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Wednesday, 15 June 2016

EGAS not required to pay SEGAS USD 270 mn, ICC arbitrator decides

EGAS is not required to pay the Spanish Egyptian Gas Company (SEGAS) USD 270 mn in arbitration, the International Chamber of Commerce (ICC)’s International Court of Arbitration decided. SEGAS runs the Damietta liquefaction plant, which is 80% owned by Union Fenosa Gas, and had filed a complaint with the ICC in 2013 alleging that “its state partner had failed to comply with contracts by halting gas supplies in 2012 and not making payments,” Reuters explains. It asked EGAS to pay USD 270 mn plus interest in compensation. EGAS was represented in the case by Shearman & Sterling, who said the ruling came in EGAS’ favour because the arbitrator “found that the claimant had assigned to a third party all of its rights under the relevant contract.”

Shearman & Sterling explain that “the tribunal … concluded that the claimant had absolutely assigned its rights to an offshore security trustee acting on behalf of a large consortium of banks. As a consequence of the assignment, the claimant could not seek to recover any amounts under the contract. In addition, the tribunal rejected the claimant’s attempt to salvage its claims by entering into a deed of reassignment with the lenders during the course of the arbitration.” Al Masry Al Youm has coverage in Arabic.

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