment in a sewage collection project was expropriated by the state. The claim is understood to be for US$60 million is being brought under the Turkish-Azerbaijan bilateral investment treaty.
Threat of ICSID claim against Gabon for alleged expropriation of water and electricity assets
A Gabonese subsidiary of French environmental services group Veolia, Société d’Energie et d’Eau du Gabon (SEEG), has launched an ICSID conciliation against Gabon after the “brutal expropriation” of its local water and electricity assets because of alleged pollution – and says it may turn to arbitration if the dispute is not resolved.
US enforcement proceedings against Ghana succeed
A US court has confirmed a UK-registered energy company’s petition to enforce an award against Ghana arising from a dispute over the refurbishment of a power barge. On 22 March 2018 the US District Court for the District of Columbia confirmed the US$11.75 million award in favour of Balkan Energy Limited on the basis of the New York Convention. With costs and interest, the award is worth US$13.4 million
Mauritius prevails in a US$1 billion investment arbitration filed by a dual national
In an award dated 6 April 2018, a tribunal at the Permanent Court of Arbitration declined jurisdiction over a US$1 billion claim filed by a French-Mauritian businessman against Mauritius on the basis of his dual nationality. Whilst the tribunal acknowledged that the claimant had made “substantial investments” in Mauritius and that dual nationals are not explicitly excluded from the protection of the France-Mauritius bilateral investment treaty, it also noted that article 9 of said treaty requires state parties to include an ICSID arbitration clause in any investment contracts with protected investors under the treaty. Thus, the tribunal ruled that, since the ICSID Convention excludes claims brought against contracting states by their own nationals, France and Mauritius “must have implicitly, but necessarily, excluded French-Mauritian dual nationals from the scope of the [Treaty]”. Overall, the permissibility of claims by dual nationals remains a controversial issue in investment arbitration.
Morocco faces ICSID claim for alleged unfair treatment on oil prices
On 14 March 2018 ICSID registered the claim by Corral Morocco Holdings (CMH), a Swedish subsidiary of Corral Petroleum Holding owned by Saudi Sheikh Mohammed Al Amoudi, brought under the 1990 Sweden-Morocco bilateral investment treaty. CMH, which owns a majority stake the only oil refinery in Morocco based in the port city of Mohammédia, seeks to recover damages as the refinery ceased operating in August 2015 in the wake of the global crash in oil prices.
US District Court petitioned to enforce mega-award against Nigeria
BVI engineering and project management company, Process and Industrial Developments (PID), filed a petition on 16 March 2018 with the US District Court for the District of Columbia to enforce a final award that it obtained last year ordering the Nigerian government to pay US$6.6 billion plus interest for repudiating a gas supply and processing agreement. The company says the interest on the award is already worth more than US$2.3 billion and that it continues to accrue at a rate of US$1.26 million per day.
Statoil and Chevron seek to enforce Nigerian oil award in the US
Norway’s state oil company Statoil and its partner Chevron have asked a US court to confirm a US$1 billion award against the Nigerian National Petroleum Corporation after it was annulled last year at the seat of arbitration in Nigeria. On 16 March 2018, Statoil and Chevron subsidiaries filed a petition with a New York district court, asking it to enforce a US$1 billion award issued in 2015 by a tribunal majority.
Royal Dutch Shell hit with US$600 million claim
Royal Dutch Shell is facing a US$600 million claim brought by Nigerian oil company, Neconde, which accuses Shell of producing oil from a block in which it no longer had an investment. Neconde says Shell continued to take oil from the OML 42 oil field in the Delta State of Nigeria, even though Shell had already sold its interest in the field to Neconde. It also accuses Shell of failing to return profits arising from the oil. OML 42 is located onshore in the Delta state of Nigeria and has seven fields that mostly produce oil. The first field began production in 1969, but security issues forced OML 42 to shut down in 2006. Shell rehabilitated and re-opened two of the fields five years later.
OHADA welcomes arbitration law reform
A revamped act governing arbitration in the 17 African states of the Organization for the Harmonization of Business Law in Africa (OHADA) has entered into force, with new provisions on investor-state arbitration and strict time limits for recognising and enforcing awards. The revised Uniform Act on Arbitration came into effect on 15 March 2018, five months after it was approved by OHADA’s council of ministers in Conakry, Guinea. It is the first time the act has been updated since it was adopted in 1999.
The act enters into force alongside a new Uniform Act on Mediation and an updated version of the arbitration rules for the Common Court of Justice and Arbitration (“CCJA”), which administers and oversees OHADA arbitrations from Abidjan in Ivory Coast.
OHADA was established in 1993 and comprises states mostly from francophone central and western Africa. Its aim is to foster economic development by harmonising its members states’ business laws.
South Korean engineering group faces Qatar Petroleum ICC claim
Barzan Gas, a subsidiary of Qatar Petroleum has launched a US$2.6 billion ICC claim against South Korean engineering group Hyundai Heavy Industries (HHI) over the cost of pipeline repairs for an offshore natural gas project. HHI signed a US$900 million deal in 2011 to build and install pipelines for the offshore section of the Barzan Gas Project, a natural gas facility located 80 kilometres northeast of the Ras Laffan Industrial City in Qatar. After construction was completed in 2015, Barzan claimed to have found a gas leak in one of its upstream pipelines. The company now wants the entire pipeline, which HHI had built from carbon steel, to be replaced with corrosion-resistant alloy.
Sudan has acceded to the New York Convention
On 3 April 2018 the United Nations reported that Sudan has become the 159th state to sign the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, which will turn 60 in June this year. Being the only Arab state with a common law-based legal system, Sudan enacted a new arbitration law in 2016 and, with this accession, Sudan hopes to enhance increased foreign investment that may help restore its economy, while it shows Sudan's acceptance of the process of international arbitration.
ONGC files claim against Sudan
A unit of India’s largest oil and gas company, Oil and Natural Gas Corporation (ONGC), has filed a US$98.4 million claim against Sudan to recover money lost from an oil project hit when South Sudan broke away from the country in 2011 – with further claims likely. It is understood that the foreign acquisition unit of the state-controlled ONGC has filed the claim over the lost oil dues and that it will be heard in London. It is further understood that this is the first arbitration claim ONGC has filed against any government.
New ICSID claim filed against the Gambia
The Gambia is facing its eighth case at ICSID after Swedish and Australian investors brought a US$35 million claim over the expropriation of their tiger-prawn farming business by the government of former president Yahya Jammeh. Swedish national Kurt Lennart Hansson and his Australian wife Martje Bolt Hansson are bringing the claim against the Gambia over the alleged unlawful expropriation of their aquaculture business without compensation. The claim, which was registered at ICSID on 28 March 2018, has been brought under the Gambia’s 2015 Investment and Expropriation Agency Act. It is the first time the act has been invoked as the basis for an ICSID claim.