Desert line case


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An case between Desert Line Project (DLP) & Republic of Yemen
* the first case has a moral damage compensation...

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Desert line case

  1. 1. ICSID Case No. ARB/05/17 February 6, 2008 Desert Line Projects LLC v. The Republic of Yemen Aziza Ahmed Al-Mahrooqi
  2. 2. content • The parties • Summary of facts a-claimant claims b- respondent counterclaims • Legal consideration a-the jurisdiction of arbitral tribunal b-the merits • Award
  3. 3. The parties • The Claimant (and Counter respondent), Desert Line Projects L.L.C. (hereafter also referred to as "DLP") is a limited liability construction company organized under the laws of the Sultanate of Oman with its registered office at Airport Road, Al Auzaiba • The Respondent (and Counterclaimant) is the Republic of Yemen (hereinafter referred to as “Yemen”).
  4. 4. Summary of facts • From 20 June 1999 to 12 July 2000 the Parties concluded six contracts, for the construction of the roads in the Yemen. • By late 2003 the Claimant had completed all construction works except for outstanding works under Contract 4 and Contract 6. • On 10 November 2003 the Respondent recorded the amount of work executed pursuant to the Contracts. The Claimant asserted that this amount was incorrect. • On 5 January 2004 the Claimant wrote to the Yemeni Minister of Public Works, requesting payment of amounts due under the threat of suspending works.
  5. 5. Summary of facts • On 6 March 2004 works were stopped at the Al Mahweet site by a subcontractor and 15 armed individuals, demanding payment of outstanding bills and threatening the Claimant‟s personnel. • On 2 May 2004 the Claimant wrote to the President of Yemen, offering to complete work on the Site which interrupted, while withdrawing from the Sa‟ada and El Tour sites but the President of Yemen replied by a hand-written notation on the Claimant‟s letter as follows: ”Perform the works and don‟t worry; your rights will be paid pursuant to the evaluation of the executed works by a third technical neutral party”. • On 26 June 2004 the Parties - the Claimant being represented by its Chairman, the Respondent being represented by the Minister of Public Works and Highways - executed an Arbitration Agreement, “the Yemeni Arbitration Agreement”.
  6. 6. Summary of facts • In same year the Claimant wrote several times to the Respondent and to the Tribunal to complain about some clerical and calculation mistakes in the Award, but the respondent reply that the Award was final and binding on both parties and the final balance due pursuant to this Award should be paid by the DLS. • On 22 September 2004 the Respondent applied to Yemeni courts for the annulment of the Yemeni Arbitral Award, then the Sana‟a Court instructing that an action brought by the respondent seeking the annulment of the Yemeni Arbitral Award, then the Claimant complained to the Respondent about “harassment, threat and theft” committed by armed groups and requested its protection. • By late 2004 the respondent offering an amount as a final settlement but the claimant claimed that injustice and unfairness. •
  7. 7. Claimant claims • On 2 August 2005 the Claimant filed a Request for Arbitration before the International Centre for Settlement of Investment Disputes (ICSID), whereby it asked that the Arbitral Tribunal to; “Declare that Respondent has breached the BIT and/or international law, and accordingly order Respondent to: • 1-Pay Claimant fair and equitable compensation for Claimant‟s works under the Contracts. • 2-Pay Claimant damages in an amount to be determined for the losses sustained by Claimant as a result of Respondent‟s breaches. • 3-Pay Claimant damages in an amount to be determined for loss of business opportunities and loss of reputation.
  8. 8. Respondent counterclaims • DLP‟s claims are dismissed because the Tribunal lacks jurisdiction under Art.1 of the Oman-Yemen BIT over all such claims. • To the scope the tribunal exercises jurisdiction in this case, Yemen is entitled to damages by the claimant resulting from; • 1-DLP‟s breach of its undertakings subscribed to in the Settlement Agreement. • 2-damages and/or set off for DLP‟s unfulfilled construction obligations.
  9. 9. Legal consideration • According to the facts and the claims and counterclaims of the parties the Arbitral Tribunal will deal with the questions before it: a- Does the Arbitral Tribunal have jurisdiction over this dispute? b- If so, did the Respondent violate its obligations under the BIT? c- Are the Respondent‟s counterclaims well founded? d- what damages should be awarded?
  10. 10. The jurisdiction of the arbitral tribunal • Respondent claims that the Investment had not been accepted by Yemen and Absence of investment certificate..!! • . The tribunal rejected this argument because: a-“any” objection to jurisdiction is required by the ICSID Rules to be made “as early as possible”. b-the object of the BIT as derived from is preamble which mentions that the object of the BIT „to create and maintain favorable conditions for capital investment‟ and to offer „mutual promotion and protection of such investment‟ .
  11. 11. The jurisdiction of the arbitral tribunal • The Respondent asserts that, according to BIT, investors are required to submit their disputes in one selected forum alone. • . The tribunal said : „that the Yemeni Arbitration and the present proceedings were brought pursuant to fundamentally different causes of action. The claims before ICSID are not said to arise under the terms of the contract. And at the time the Claimant initiated the Yemeni Arbitration, there was no violation of the BIT‟s substantive standards‟ •
  12. 12. The merits • The validity of settlement agreement, The Respondent asserts that the Settlement Agreement was a final settlement in discharge of all claims between the Parties. The Claimant retorts that the Settlement Agreement was obtained by duress, is null and void. The tribunal held: „The Settlement Agreement contravened the Respondent's obligations under Art. 3 of the BIT and, therefore, it is not entitled to international effect‟.
  13. 13. Award • The Claimant's claim based on moral damages, including loss of reputation, is granted in the amount of USD 1,000,000 . • The Claimant's claim based on the Yemeni Arbitral Award is YR 3,585,446,554