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

Gabon

Eurofinsa obtains a partial  award against Gabon in road project dispute

Spanish construction group Eurofinsa has seen an ICC tribunal dismissing the bulk of a €67 million contractual claim filed against Gabon relating to a road project, ordering Gabon to pay only €5.7 million, and ordering the group to repay an additional .€5.9 million it had received from Gabon as a start-up loan – resulting in a net award of around €200,000 in favour of the state.

The dispute concerned Eurofinsa’s local subsidiary Ceddex-Entraco contract with Gabon’s Ministry of Public Works to expand one of the state’s main highways just outside of capital Libreville. In 2017, Eurofinsa terminated the contract amid reports of the Ministry having financing issues. Eurofinsa filed a claim against the state later that year.

Kenya

Kenya loses dispute with Spanish contractor in electricity project 

Spanish construction group Abengoa and its ubsidiary Instalaciones Inabensa have reported a win in a €38 million UNCITRAL award against Kenyan state entity Kenya Electricity Transmission Company (Ketraco) in a dispute conducted under the 2010 UNCITRAL rules over a cancelled electricity transmission project. 

The dispute relates to a €32 million contract that Ketraco awarded to Instalaciones Inabensa in 2013 to build a 132-kilometre transmission line between Kenya and Uganda and expand a substation. The project was financed by the African Development Bank and is part of a larger project to build around 770 kilometres of transmission lines in various African countries.

In 2016, Ketraco terminated the contract, reportedly citing Instalaciones Inabensa’s non-performance.

According to Abengoa, the tribunal awarded it €30.9 million as a principal sum, €6.4 million in interest and €900,000 in costs.

Kuwait

US Court asked to assist enforcement in support of ICC award against Kuwaiti groups

South Korea’s Doosan Heavy Industries (Doosan) has applied before the a Northern District of Georgia court for permission to subpoena a former executive of a Kuwaiti private equity firm to enforce an ICC award against Kuwaiti transport and logistics group KGL.

The dispute relates to a cancelled container terminal project in Egypt and involves enforcement of an ICC award worth US$74 million obtained by Doosan against two affiliates of KGL, the Damietta International Ports Company (DIPCO) and its 29% shareholder, Kuwait Gulf Link Ports International (KGLPI).  

Doosan lodged a discovery application, seeking documents and testimony from Wael Salam, former Chief Investment Officer for the private equity arm of KGL.

The request is in aid of court proceedings in Egypt, where Doosan has already obtained precautionary attachments. According to Doosan, besides Egypt, Doosan says it is also contemplating enforcement proceedings in the United Arab Emirates, Kuwait and Oman, as KGLPI or its affiliates do business in each of those jurisdictions.

Mauritius

UNCITRAL tribunal rejects treaty claim against Mauritius

An UNCITRAL tribunal has rejected a US$12 million claim brought by two French investors, father and son Christian and Antoine Doutremepuich, against Mauritius over failed plans to establish a laboratory for DNA analysis.

The claim was filed under the 1973 France-Mauritius bilateral investment treaty and the arbitration was administered by the Permanent Court of Arbitration in The Hague. 

The dispute related to a flagship project to set up a DNA laboratory in Mauritius, as the state looked to enhance its forensic science capability. The claimants set up companies in Mauritius and made investments in the project. However, when an updated business plan was sent to the Prime Minister’s Office in 2016, the claimants said that the project was rejected without reasons, in violation of their rights under the BIT.

On subject-matter jurisdiction, Mauritius argued that the mere ownership of non-operating companies and pre-investment expenditures were not qualifying investments under the BIT. While the treaty does not define investments and only provides a non-exhaustive list of assets, the state said the “inherent” definition required a capital contribution, a significant duration and a sharing of operational risks – often referred to as the Salini test.

In its award, the tribunal agreed it was required to determine the objective meaning of “investment” with reference to the Salini test. It found that the claimants’ investment did not meet any of the three criteria.

UAE

Abu Dhabi appeal court upholds DIAC awards on oil & gas dispute

The Abu Dhabi Court of Appeal had dismissed an application made by local company Emirates International Energy Services (EMAS) to annul a pair of awards issued by the Dubai International Arbitration Centre (DIAC) in several claims against the engineering arm of Malaysian conglomerate Sime Darby Engineering (SDE)  over its decision to withdraw bids for seven oil and gas projects in the United Arab Emirates.

The awards had rejected EMAS’ US$11 million claim against SDE regarding claims under an agency agreement dated 2006, under which the UAE company would identify suitable projects in the country for its Malaysian client to bid for. The DIAC dispute arose in 2011 after SDE declined to participate in seven oil and gas projects in UAE worth a combined US$5.7 billion, withdrawing from the tenders shortly before the deadline.