On 27 March 2017, the Secretary-General of the Permanent Court of Arbitration (the “PCA”) designated an appointing authority in the investment arbitration between United Arab Emirates-based company DS Construction FZCO and Libya under the Agreement on promotion, protection and guarantee of investments among member States of the Organisation of the Islamic Conference (the “OIC Investment Agreement”).  The PCA’s designation breaks a stalemate caused by the failure of Libya to appoint an arbitrator and the subsequent failure of the Secretary-General of the Organisation of Islamic Cooperation (the “OIC”) to appoint the arbitrator on behalf of Libya.  The designation was made in accordance with the 1976 Arbitration Rules of the United Nations Commission on International Trade Law (“UNCITRAL”), which allow a party to the proceedings to request the Secretary-General of the PCA to designate a new appointing authority when the other party and an appointing authority previously designated fail to appoint an arbitrator.  The Secretary-General of the PCA designated as appointing authority on behalf of Libya French professor and arbitrator Pierre-Marie Dupuy.  Professor Dupuy appointed Mr Nassib Ziade, former ICSID Deputy Secretary-General.  Mr Ziade and the claimant’s appointee, Mr Stanimir Alexandrov, subsequently appointed Judge Bruno Simma—a former Judge of the International Court of Justice—as chairman of the arbitral tribunal.

The investment arbitration initiated by DS Construction FZCO against Libya in October 2016 arises out of a dispute involving claimant’s investments in the construction sector in Libya.  The OIC Investment Agreement provides for ad hoc arbitration between investors and states, without any reference to the UNCITRAL Arbitration Rules.  However, the claimant reportedly succeeded in arguing that the UNCITRAL Arbitration Rules—which are applicable under the Austria – Libya Bilateral Investment Treaty—also apply to arbitral proceedings under the OIC Investment Agreement by virtue of the operation of the Most-Favoured Nation clause contained in the latter instrument.

The PCA’s designation of an appointing authority in the arbitration between DS Construction FZCO and Libya could have significant consequences for other arbitral proceedings under the OIC Investment Agreement.  Claimants in other investment arbitral proceedings under the OIC Investment Agreement could be entitled to request the PCA Secretary-General to designate an appointing authority, if the respondent States and the OIC Secretary-General fail to appoint arbitrators.