International Arbitration Newsletter - December 2020 | Regional Overview: Middle East and Africa

Egypt

Egyptian court upholds port project award

The Cairo Court of Appeal has upheld an ICC award requiring the Damietta Port Authority (DAP) to pay US$ 490 million to DIPCO, a Kuwaiti consortium. 

The arbitration pursued by DIPCO sought compensation by the Egyptian authority for terminating in 2015 a contract with DIPCO to build, operate and transfer a container terminal facility at the port of Damietta, on Egypt’s Mediterranean coast. 

The Court of Appeal considered that it did not have authority to review the arbitral tribunal’s decision on Egyptian law, denying any infringement of Egyptian public policy. Even though DAP argued that Egyptian law precludes the arbitrability of disputes originating from government contracts and concessions, the Court concluded that the agreement subject to the arbitration was a private law contract, thus applying principles of party autonomy and validating the arbitration agreement.

Equatorial Guinea

Equatorial Guinea faces enforcement of award

Swiss company Marseille-Kliniken AG (MK) has asked the US District Court for the District of Columbia to enforce an US$ 9.3 million award, issued by a Zurich-seated tribunal administered by the Swiss Chambers’ Arbitration Institution, against Equatorial Guinea.

The dispute stems from a 2009 management contract for a hospital located in the port city of Bata. The contract provided for MK to become the operator of the facility and included a two-stage take-over process. The Swiss company says it completed all its obligations under the first phase in mid-2010 but that the State then began to block its access to the newly installed software and IT system. In 2011, MK directors were removed from the premises and were told to leave the country within 48 hours. The Swiss company withdrew entirely from the clinic and the country soon after.

MK initiated a first arbitration against the State in 2011, which finally ended in a settlement agreement. The Swiss company then initiated the second arbitration, seeking the remaining 10% of the management fees and the unpaid management fees for the whole duration of the management agreement.

This second award granted fees up to the start of 2015 while deducting expenditures it calculated MK had saved. MK says that at current exchange rates the award is worth over US$ 9.3 million not including interest.

Libya

State defeated in treaty claim

Libya has failed in its challenge against a US$ 22 million ICC award before the Swiss Federal Tribunal who ruled in favour of a Turkish construction company, Etrak, after the Libyan Government had already failed to comply with a previous settlement.

The Swiss Court concluded that the ICC tribunal was entitled to decide on the validity of the settlement agreement and also that it had correctly upheld its temporal jurisdiction under the Turkey-Libya BIT.

Etrak had undertaken over 35 construction projects in Libya but had stopped works in the 1990s due to unpaid bills. After a Libyan court had recognised Etrak’s right, Libya’s Deputy Minister of Finance signed a settlement agreement with with the Turkish company in 2013. However, in 2016, Libya had made no payment and Etrak was forced to file a treaty claim.

The ICC tribunal upheld jurisdiction after determining that the 2013 settlement was valid under Libyan law and constituted a protected investment under the BIT. It also concluded that the State was in breach of the fair and equitable treatment standard of the BIT, thus ordering Libya to pay US$ 22 million. While the arbitration was still ongoing, Libya challenged the agreement before a Libyan court that ruled in its favour, annulling the settlement agreement.

In this context, Libya argued before the Swiss Court that the tribunal had erred when applying the kompetenz-kompetenz principle as it should have coordinated with the Libyan court in defence of “international comity”. The Swiss court rejected this argument as the question of the settlement’s validity had been brought first before the ICC tribunal. Finally, Libya argued that Etrak’s claims fell outside the temporal scope of the Turkey-Libya BIT, which only entered into force in 2011. The Court also rejected this argument explaining that the dispute concerned Libya’s failure to comply with the 2013 settlement agreement.