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

EGYPT

Egyptian gas company seeks award enforcement despite settlement

Egyptian gas company East Mediterranean Gas (EMG) filed a petition in the US District Court for the District of Columbia to enforce an ICC award ordering two Egyptian state entities EGAS and EGPC to pay it US$288 million for terminating a deal to supply gas to Israel, despite a recent settlement agreement involving some of its shareholders.

The underlying dispute relates to a gas sale and purchase agreement that arose out of a 1979 peace treaty between Israel and Egypt that allowed EMG to supply gas to customers in Israel via an undersea pipeline it had built and operated.The enforcement petition has been filed despite a settlement agreement whereby by some shareholders in EMG sold a minority stake to Israel’s Delek Drilling, Texas-based Noble Energy and the Egyptian East Gas Company, purportedly in return for an exclusive right to lease and operate the pipeline. The share purchase agreement included a provision that the selling shareholders in EMG “will waive any claim, action, award, decision, order or remedy they have against the government of Egypt and companies owned thereby in the context of the arbitration proceedings.”

ICC seeks to stop “sham” Cairo award

The ICC International Court of Arbitration has recently asked the US District Court for the Northern District of California for leave to file an amicus curiae brief in support of Chevron’s attempts to prevent enforcement of a US$18 billion award that the energy company alleges was issued by a sham arbitral institution in Cairo.The Saudi Arabian and Egyptian award creditors filed their enforcement application in June last year seeking to collect on an award issued by the International Arbitration Centre or IAC in Cairo. The petitioners simultaneously filed an enforcement application in Houston against Saudi oil company Aramco, which they say is also liable under the award. The ICC Court has yet to file a similar motion to intervene in that proceeding and it is unclear whether it will do so.

The creditors – who include members of the Saudi royal family – allege they are heirs to a 1933 concession granted by their ancestors to a predecessor company of Chevron and Aramco, Standard Oil of California, and are owed some US$82 billion in lost rent and oil revenue for land that should have been returned to them after 60 years. In June 2015 a tribunal ruled in their favour following turbulent proceedings that saw the tribunal reconstituted on several occasions and a total of seven arbitrators involved at various times. The IAC said this award had not been legally delivered to its management, paving the way for the reconstituted tribunal to uphold jurisdiction and issue the massive award against Chevron and Aramco.

LIBYA

Libya hit with UNCITRAL oil refinery claim brought by UAE investor

UAE investor Trasta Energy, a member of a joint venture with Libya’s National Oil Cooperation that operated Libya’s largest oil refinery, has recently requested UNCITRAL arbitration against Libya under the the 1981  Treaty of the Organisation of Islamic Cooperation (“the OIC Treaty”).

Trasta’s claim concerns the Ra’s Lanuf refinery on Libya’s Mediterranean coast. Libya Emirates Oil Refining Company (“LERCO”), took over the refinery in 2008 after it had allegedly suffered years of neglect owing to crippling international sanctions against the country.

Trasta accuses the state of a range of breaches of customary international law and the OIC Treaty. It claims that these breaches have caused it “progressive loss" and led ultimately to the expropriation of its investment. Trasta also seeks either restitution of the investment or damages and lost profits, including moral damages for injury to its reputation and harassment and persecution it says it has suffered.

MOROCCO

Morocco faced with ICSID claim from German scrap recycler

German scrap recycler Scholz Holding and German-incorporated parent company,  Scholz Recycling, recently brought a claim before ICSID against Morocco under the 2001 Germany-Morocco bilateral.The dispute relates to the purchase in 2016 of Scholz Holding by Chinese scrap metal recycler Chiho-Tiande Group. The company has a Moroccan subsidiary, Scholz Metall Marokko.

QATAR

Three prominent arbitrators convicted by a court in Qatar

The Lower Criminal Court in Doha has upheld charges against well-known arbitrators Sami Houerbi and Samir El Annabi of Tunisia and Nathalie Najjar of Lebanon and sentenced them in their absence to three years’ imprisonment. The convictions relate to the arbitrators’ decision to transfer a dispute they were hearing away from the jurisdiction of the Qatar International Centre for Conciliation and Arbitration (QICCA) and instead conduct the case as an ad hoc proceeding seated in Tunisia. The court found that the arbitrators had thereby participated in a criminal scheme to cause intentional harm to Sheikh Khaled Nasser Abdullah Al Misnad – an uncle to the current Emir of Qatar. The arbitrators, who are described in the judgment as “public officers”, were also found to have obtained “illegal benefits” from the scheme.

The convictions have been condemned by the international arbitration community, practitioners expressing shock and many noting the lasting harm likely to be done to Qatar’s reputation as an arbitral venue.