Bangladesh no longer a party to Niko arbitration: ICSIDStaff Correspondent
The International Centre for Settlement of Investment Disputes on Tuesday said that it could not make Bangladesh a respondent to the arbitration over the two complaints filed by Canadian oil company Niko as it had no jurisdiction over the state.
In a ruling in the arbitration over the disputes between state-run Petrobangla and Canadian oil company Niko Resources on payment and compensation, it said, ‘It has no jurisdiction over Bangladesh, which therefore will no longer be a respondent in this arbitration.’
But legal experts said the arbitration involving state-run Petrobangla and its subsidiary Bapex as the respondents and Niko as the plaintiff would continue.
Niko in 2009 filed two complaints with ICSID against the two state-run organisations of Bangladesh and also the People’s Republic of Bangladesh.
One of the complaints said Petrobangla was not paying bills to Niko for the gas supplied from Feni field and the other complaint was whether or not Petrobangla could realise compensation for the damages due to explosion at Chhatak gas field in Sylhet.
The ruling said the tribunal would give separate orders for continuation of the proceedings pursuant to Arbitration Rule 41 (4).
On Tuesday evening, Petrobangla chairman Hossain Monsur at an emergency press briefing termed the ICSID ruling ‘victory’ for the Bangladeshi parties in the arbitration.
In 2008, Petrobangla filed a case with a local court against Niko claiming $106 million in compensation for the damages caused by two explosions in a span of five months at Chhatak field due to negligence and inefficiency of Niko.
In 2006, Bangladesh Environment Lawyers Association filed a public interest litigation against Niko and subsequently got an injunction order that barred Petrobangla from paying gas bills to the company until the compensation issue was settled.
Petrobangla had halted $35 million in payment of gas bill to Niko before the Canadian firm stopped gas production from the Feni field in May 2010.
Niko in 2009 had filed a petition with the High Court seeking payment of its gas bills.
But the court upheld the previous verdict and directed the government to refrain from making any payment to Niko until the case lodged by the government was resolved and then Niko went to ICSID challenging the legality of realising compensation from it.
The Canadian oil firm attained operatorship of the Feni field under the terms of a 2003 joint venture agreement with the state-run Bangladesh Petroleum Exploration and Production Company or Bapex, which gave it an 80 per cent stake.
The remaining 20 per cent stake was held by Bapex.
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