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

Egypt

Egyptian appeal court upholds convictions of two arbitrators

The East Cairo Court of Misdemeanour Appeals rejected an appeal by Egyptian arbitrators Mohammed Said Hasanein and Abul-Ella Al-Nimir against their convictions for attempted fraud and forgery in connection with a US$18 billion award against Chevron.

The court ruled that Hasanein had forfeited his right to appeal after failing to post bail or appear at the hearing. While both men were originally sentenced to three years in jail, the court agreed to commute Al-Nimir’s sentence to one year.

The men were among five individuals convicted by the El-Nozha Misdemeanours Court in February in connection with the issuance of the award under the auspices of the International Arbitration Centre (IAC), an institution based in Cairo.

The IAC tribunal rendered the award 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 Saudi concession granted by their ancestors to the oil companies’ predecessor, Standard Oil of California. The claimants, who include 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.

Libya

London Appeal Court confirms arms award enforcement against Libya

The Court of Appeal in London has ruled that US-owned arms manufacturer General Dynamics can pursue enforcement of an ICC award against Libya without service through diplomatic channels, in light of the “exceptional circumstances” presented by the ongoing civil unrest in the country.

The court reinstated an earlier decision that allowed the arms maker to dispense with the 1978 State Immunity Act’s requirements that service of the enforcement proceedings on Libya take place through the UK Foreign & Commonwealth Office (FCO).

However, the Court of Appeal said that the arms maker should not begin enforcement until permission to appeal to the Supreme Court is finally disposed of.

General Dynamic’s UK subsidiary seeks to enforce an award worth £16 million plus interest and costs issued in 2016 by a Geneva-seated ICC tribunal in a dispute concerning a US$85 million supply contract that General Dynamics and Libya signed in 2008 for the supply and installation of a communications system for tanks and other armoured vehicles, to be used by an elite force of the Libyan army loyal to Libya’s then leader Muammar Gaddafi.

Following the Arab Spring uprising in 2011, a civil war broke out in Libya in which Gaddafi was killed and his 42-year regime was overthrown.  

General Dynamics originally filed for ICC arbitration at the end of 2011, alleging that Libya had not met financial obligations set out in the agreement. The company later withdrew its claim after the state caught up on payments. It filed a second claim in 2013 after the state drew on letters of credit provided by the contractor. In its award, the ICC tribunal ordered Libya to pay the amount drawn down under the letters of credit.

Kenya

Kenyan state-owned company beats most of LCIA claim from UK Cluff Geothermal Company and partner Great Rift Drilling

An LCIA tribunal has issued an award requiring state-owned Geothermal Development Company (GDC) to pay just under US$3 million in damages and interest to the UK’s Cluff Geothermal Company and its Kenyan partner Great Rift DrillingKenyan, defeating the bulk of the US$26 million LCIA claim brought by claimants over debts owed for drilling geothermal wells.

The dispute relates to a US$41 million contract awarded to Cluff in 2013 to drill 20 wells at a geothermal field in the caldera of Kenya’s Menengai Crater volcano, located in the Great Rift Valley in the country’s southwest. Steam generated from the wells is intended to be sold to three privately owned geothermal power stations under construction.  Cluff stopped working on the project in 2015, saying that GDC owed money from unpaid invoices. It filed the LCIA claim along with its subsidiary two years later, claiming US$26 million.

The tribunal is said to have ruled GDC should pay US$2.3 million in invoices for work done and US$600,000 in interest.