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

1. ICSID Case No. ARB/05/17
February 6, 2008
Desert Line Projects LLC v. The Republic of Yemen
Aziza Ahmed Al-Mahrooqi

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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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