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

GUINEA

Brazil´s Vale awarded US$2 billion in mining dispute in Guinea

Brazil’s mining company Vale has been awarded nearly US$2 billion against BSG Resources, the Guernsey mining company founded by Israeli billionaire Beny Steinmetz in an LCIA claim over a mining project in Guinea that gave rise to allegations of corruption and fraud and the disqualification of a prominent arbitrator.

The Brazilian mining company says the LCIA tribunal upheld its claims that BSGR committed fraud and breach of warranty in inducing the Brazilian company to enter into a joint venture to develop a concession for mining iron ore in the Simandou region of Guinea.

Vale says it intends to pursue collection of the award.

JORDAN

London court grants anti-suit order against Jordan proceedings in port terminal dispute

The High Court in London has restrained French construction company Soletanche Bachy from seeking to invalidate its contract with Jordanian company Aqaba Container Terminal (ACT) through a Jordanian constitutional challenge in a dispute over a contract for works at a container terminal at Jordan’s port.

The judge argued that it was “just” that proceedings in Jordan be restrained because Soletanche had previously relied on the arbitration agreement to unsuccessfully claim damages against ACT in an ICC case.

The dispute relates to a 2009 contract to carry out infrastructure works at the Aqaba container terminal – a strategically important utility for the Aqaba Special Economic Zone (ASEZ) that serves as a major gateway for transit of cargo to and from surrounding countries. Soletanche was awarded the contract following a public tender by ACT, a joint venture between the Jordanian government-owned Aqaba Development Corporation and AP Moller Finance, the Swiss finance arm of Danish logistics group Maersk.

However, ACT terminated the contract with Soletanche in 2011, who commenced ICC arbitration seated in London, arguing that the termination was unlawful, while ACT counterclaimed for a declaration that the termination was lawful. In 2017, the arbitral tribunal ruled that ACT had validly terminated the contract and ordered Soletanche to pay around US$38 million in damages and costs.

KUWAIT

Spain's Alcosa files treaty claim against Kuwait on health services contract

Spanish entity Alcosa filed a notice of arbitration under the Spain-Kuwait bilateral investment treaty in an US$800 million UNCITRAL claim against Kuwait in relation to the state’s termination of certain health services contracts. 

The dispute relates to the investor´s stake in a Kuwaiti entity called Public Services Company (PSC), which was established in 1996 to provide governmental services on behalf of various ministries and state institutions in partnership with the private sector. 

In 2003, PSC entered into a partnership with Kuwait’s Ministry of Health to provide health services to foreign expatriates, including registration for public health insurance schemes and the issuance of public health insurance cards. Alcosa invested in PSC when it was privatised in 2017. In the same year, however, Kuwait’s Minister of Health cancelled various health services contracts with PSC, including those relating to expatriates. The investors argue the minister’s actions damaged their investment in PSC and breached their right to fair and equitable treatment under the BITs.

MOZAMBIQUE

Mozambican maritime companies face claims from Abu Dhabi shipbuilder

Abu Dhabi-based shipbuilder Privinvest has commenced arbitration against three Mozambican state-owned entities maritime security companies, ProIndicus, tuna-fishing company Ematum and shipyard operator Mozambique Asset Management (MAM)  under a number of supply agreements that it says the companies have breached in the wake of a probe by US authorities into an alleged US$2 billion fraud that has been called the “tuna bond” scandal.  

Privinvest is seeking US$200 million from MAM, but has not yet quantified its claims against the other entities and says that figure could rise. The arbitrations come in the wake of a fraud and money laundering probe by the US Department of Justice, which has already led to indictments against a Privinvest executive and employee and Mozambican government officials.

The probe relates to US$2 billion in loans that ProIndicus, Ematum and MAM took out to fund maritime projects and coastline protection in Mozambique. The state-owned companies hired Privinvest to provide equipment and services to complete those maritime projects.

UNITED ARAB EMIRATES

UAE faces ICSID claim in failed artificial archipelago project

UK businessman Shokat Mohammed Dalal has filed an ICSID claim against the United Arab Emirates under the UK-UAE bilateral investment treaty relating to the UAE courts’ annulment of an award in Dalal’s favour relating to the collapse of The World – a project to build an artificial archipelago of some 300 islands two miles from the emirate’s coastline.

In 2012, a tribunal ordered government-owned real estate developer Nakheel Properties to repay 57 million dirham (US$16 million) in deposits that Dalal paid to reserve three islands in the development. It seems that the UAE courts have subsequently overturned the tribunal’s award, though on what grounds remains unclear.

TANZANIA

Tanzania faces new treaty claim from former bank owners

Ayoub-Farid Michel Saab, one of the former owners of a bank in Tanzania that was shut down after US authorities accused it of money laundering, has filed an ICSID claim against Tanzania under the Tanzania-Netherlands bilateral investment treaty.

Saab, who apparently is invoking Dutch nationality and his brother are reportedly also Lebanese nationals and relied on the Lebanon-Cyprus BIT for a prior ICC claim against Cyprus.

The dispute apparently relates to FBME Bank, which the Saab brothers originally opened in Cyprus in 2003 before moving its headquarters to Tanzania. In 2014, the US Treasury’s Financial Crimes Enforcement Network (FinCEN) accused FBME of facilitating money laundering and financing terrorism and organised crime. It also said that at least one FBME customer was a front for a Syrian entity alleged to be proliferating chemical weapons. In 2017, Tanzania’s central bank shut down and liquidated FBME’s operations in the country.