Diamond Naga Siu
A Spanish gas company has agreed to drop its $2 billion award confirmation suit against Egypt in D.C. federal court after the parties inked a settlement ending their years' long dispute over Egypt cutting off a natural gas plant's supply.
The International Centre for Settlement of Investment Disputes issued Unión Fenosa Gas SA the award against the Arab Republic of Egypt after finding that the state-owned gas company breached a contract by cutting off UFG's gas supply to its liquefied natural gas plant in Damietta.
U.S. District Judge James E. Boasberg on Tuesday accepted UFG and Egypt's Monday joint stipulation of dismissal, which said each party would handle its own attorney fees and costs. The settlement was agreed upon in early December.
"We and our client are very pleased that, after nearly eight years of arbitration in which UFG obtained notable results, the parties were able to reach a settlement that resolves all remaining disputes and allows UFG to recover damages for the breaches that precipitated the dispute," James E. Berger of King & Spalding LLP, counsel for UFG, told Law360 in an email Tuesday.
Larry C. Work-Dembowski of Cleary Gottlieb Steen & Hamilton LLP, counsel for Egypt, also expressed happiness with the settlement during a phone interview with Law360 Tuesday and said he was honored to be able to work on the case.
"It was an interesting and important case," Work-Dembowski said during the joint interview with his colleague Laurie Achtouk-Spivak in France.
"With the resolution, I think it allows both sides to move forward in a way that they're both content and happy with, and we're glad that the client reached a conclusion that they're happy with," he added.
UFG entered a gas supply agreement with state-owned Egyptian General Petroleum Corp. in 2000, locking in its natural gas source for at least 25 years. The Spanish gas company invested approximately $1.3 billion to build the largest single-train liquefaction facility in the world at the time.
But the Egyptian gas company began falling short on its supply obligations — favoring domestic purchasers, like the country's electricity sector — which pushed UFG to open arbitration in 2014. An ICSID tribunal found for UFG in August 2018, concluding Egypt was responsible for reducing and blocking the plant's gas supply.
UFG filed for award confirmation in October 2018, but Egypt appealed the award to an ICSID ad hoc committee in January 2019, which paused the suit until January 2020. Once the suit was allowed to resume, UFG reopened its push for confirmation.
The parties reached a tentative settlement in February 2020, but it fell through, prompting them to pause the suit again in June to try reaching another deal.
Unión Fenosa is represented by Jeffrey S. Bucholtz, Edward G. Kehoe, James E. Berger, Charlene C. Sun and Enrique J. Molina of King & Spalding LLP.
Egypt is represented by Matthew D. Slater and Larry C. Work-Dembowski of Cleary Gottlieb Steen & Hamilton LLP.
The case is Unión Fenosa Gas SA v. Arab Republic of Egypt, case number 1:18-cv-02395, in the U.S. District Court for the District of Columbia. The arbitration is Unión Fenosa Gas SA v. Arab Republic of Egypt, case number ARB/14/4, in the International Centre for Settlement of Investment Disputes.
--Editing by Janice Carter Brown.
SOURCE
The International Centre for Settlement of Investment Disputes issued Unión Fenosa Gas SA the award against the Arab Republic of Egypt after finding that the state-owned gas company breached a contract by cutting off UFG's gas supply to its liquefied natural gas plant in Damietta.
U.S. District Judge James E. Boasberg on Tuesday accepted UFG and Egypt's Monday joint stipulation of dismissal, which said each party would handle its own attorney fees and costs. The settlement was agreed upon in early December.
"We and our client are very pleased that, after nearly eight years of arbitration in which UFG obtained notable results, the parties were able to reach a settlement that resolves all remaining disputes and allows UFG to recover damages for the breaches that precipitated the dispute," James E. Berger of King & Spalding LLP, counsel for UFG, told Law360 in an email Tuesday.
Larry C. Work-Dembowski of Cleary Gottlieb Steen & Hamilton LLP, counsel for Egypt, also expressed happiness with the settlement during a phone interview with Law360 Tuesday and said he was honored to be able to work on the case.
"It was an interesting and important case," Work-Dembowski said during the joint interview with his colleague Laurie Achtouk-Spivak in France.
"With the resolution, I think it allows both sides to move forward in a way that they're both content and happy with, and we're glad that the client reached a conclusion that they're happy with," he added.
UFG entered a gas supply agreement with state-owned Egyptian General Petroleum Corp. in 2000, locking in its natural gas source for at least 25 years. The Spanish gas company invested approximately $1.3 billion to build the largest single-train liquefaction facility in the world at the time.
But the Egyptian gas company began falling short on its supply obligations — favoring domestic purchasers, like the country's electricity sector — which pushed UFG to open arbitration in 2014. An ICSID tribunal found for UFG in August 2018, concluding Egypt was responsible for reducing and blocking the plant's gas supply.
UFG filed for award confirmation in October 2018, but Egypt appealed the award to an ICSID ad hoc committee in January 2019, which paused the suit until January 2020. Once the suit was allowed to resume, UFG reopened its push for confirmation.
The parties reached a tentative settlement in February 2020, but it fell through, prompting them to pause the suit again in June to try reaching another deal.
Unión Fenosa is represented by Jeffrey S. Bucholtz, Edward G. Kehoe, James E. Berger, Charlene C. Sun and Enrique J. Molina of King & Spalding LLP.
Egypt is represented by Matthew D. Slater and Larry C. Work-Dembowski of Cleary Gottlieb Steen & Hamilton LLP.
The case is Unión Fenosa Gas SA v. Arab Republic of Egypt, case number 1:18-cv-02395, in the U.S. District Court for the District of Columbia. The arbitration is Unión Fenosa Gas SA v. Arab Republic of Egypt, case number ARB/14/4, in the International Centre for Settlement of Investment Disputes.
--Editing by Janice Carter Brown.
SOURCE
