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“Sham” Cairo award - ICC seeks to intervene

03 January 2019

“Sham” Cairo award - ICC seeks to intervene

The ICC International Court of Arbitration has asked a US court for permission to file an amicus curiae brief in support of Chevron’s attempts to prevent enforcement of a US$18 billion award that the energy company alleges was issued by a sham arbitral institution in Cairo.

In a petition filed on 20 December, the ICC Court asked the US District Court for the Northern District of California for leave to file the brief – suggesting that, as the “leading arbitral institution globally”, it can provide “unique information or perspectives that can help the court” in its consideration of the enforcement application by 39 Saudi and Egyptian claimants.

The ICC Court did not express a view as to the veracity of the facts alleged by the parties, saying this was for the courts to determine. However it said that if certain circumstances were proved, the Cairo arbitration would “bear little resemblance” to a typical arbitration process and “would fall woefully short of the safeguards that legitimate institutions typically uphold”.

It warned that allowing the invocation of the New York Convention to enforce awards tainted by a failure to respect the will of the parties, gross procedural irregularities, collusion, lack of due process and other misconduct would “undermine the goals of the convention and destroy confidence in the arbitral process.”

The President of the International Court of Arbitration of the International Chamber of Commerce Alexis Mourre tells GAR: “The ICC Court has for decades supported and defended the role that legitimate international arbitration processes play in a global system of justice. We are pleased to share with the US court the ICC’s unique perspective on how legitimate institutions operate.”

The ICC instructed a team from Debevoise & Plimpton in New York as external counsel for its amicus application.

The Saudi Arabian and Egyptian award creditors filed their enforcement application in June last year, seeking to collect on an award issued by the International Arbitration Centre or IAC in Cairo – an institution previously unknown to GAR which does not appear to have a website or public contact details.

The petitioners simultaneously filed an enforcement application in Houston against Saudi oil company Aramco, which they say is also liable under the award. The ICC Court has yet to file a similar motion to intervene in that proceeding and it is unclear whether it will do so.

The creditors – who include members of the Saudi royal family – allege they are heirs to a 1933 concession granted by their ancestors to a predecessor company of Chevron and Aramco, Standard Oil of California, and are owed some US$82 billion in lost rent and oil revenue for land that should have been returned to them after 60 years.

In June 2015 a tribunal chaired by Mohammed Said Hasanein of Egypt and including Mohamed Abdullah Alderi of Jordan and Abul-Ella Al-Nimir of Egypt as co-arbitrators ruled in their favour, following turbulent proceedings that saw the tribunal reconstituted on several occasions and a total of seven arbitrators involved at various times.

Among arbitrators who resigned from the case were prominent Egyptians Ahmed El-Kosheri and Mohamed S Abdel Wahab, who reportedly cited a lack of confidence in the IAC’s ability to administer the arbitration and said misrepresentations had been made to them during the appointment process.

Another Egyptian arbitrator who was appointed by the centre to replace Abdel Wahab, the deputy chairman of Egypt's prosecution board Abdul-Nassir Mohammed Khattab, resigned after making an excuse about having to attend to "formalities" following the death of his boss.

Following these resignations, the original chair of the tribunal, Egyptian Hamdy Abdul-Rahman Ahmed, determined he was permitted to issue an award alone under the arbitration clause of the concession agreement – issuing a four-page decision denying jurisdiction over the case in May 2015.

However, the IAC said this award had not been legally delivered to its management, paving the way for the reconstituted tribunal to uphold jurisdiction and issue the massive award against Chevron and Aramco.

In August last year, Chevron asked the California court to throw out the enforcement petition – supporting its motion with a scathing assessment of the case by its appointed expert Gary Born. Born stated that he had never encountered a case that “so completely and flagrantly disregards the basic norms of arbitral due process, regularity and legality.”

Since that filing, the Egyptian General Prosecutor has referred five individuals involved in the arbitral proceedings to trial, including the deputy chairman of the IAC, the three final members of the arbitral tribunal and the tribunal secretary.

In September, Aramco also filed a motion to dismiss the Houston enforcement proceedings that it faces – suggesting that the petition does not allege that the Saudi company was a party to any agreement to arbitrate, participated in the arbitration, or is a named respondent in the alleged award.

The petitioners have filed responses in both enforcement proceedings, arguing that the allegations of misconduct are “scandalous” and “libellous”.

In its proposed amicus brief, the ICC Court says it has an abiding interest in the integrity of arbitral proceedings and of the arbitral system as a whole, including the independence and impartiality of the administering institutions and tribunals.

In particular, it says that it has an interest in ensuring the New York Convention is not “abused to achieve results contrary to its provisions and purpose, and that arbitration is not used as a means to perpetuate fraud.”

Chevron was represented in relation to the arbitration by a team from Herbert Smith Freehills led by the firm’s new head of US international arbitration Christian Leathley and partner Craig Tevendale in London, as well as by Cairo law firm Ibrachy & Partners. In the California and Houston enforcement proceedings, Chevron is represented by Gibson Dunn & Crutcher, while Aramco is represented by King & Spalding in Houston.

Counsel to the Saudi and Egyptian claimants in the arbitration are unknown. In the enforcement proceedings, they have instructed law firms in Washington, Seattle, and Irvine, California.

Waleed Bin Khaled Abu Al Waleed Al-Quagani et al v Chevron Corporation et al

In the California and Houston enforcement proceedings 

Counsel to claimants

  • Chung Malhas & Mantel

Partner Edward Chung in Washington, Seattle

  • Law Offices of Nicole Jadelrab

Partner Nicole Jadelrab in Irvine, California 

Counsel to Chevron

  • Herbert Smith Freehills

Partners Christian Leathley and Scott Balber in New York

  • Gibson Dunn & Crutcher

Partners Anne Champion and Randy Maestro in New York

Counsel to Aramco

  • King & Spalding

Partners Robert Meadows and James Berger in Houston

Counsel to the ICC Court of International Arbitration

  • Debevoise & Plimpton

Partner Ina Popova and associates Meryl Holt, Berglind Birkland and Guilherme Recena Costa in New York

In the proceeding at the International Arbitration Centre in Cairo

Final tribunal 

  • Mohammed Said Hasanein (Egypt) (chair) (appointed by centre)*
  • Mohamed Abdullah Alderi (Jordan) (appointed by centre) **
  • Abul-Ella Al-Nimir (Egypt) (appointed by centre)***

* replaced Hamdy Abdul-Rahman Ahmed (Egypt), who left after attempting to issue a first award

** replaced Ahmed El Kosheri (Egypt), who was appointed by the Saudi claimants and withdrew early in the case

*** replaced Mohamed Abdel Wahab (Egypt), who was appointed by Chevron and withdrew early in the case and Abdul-Nasir Mohammed Khattab (Egypt), who was appointed by the centre to replace him but withdrew ahead of the first award

Counsel to claimants

Unclear from the award but their elected domicile is named as the Office of Dr Abdul-Halleem Mandoor in Cairo

Counsel to Chevron

  • Herbert Smith Freehills

Partners Christian Leathley in New York and Craig Tevendale in London (with partner Laurence Shore, until his move to Bonelli Erede & Pappalardo in Milan in 2017)

  • Ibrachy & Partners

Partner Mohamed Madkour (now deceased) in Cairo

  • Hesham Law Firm in Cairo 

Mohamed Hesham and Nader Hesham in Cairo (advising on criminal law issues)

 

 

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