International Arbitration Newsletter - May 2021 | Regional Overview: Middle East and Africa

SIERRA LEONE

Sierra Leone and Gerald International subsidiary settle their dispute

After nearly two years of legal battle, the Sierra Leone Government and Gerald International’s subsidiary in Sierra Leone, SL Mining, have announced an out-of-court settlement over a dispute triggered by the cancellation of the company's mining licence.

The miner subsidiary of the London-based commodities trader, which was accused by the government of violating its licence agreement by, among others, failing to pay royalty on exported iron ore, has agreed to pay US$ 20 million to the state and increase production at the site.

SL Mining acquired its licence in 2017 to operate the Marampa Iron Ore project. Marampa is believed to hold an estimated one billion tonnes of iron ore with a potential lifespan of 30 years. The mine has an output of two million tonnes per year and produces a high-grade iron ore concentrate branded “Marampa Blue”.

TURKMENISTAN

Turkmenistan wins US$ 500 million claim brought by Turkish construction company

The government of Turkmenistan has won US$ 500 million claim brought before  ICSID by Turkish businessman Muhammet Çap and his construction company Sehil.

The claim was brought under the Turkey-Turkmenistan bilateral investment treaty and  concerned 32 construction projects in Turkmenistan, including water and waste treatment plants, an iron and steel plant, schools and government buildings.

The claimants alleged they were impeded by delays and defaults by their contractual counterparties and by regulatory procedures, that they were entitled to additional compensation for works outside the scope of the contracts, and that they were unfairly subject to delay penalties, tax audits and court orders terminating the contracts. Their contractual counterparties argued that terminations and penalties were justified due to Sehil’s failure to perform its contractual obligations, defective works and non-completion.

The ICSID tribunal found that the claimants had not proven that alleged acts and omissions by the state led to the indirect expropriation of their investments. Therefore, it rejected all claims against Turkmenistan and held that Sehil’s contractual counterparties acted in the legitimate exercise of their contractual rights and in a commercial capacity, that Turkmenistan courts, tax authorities and prosecutors acted in accordance with Turkmenistan law and procedures and did not violate due process.

EGYPT

Egypt threatened with second claim by Finnish investor

Mohamed Abdel Raouf Bahgat, a Finnish businessman, has issued a notice of dispute under the Finland-Egypt bilateral investment treaty over alleged measures taken by the Egyptian government that would affect his 30-year concession to mine iron ore in the Aswan region and develop a related steel production facility.

Bahgat won an award against Egypt in 2019, which concluded that the actions taken by the state amounted to indirect expropriation and a failure to provide fair and equitable treatment and awarded Bahgat US$ 40 million plus interest for his sunk costs in building a steelworks and progressing the project.

In this second investment treaty claim, based on the measures taken by the state since the first award, Bahgat alleges that Egypt has carried out further expropriatory measures against his investment by denying that he has any ongoing rights in the project.