International Arbitration Newsletter - October 2020 | Regional Overview: Middle East and Africa

ANGOLA

Dispute over Angolan power plant

General Electric (GE) has filed two ICC claims against Aenergy, an Angolan energy company. The African company accused GE of encouraging Angolan Authorities to terminate a power plant building contract. 

The core of the dispute is a US$ 1.1 billion concession given by Angola to Aenergy to build, operate and maintain several state-owned power plants. Aenergy, in order to fulfil its obligations entered into a contract with GE, agreeing to purchase industrial equipment to be installed in those plants. 

In 2019, the Angolan government decided to terminate the contract and Aenergy, for is part, filed a lawsuit against GE and Angola, as well as a LCIA claim in New York. Aenergy now seeks punitive damages amounting to US$ 550 million in compensation for the unilateral termination, which, according to Aenergy, was partly influenced by GE.

In response, Angola has claimed immunity under a foreign sovereign immunities act, whereas GE has denied Aenergy’s allegations and has rejected New York as a suitable forum.   

IRAN

Interim award upheld against Iran

UAE’s Crescent Petroleum was granted an interim award against National Iranian Oil Company (NIOC) in an US$ 18.6 billion dispute over a terminated gas supply contract entered in 2001.

Under the terms of the contract, NIOC agreed to supply gas to the city of Sharjah, UAE for a period of 25 years. The supply was intended to begin in 2005, but as yet NIOC has not complied with the agreement.

After the default, Crescent launched a series of arbitration proceedings seeking compensation for the damages caused by the breach. The first two UNCITRAL arbitrations accepted the validity of Crescent’s termination of the contract and its right to receive compensation. The current UNCITRAL arbitral tribunal with seat in Geneva has upheld this ruling, after NIOC challenged the award arguing the violation of its right to be heard. 

The tribunal has still to rule on whether NIOC is liable and whether Crescent is indeed entitled to damages for the entire period of the agreement.

GAMBIA

Settlement over Gambian offshore oil blocks

PetroNor E&P Ltd. (PetroNor), a Norwegian oil company, and the government of Gambia have reached an agreement to settle an ICSID claim regarding the offshore operation licences for two oil blocks located in Gambia’s shores. 

Under the settlement, PetroNor is reassigned the licence of one of the oil block as well as a 30-year lease for the block drilling, in exchange of giving up any claim regarding the other oil block, which was previously awarded to British Petroleum. 

This settlement brings an end to the three ICSID claims filed by African Petroleum, recently acquired by PetroNor, against the Gambian Authorities that had rejected the renewal of the drilling licences, arguing the company’s default of its terms in relation to an obligation to drill an exploration well.

TANZANIA

Tanzania faces claim filed by Australian mining company

Indiana Resources, an Australia-based mining company, has announced recently that two of its UK subsidiaries, Ntaka Nickel Holdings and Nachingwea, and its Tanzanian subsidiary had filed an ICSID claim for US$ 95 million against the Tanzanian government for expropriation of a nickel project following the revocation of several mining licenses.  

The Australian miner claims it obtained a retention license to operate in Tanzania on the nickel project, which was managed by its two UK subsidiaries together with a private equity fund in joint venture. In January 2018, Tanzania approved the Mining (Mineral Rights) Regulations, which abolished the retention licenses issued and transferred the rights under such licenses to the government. In December 2019, the Mining Commission of Tanzania launched a public tender for the area covered by the abolished retention license to be jointly developed. This tender provided for the condition that any successful bidder shall compensate the holder of the abolished retention license for its exploration costs. However, such compensation terms were revoked by the Mining Commission of Tanzania one day later.

The ICSID claim has been filed under the UK-Tanzania bilateral investment treaty with Indiana Resources maintaining that the Tanzanian government breached the fair and equitable treatment standard under the treaty and its obligation not to nationalize the company’s investments without paying any compensation.  

Other companies such as Canada’s Winshear Gold and Chile´s Montero Mining and Exploration have also threatened Tanzania with treaty claims relating to the same legislative reforms.