Summary

Source: icsid.worldbank.org

Members of the Tribunal
Neil Kaplan CBE QC SBS, Presiding Arbitrator
John Beechey, Co-Arbitrator
Toby Landau QC, Co-Arbitrator

TABLE OF CONTENTS

I. PROLOGUE
II. INTRODUCTION AND PARTIES
III. ARBITRATION CLAUSES
III.1 The PPA
III.2 The IA
III.3 The DOG
IV. PROCEDURAL HISTORY ON THE MERITS
IV.1 Jurisdiction
IV.2 The EDC Application
IV.3 Respondent's Objections to Claimant's Memorial on Quantum
IV.4 The Parties' Requests for Production of Documents and Further Written Submissions on the Merits
IV.5 The Main Hearing
IV.6 The Post-Hearing Phase
V. THE LOBIT ISSUE
V.1 Procedural History Relating to the Lobit Issue
V.2 Factual Background to the Lobit Issue
V.3 The Tribunal's Reasons for the Amended Lobit Decision
A. The Alleged Agency Relationship Between Mr Lobit/PDC and CPC
B. Mr Lobit's Status as "Trusted Adviser" to the Claimant
VI. THE SCIARONI AND BIT ISSUE
VII. FACTUAL BACKGROUND TO THE MERITS
VIII. THE DISPUTE IN BRIEF
IX. THE PARTIES' PRAYERS FOR RELIEF
IX.1 The Claimant's Requests
IX.2 The Respondent's Requests
X. THE PARTIES' POSITIONS ON THE MERITS
X.1 The Claimant's Position
A. The Claimant's Factual Submissions
1. The Respondent's Acts Prior to 2001
2. The Electricity Law of 2 February 2001
3. Other Events Subsequent to End 2000
4. The Repudiation of the Agreements
B. The Claimant's Legal Submissions
1. Introduction
2. The Legal Principles of Repudiation
3. KOC's and EDC's Conduct Amounted to Repudiation of the IA and the PPA
4. The Respondent's Incompatible Commitments to Buy Power from Vietnam
5. The Electricity Law
6. The Claimant's Force Majeure Argument
7. The Respondent's Liability for Damages
C. The Additional Claims
1. The Claimant's Additional Claim No. 1: Designation of EDC
2. The Claimant's Additional Claim No. 2: Liability of KOC for Cross-Defaults under the IA Caused by EDC's Material Breach of the PPA
X.2 The Respondent's Position
A. The Respondent's Factual Submissions
B. The Respondent's Legal Submissions
1. The Respondent's Claims for Rescission of the PPA and IA and Damages for the Claimant's Misrepresentations
2. The Respondent Did Not Breach the IA and/or the PPA
3. The Claimant's Claims under the DOG
4. The Claimant's Claims under Customary International Law
C. The Additional Claims
1. The Claimant's Additional Claim No. 1: Designation of EDC
2. The Claimant's Additional Claim No. 2: Liability of KOC for cross-defaults under the IA caused by EDC's Material Breach of the PPA
XI. DAMAGES
XII. THE TRIBUNAL'S ANALYSIS
XII.1 Overview
XII.2 The Agreements
A. The PPA
B. The IA
C. The DOG
XII.3 Analysis of the Factual Timeline
A. 1994 - April 1998
B. Amendment No. 1
C. The Bribery Allegation
D. Amendment No. 2
E. Jupiter
F. IFC Involvement
G. BHA Internal Dispute
H. Extensions Granted in 2000
I. Amendment No. 4
J. Notices of Default
K. Events Subsequent To Notices of Default
XII.4 Analysis of Claimant's Claims
A. Finance Minister's Resistance to the DOG
B. Bribery Allegation
C. Failure to Act on Legal Requirements for Financial Closing
D. EDC's Unwillingness to Proceed on Agreed Price and Technology and Its Interference with Lenders
E. The Vietnam PPA
F. EDC Renounced, Left in "Continuous Limbo" and Lobbied KOC to Cancel the C-4 Project
G. The Electricity Law
H. Financing
I. Designation of EDC
J. Termination
K. Conclusion
XIII. RESPONDENT'S COUNTERCLAIM, CLAIMANT'S CLAIM FOR DAMAGES AND MISCELLANEOUS OTHER POINTS
XIV. COSTS
XIV.1 Jurisdiction
XIV.2 Lobit Application
XIV.3 Merits
XIV.4 Costs of Proceeding
XV. AWARD

I. PROLOGUE

1. The history of Cambodia, for much of the recent past, has been unhappy and difficult.

This case concerns a bold project that followed the end of a bloody civil war. The Kingdom of Cambodia ("KOC" or "Respondent") was short of power. Without sufficient power generation the economy could not progress and take advantage of more stable times. American interests proposed a power generation project for Phnom Penh ("C-4 Project") with support at the highest levels in Washington. ..., supported the C-4 Project. But certainly at the beginning, others in the Cambodian government did not. However, the transaction documents giving rise to this dispute were executed. Financial closing never in fact took place.

