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

Djibouti

Djibouti ordered to restore DP World’s rights over a major port facility on the Red Sea

A sole arbitrator in a London Court of International Arbitration (LCIA) arbitration between DP World and Djibouti over the Doraleh Container Terminal (DCT) has given the African country two months to restore DP World’s control of the facility or pay damages.

In 2006, DP World signed a concession agreement with Djibouti to build and operate the DCT during 50 years. However, in 2018, the African country agreed to the seizure of DP World's port after passing a law that allegedly empowered Djibouti to terminate infrastructure agreements.

As a result of Djibouti’s seizure of the DCT, Dubai’s state-owned company DP World filed a claim against Djibouti in 2018 before the LCIA. This recent order follows the partial award issued by the arbitrator in which he considered the seizure of the port illegal.

Egypt

Stay of enforcement on US$2 billion award against Egypt lifted by ICSID committee

The failure of the Egyptian state to pay the security required by the ICSID annulment committee to ensure payment of the US$2 billion award won by Union Fenosa Gas (UFG) joint venture in the event that Egypt’s application for annulment does not succeed has led the committee to lift the stay of enforcement of the award.

The award issued in August 2018 ordered Egypt to pay the UFG joint venture –composed of Spanish Naturgy and Italy’s Eni at 50%–, the amount of US$2 billion derived from investments made, through a share purchase agreement, in a liquefied natural gas plant located on the Mediterranean coast of Egypt.

In January 2019, Egypt sought the annulment of the award on the grounds that UFG had taken advantage of improper contacts to win the contract for the construction of the plant. These allegations had previously been ruled out by the majority of the tribunal, which found that there was no evidence of payments or influence on third parties that would raise suspicions of the alleged corruption.

Initially, this petition for annulment filed by Egypt led the ICSID annulment committee to grant the stay of enforcement of the award. However, the committee requested Egypt to provide a guarantee to ensure prompt compliance with the award in case the annulment was not successful, a request that Egypt has notmet.

Congo

Congo’s state mining company settles ICC claim against Chinese company over a mining venture

The Congolese state mining company Gécamines has decided to amicably settle its ICC claim against subsidiaries of the Chinese Jinchuan Group (“Jinchuan”) in connection to the dispute over the Ruashi copper mine. Jinchuan subsidiaries have finally agreed to pay US$25 million in order to settle the dispute, but without assuming any liability.

In the claim filed in 2017, Gécamine initially claimed US$100 million in unpaid royalties and fees from the joint venture operating the mine, which was composed of Ruashi Hodings, Jinchuan subsidiary, and Gécamines, but the claim was later increased to US$150 million.

The agreement will not only terminate the arbitration, but also amend the joint venture agreement existing between the Chinese and the Congolese firms with the aim of “clarifying and conforming” the clauses for the calculation of royalties to be paid to Gécamine and any additional mineral content fees that may be payable in the future.

Tanzania

Tanzania threatened with three gold mining licenses claims  

Three companies (Canadian Winshear Gold and Montero Mining and Exploration, and UK Ntaka Nickel Holding Company), have threatened to file investment treaty claims against Tanzania over legislation revoking a number of mining licenses.

The three companies have announced the filing of the notice of intent on the Government of Tanzania under the bilateral investment treaties over their investment in different projects in various mines over Tanzania.

The disputes derive from the “retention licences” that the three companies use to operate its mines in Tanzania. These “retention licences” are a category of licence granted by the government to mining companies who identified valuable mineral deposits that could not be immediately developed due to technical constraints, adverse market conditions or other economic factors. These retention licences were revoked by the Mining Regulations adopted by Tanzania in January 2018, which govern the transfer of all rights issued under those licences to the Government of Tanzania.