News 18 Nov. 2020

Libya Obtains Historic Victory in Setting Aside of EUR452 Million Arbitral Award

New York, November 18, 2020 – In a historic decision, the Paris Court of Appeal yesterday set aside an award of EUR 452 million that had previously been issued against the State of Libya, after Libya’s legal team succeeded in proving the existence of “serious, specific and consistent” indications of corruption in the signing of the settlement agreement that originally gave rise to the award.

Sorelec, a French company, initiated an ICC arbitration against the State of Libya in March 2013 after a dispute arose in relation to the enforcement of an agreement entered into by the parties in 2003. When the arbitral proceedings had already reached an advanced stage, Sorelec submitted a document that it claimed to be a settlement agreement, on the basis of which the arbitral tribunal (composed of B. Hanotiau, E. Loquin and Y. Fortier as president of the tribunal) rendered a partial award on 20 December 2017. The terms of the settlement agreement provided that Libya had to pay Sorelec the amount of EUR 230 million within 45 days of service of the award, and that if Libya failed to do so, the arbitral tribunal would issue a final award ordering it to pay EUR 452 million. Since Libya did not pay within the required time, the arbitral tribunal issued a final award on 10 April 2018 ordering Libya to pay EUR 452 million to Sorelec.

Libya filed a set aside application before the Paris Court of Appeal against both awards in early 2018 on the basis that the alleged settlement agreement that had been validated by the arbitral tribunal was procured through corrupt means. On 17 November 2020, the Paris Court of Appeal issued decision No. RG 18/02568, annulling the partial award on the basis that there was sufficient corroborating evidence to show that the Minister who had signed the settlement agreement on behalf of the State had colluded fraudulently with Sorelec. Among the indications of corruption and illicit activity accepted by the court was the absence of involvement of the Libyan State Litigation Department (“SLD”) in the settlement negotiations, even though it was proven that the Minister in question was fully aware that the SLD was the sole body in Libya with the authority to conclude such an agreement. The court also pointed to the absence of any evidence of substantive negotiations prior to the signing of the settlement, and the fact that the agreement offered no obvious benefit to the State, as being critical indications of fraud. All these elements were taken into consideration by the Paris Court of Appeal, which noted that the general political uncertainty in Libya at the time the events took place created circumstances that were highly conducive to fraud and corruption.

The Court concluded that the partial award was contrary to the “French conception of international public order” and annulled it. With a second decision, No. RG 18/07347, issued the same day, the Court determined that the annulment of the partial award necessarily led to the annulment of the final award, since the latter related to the enforcement of the former.

Libya was represented in the annulment proceedings by Olivier Loizon and Laure-Anne Montigny of Viguié Schmidt & Associés and the appellate attorney Jean-Claude Cheviller, working with Ben Preziosi, Dr. Walid El Nabal, Edoardo Zucchelli and Loujaine Kahaleh of Curtis, Mallet-Prevost, Colt & Mosle LLP and under the supervision of the Head of the Libyan State Litigation Department, Dr. Khalifa El Gahmi.

To read the State of Libya's announcement in Arabic, please click here.

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