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Libya’s Tripoli-based Ministry of Justice confirms Egypt court ruling annulling ‘‘Kharafi’’ US$ 1 bn 2013 arbitration case

bySami Zaptia
June 11, 2020
Reading Time: 2 mins read
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By Sami Zaptia.

(Tripoli Ministry of Justice).

London, 11 June 2020:

Libya’s Tripoli-based Ministry of Justice confirmed last week (3 June) that an Egyptian Court of Appeal in Cairo annulled the ‘‘Kharafi’’ US$ 1 bn arbitration case of 22 March 2013 against Libya.

The Ministry said that the arbitration ruling had obliged the Libyan state to pay damages to the company worth nearly US$1 billion, and its annulment is the culmination of a long judicial struggle waged by the Department of Cases over many years.

It will be recalled that an arbitration panel in Cairo had ordered Libya to pay nearly a billion dollars to Kuwaiti Kharafi company for the loss of 90 years income from a cancelled Tripoli (Tajura) tourism project.

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The damages had been awarded in arbitration proceedings organised by the Arab League. Since 1992, the Arab Convention on Commercial Arbitration has worked under the aegis of the League.

The Kuwaiti group, owned by one of the richest merchant families in the Gulf, had a $4-billion annual turnover at the time. It had agreed in 2006 to develop a $130-million Holiday Inn-branded resort in the Tajura area of Tripoli, to be completed in 2011.

Besides a 252-room hotel, it would have included 100 villas, a shopping mall, a convention centre, spa and 1.4 km of beach with a club and water sport facilities. When Kharafi established its subsidiary Sovereign Hospitality Holdings in 2008, the project was transferred to it.

Until the uprising, when the deal was apparently cancelled, the Kuwaitis said that they had invested about US$ 5 million in feasibility studies, design and management contracts. However, the major part of their claim was for the loss of profit which they put at LD1.2 billion, plus interest.

It was thought that this may be the first such ruling on loss of future income by the Arab Convention on Commercial Arbitration, which was in part designed to protect Arab investors in other Arab League countries.

The Kharafi group then went on to try to seize a Libyan plan in France in lieu of compensation which was rejected by a French court in December 2015. It also froze US$ 100 million belonging to the Central Bank of Libya in french bank which was again rejected by a French court in December 2017.

A senior government official had told the Libya Herald at the time, on the basis of anonymity, that if the award, with its key component for loss of future income, were allowed to stand, it would have been “a disaster”. Libya could have faced claims running in to hundreds of billions, the source had said.

 

Arbitration award against Libya to Kuwaiti Kharafi Group
1 US$ 30 million Compensation for ‘‘moral damages’’
2 US$ 5 million Representing the value of losses and expenses.
3 US$ 900 million Compensation for lost profits resulting from real and certain lost opportunities.
4 US$ 1.94 million Arbitration costs and expenses.
5 4% interest rate Shall apply to all amounts awarded from date of issuance of decision until full settlement
Total: 936, 940 million

 

 

Libya told to pay Kuwaiti group $1 billion for 90 years’ earnings loss on scrapped tourism project

 

Kuwaiti group tries to seize Qaddafi’s jet

 

CBL wins $100-million French court battle

 

French court releases Libyan plane from Kuwaiti Kharafi group grasp

 

Tags: CairoEgypt EgyptianfeaturedFranceKuwait's Al-Kharafi Construction Group
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