International Arbitration Newsletter October - 2018 | Regional Overview: Middle East and Africa

ALGERIA

Swiss Court dismisses ICC award annulment request won against Air Algérie

On 9 August 2018, the Swiss Federal Tribunal dismissed a request by Montreal-based Groupe SM International (SMI) for the partial annulment of the US$13 million ICC award against Air Algérie over the termination of a US$100 million contract.

The dispute relates to an Algerian-law contract with Air Algérie of 2011 for the construction of the airline’s new headquarters in a suburb of Algiers. The airline declared the contract terminated in the following month and ordered SMI to vacate the premises, but the company refused to leave for a further three and a half years.

In its final award, the ICC tribunal dealt with various claims and counterclaims, awarding SMI a net sum of 1.5 billion Algerian dinars (US$12.7 million). The company is understood to have claimed US$120 million in the case. Now the Swiss Federal Tribunal has not allowed SMI to overturn some of the arbitrators’ findings on damages.

EGYPT

Egypt hit by ICSID award in favour of  Spain’s Naturgy and Italy’s Eni         

According to a formal announcement made by Spanish Gas giant Naturgy (formerly Gas Natural Fenosa), Unión Fenosa Gas (UFG) –a 50-50 joint venture of the Spanish Gas giant with Italy´s Eni – had received a favourable award issued by an ICSID tribunal holding Egypt liable for failure to provide fair and equitable treatment under a claim brought under the in 2014 under the Spain-Egypt bilateral investment treaty.

The tribunal awarded US$2 billion (more than €1.7 billion) after taxes and before interest since it understood that the Egyptian government had decided to restrict gas supplies unilaterally and in a discriminatory fashion after state-owned Egyptian Natural Gas Holding Company (EGAS) cut off its gas supplies in the wake of the Arab Spring, citing energy shortages in the domestic market back in 2012.

Egypt faces ICSID treaty claim on cancelled Cairo city by Kuwaiti investors

On 19 September 2018, ICSID received the registration of a claim brought by 13 Kuwaiti investors- including International Holding Project Group and one Kuwaiti national- against Egypt at ICSID, under the 2001 Kuwait-Egypt bilateral investment treaty. The dispute relates to compensation claims regarding a cancelled building projected off the city of Giza, south of Cairo.Damages claimed are estimated in the region of US$15 billion. 

ISRAEL

Egypt and Israel to settle gas supply arbitrations

Israel’s Delek Drilling and Texas-based Noble Energy will buy a combined 39% stake in the operator of the pipeline, East Mediterranean Gas (EMG), an Egyptian company which is conducting several arbitration proceedings against the government of Egypt in connection with the termination of the transport of gas from Egypt to Israel.After the issuance of four arbitral rulings finding Egypt and its state-owned entities liable for repudiating a deal to supply gas to Israel via an undersea pipeline, the ongoing cases seem settled by way of this stake purchase.

LIBYA

Italian Gemmo wins commercial arbitration on hospital dispute with Libya 

Italy’s construction company Gemmo has won a €5.98 million commercial arbitration claim brought against Libyan-registered Peaktrade Holdings, also known as Libyan European Hospital (LEH) over a Libyan hospital project disrupted by the country’s civil war.

After obtaining the ward in February 2018 in an ad hoc arbitration conducted in English and governed by the Libyan Code of Civil and Commercial Procedure of 1953, the Italian constructor has successfully applied to a court at the arbitral seat in Benghazi for the default appointment of the respondent’s arbitrator, who did not participate in the proceedings and had no representation.

The claim relates to works carried out on a project to build a 25,000 square-metre hospital complex in Benghazi and defaults of payments by LEH, works that were disrupted six months before the outbreak of the Libyan civil war.

SAUDI ARABIA

Saudi Arabia faces Treaty claim from TV broadcaster BeIn

Qatari state-backed sports broadcaster beIN has filed a notice of arbitration under the UNCITRAL arbitration rules and the 1981 investment agreement between member states of the Organization of Islamic Cooperation in a billion-dollar investment treaty claim against Saudi Arabia over its failure to crack down on one of the world’s largest pirate television networks and other measures that followed the suspension of diplomatic relations between the two countries last year.

BeIn alleges that Saudi Arabia has imposed a scheme of “diplomatic, political and economic measures” against Qatar and Qatari companies since June 2017 – when Saudi Arabia, the United Arab Emirates, Bahrain and Egypt cut off diplomatic relations with Qatar over its alleged support of terrorism and alignment with Iran.

Tanzania

New Tanzania arbritation law bans ISDS arbitration

On 17 September 2018, Tanzania passed through the country’s National Assembly  a new law banning international arbitration as a method for resolving investor-state disputes with the country.The so-called Public Private Partnership (Amendment) Bill includes a provision that requires all investors in public-private projects (PPPs) to use local courts instead of international arbitration to resolve any and all disputes arising out of those contracts.

United Arab Emirates

Dubai Court of Cassation asked to decide on participation in arbitration proceedings

The Dubai Court of Cassation has been asked to decide on the question of whether or not participation in arbitration is sufficient to render the proceeding valid, after taking an extreme position last year in addressing the capacity to enter arbitration clauses.

Cassation Appeal 889/2016 dated 1 October 2017 involved an arbitration action brought by a sub-contractor against a main contractor claiming that it had satisfactorily completed works but had not been paid the money owed. There the court found that the authority to participate in arbitration proceedings cannot be conferred via a general power of attorney even where it has specific reference to arbitration.