In a groundbreaking victory for Spanish gas company Unión Fenosa Gas (UFG), King & Spalding’s international arbitration team has secured a historic award of approximately US$2.2 billion, including interest and legal costs, against the Arab Republic of Egypt.
The arbitration was brought under the Spain-Egypt Bilateral Investment Treaty before the World Bank’s International Centre for Settlement of Investment Disputes (ICSID). The award is the largest ever rendered by an ICSID tribunal.
UFG filed its ICSID case in 2014, claiming that Egypt had unlawfully restricted gas supplies to a liquefied natural gas plant it had built at the port of Damietta. The tribunal found Egypt liable under the Bilateral Investment Treaty for violating its duty to protect the delivery of gas under a gas supply agreement between the State-owned Egyptian Natural Gas Holding Company (EGAS) and UFG. The tribunal also rejected Egypt’s allegations of corruption, as well as its state of necessity defense based on the 2011 Egyptian Revolution.
King & Spalding partner Doak Bishop states, “For many years, our client Unión Fenosa Gas has been deprived of vast quantities of Egyptian gas that were promised for delivery to the liquefaction plant that UFG built in Egypt at a cost of US$1.4 billion. We are pleased that the tribunal has now confirmed Egypt’s responsibility for this injury to our client’s investment as a result of Egypt's violation of its undertaking not to interfere with the performance of the parties’ agreement. We are also gratified by the tribunal’s finding that there was no evidence of the corruption that Egypt belatedly raised in an attempt to avoid liability.”
This victory highlights King & Spalding’s world-leading expertise in handling the most complex and significant international arbitrations, and builds on our track record of success for our clients, including in the energy and natural resources sectors.
The King & Spalding team was led by partners Doak Bishop, James Castello and Edward Kehoe, along with counsel Isabel Fernandez de la Cuesta and David Weiss, senior associates Aloysius Llamzon and Sara Burns, and associates Rami Chahine, Sara McBrearty, Anisha Sud and Ginny Castelan.