International Arbitration Newsletter - February 2019 | Regional Overview: Middle East and Africa

EGYPT

Egypt court convicts three arbitrators on sham award

An Egyptian Criminal court has convicted three arbitrators Mohammed Said Hasanein and Abul-Ella Al-Nimir of Egypt and Mohamed Abdullah Alderi of Jordan to three years’ imprisonment in connection with the issuance of a US$18 billion award against Chevron – following a criminal complaint by the US oil company that the arbitration was a “sham”. The court upheld charges of misappropriation by fraudulent means and forgery against arbitrators, and others including the executive director of the Cairo-based International Arbitration Centre (IAC), under whose auspices the award was rendered.

The award was issued in 2015 against Chevron and Saudi oil company Aramco, upholding claims brought by 39 Saudi and Egyptian nationals who say they are heirs to a 1933 concession granted by their ancestors to the oil companies’ predecessor, Standard Oil of California. The claimants – which included members of the Saudi royal family – said they were entitled to US$82 billion in lost rent and oil revenue for land that should have been returned to them after 60 years.

Two Egyptian businessmen seek to set aside ICDR award on Eurobond defualt

On 4 February 2019, the two Egyptian brothers and businessmen Ramy and Michel Lakah filed a motion with the US District Court for the Southern District of New York seeking to set aside an ICDR award that held them personally liable to pay US$194 million after their companies defaulted on Eurobonds bought by UBS and several other international banks.The final award was issued in November 2018 in favour of the holders of the bonds, which include Switzerland’s UBS, the national banks of Oman and Abu Dhabi and real estate merchant bank Island Capital.

LIBYA

Libya escapes bulk of a damages claim in airport dispute

An ICC tribunal has rejected the bulk of a €562 million claim against Libya over the construction of a new passenger terminal at Tripoli International Airport.The dispute relates to a claim brought by a consortium made up of Brazil’s Odebrecht, Turkish construction firm TAV-Tepe and Lebanon’s Consolidated Contractors Company (CCC) over the suspension of the project caused by the Arab Spring uprising in 2011, as they were covered by the force majeure clause in the contract.

The tribunal held  that the state is not liable for delays to the project caused by the country’s civil war, but did however order Libya to pay €124 million in unpaid invoices for work completed prior to the project’s suspension. As a result, the state’s total liability under the award is €74 million.

NIGERIA

London Court allows Nigeria to present arguments against award enforcement

On 21 December 2018 the Commercial Court in London gave an oral ruling granting that Nigeria permission to present arguments against the enforcement of a US$9 billion arbitral award despite having missed a filing deadline.British Virgin Islands entity Process and Industrial Developments (P&ID), seeks to enforce an award worth US$6.6 billion plus interest, said to be accruing at the rate of US$1.3 million per day.

The dispute arose from a 2010 contract in which P&ID agreed to build a gas-processing facility in the Niger Delta, with the state agreeing to provide wet gas from nearby fields over a 20-year period. P&ID invested US$40 million in the project but the plant was never built and no wet gas was ever delivered.

RWANDA

Rwandan state-owned company brings ICSID claim against Investor in power plant

On 17 January 2018, ICSID registered a contractual claim brought by the Rwandan government-owned Energy Utility Corporation Limited (EUCL) against KivuWatt, a Rwandan subsidiary of London-listed ContourGlobal, i.e. an investor and operator of a one-of-a-kind power plant on one of Africa’s Great Lakes.

The dispute seems to relate to the KivuWatt methane extraction and power generation plant based on Lake Kivu, a 1,000-square-mile lake that straddles Rwanda’s border with the Democratic Republic of the Congo. ContourGlobal signed a 25-year power purchase agreement requiring Rwanda to buy all available electricity generated from the project. Rwanda reportedly planned to sell any excess electricity generated to its neighbours. This case is one of the few examples of a State bringing an ICSID claim against an investor.

U.A.E.

Airline funding dispute to be heard by DIAC

The UAE-based low-cost airline Air Arabia is pursuing a claim against collapsed private equity group Abraaj before the Dubai International Arbitration Centre as it brings a criminal complaint against the group’s founder.

The dispute relates to the liquidation of Abraaj after other creditors commenced winding-up proceedings against it.  Air Arabia is among the group’s unsecured creditors, Abraaj having defaulted on a US$75 million loan. The airline, which at one stage was 17% owned by Abraaj, had previously disclosed an exposure of US$336 million to Abraaj through funds and short-term loans.