2. Cambodia Power Company ("CPC" or "Claimant") contends that the deal did not reach fruition due to deliberate acts of KOC (or due to acts for which KOC is responsible) designed to scupper it. KOC for its part contends that it did all that was required of it, but that the project failed because the Claimant was inexperienced and, crucially, had entered into a power purchase agreement prior to securing financing - something which it never managed to do.

II. INTRODUCTION AND PARTIES

3. This case concerns a dispute submitted to the International Centre for the Settlement of Investment Disputes ("ICSID" or "Centre") on the basis of three agreements:

a. a Power Purchase Agreement, entered into among the Kingdom of Cambodia, Cambodia Power Company and Electricité du Cambodge on
March 1996, as subsequently amended ("PPA");

b. an Implementation Agreement, entered into between the Kingdom of Cambodia and Cambodia Power Company on 20 March 1996, as subsequently amended ("IA"); and

c. a Deed of Guarantee, entered into between the Kingdom of Cambodia and Cambodia Power Company on 27 March 1998 ("DOG").

4. The dispute resolution clause in each of the three agreements provides for arbitration between the signatory parties under the aegis of ICSID.

5. The Claimant is a Cambodian limited liability company incorporated and existing under the laws of the Kingdom of Cambodia. For the purpose of this matter, the Claimant's registered office is

6. CPC is a company wholly owned by. .., a Delaware corporation, which entered into the original contracts, the subject matter of this arbitration.

7. The Respondent is the KOC, a sovereign state, represented by the Ministry of Industry, Mines and Energy ("MIME"). For the purpose of this arbitration, the Respondent's address is...

8. The Claimant and the Respondent are hereinafter collectively referred to as the "Parties". The Parties' respective representatives and their addresses are listed above on page (i).

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IV. PROCEDURAL HISTORY ON THE MERITS

IV.1 Jurisdiction

15. On 22 March 2011, the Tribunal issued a Decision on Jurisdiction upholding its jurisdiction over claims against the Kingdom of Cambodia and declining jurisdiction over claims against Electricité du Cambodge ("EDC"). The Decision on Jurisdiction, which is annexed to this Award as Annex 1, contains at paragraphs 15-45 the procedural history in this arbitration leading up to the Decision. This Section provides the procedural history from the date of the Decision on Jurisdiction until the date of this Award, with the exception of the procedural history relating to a witness statement filed by the Respondent, which is set out in Section V.1 below.

IV.2 The EDC Application

16. The Decision on Jurisdiction concluded that the Respondent had not designated EDC as an agency or subdivision of the Respondent within the meaning of Article 25(1) of the ICSID Convention. This ruling prompted the Claimant to file an application, dated
March 2011, with a number of prayers of relief relating to the Tribunal's jurisdiction ratione personae over EDC ("EDC Application"). The Claimant sought, inter alia, that the Tribunal invite the Respondent to fulfil its alleged undertaking to designate EDC pursuant to PPA 16.3(b)(i) and 16.3(b)(iii)(A), as amended. According to the Claimant, the Tribunal had the power to compel the Respondent to designate EDC by ordering specific performance and that, once the designation was made, the Tribunal could acquire jurisdiction ratione personae over EDC in this arbitration.

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XV. AWARD

482. For the reasons stated above, the Tribunal unanimously decides that:

(i) The Respondent did not breach the IA, PPA or DOG directly or indirectly through the actions of EDC;

(ii) All of the Claimant's other claims are dismissed;

(iii) The Respondent's counterclaim is dismissed;

(iv) The Claimant shall pay to the Respondent USD 5,250,000 for the Respondent's legal costs and expenses in this arbitration, plus interest on this amount as from the date of dispatch of this Award at the rate of 2% per annum compounded annually until the date of payment;

(v) The Claimant shall pay to the Respondent USD 372,111.29 in respect of the Respondent's costs of these proceedings, plus interest on this amount as from the date of dispatch of this Award at the rate of 2% per annum compounded annually until the date of payment;

(vi) All other claims and requests by the Parties are dismissed.

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