Dhaka, May 18 (bdnews24.com) – Petrobangla estimates that an international tribunal's unanimous decision in favour of Bangladesh in a case filed by Chevron will have saved the country $312 million over 20 years.
The International Centre for the Settlement of Investments Disputes (ICSID) published its unanimous decision on Tuesday following a claim made by Chevron for $240 million - the company's estimate for the amount of money it would lose if Petrobangla continued to charge the company for the use of its pipelines.
Dr Sharif Bhuiyan, a partner at Dr. Kamal Hossain and Associates, the law firm which acted for the government, told bdnews24.com that the chances of the award being revised or annulled are "almost nil".
Chevron filed the case against the government in 2006, stating that Petrobangla should not have been deducting 4 percent from the bills that the company sent it for supplying gas to the government from three gas fields.
Chevron has the rights over three gas fields – Jalalabad that started in 1999, Moulavibazar in 2005 and Bibiyana in 2007.
Petrobangla was deducting 4 percent in order to cover the costs it incurred when Chevron used the government's own pipeline to supply natural gas for the Bangladesh domestic market.
Chevron, however, argued that the deductions, which had been made by Petrobangla since the commencement of production in 1999 in one of the three gas fields, was only applicable to the sale of the gas to third parties.
Chevron claimed in May 2009 when the case came for hearing that Petrobangla's deduction would cause it to lose $240 million over the course of the life span of the three fields.
However, the three-member tribunal held that the contract between Petrobangla and Chevron allowed these deductions.
In a press statement, Petrobangla stated that, till now, the 4 percent deduction has amounted to $61.7 million, which with interest rises to $70 million.
Dr Kamal Hossain, who led the Bangladesh team, said on Tuesday, "This award demonstrates again that a developing country can win justice and protect its interests in an international forum using international law.
"This is a huge win for Bangladesh. We can be justly proud of the efforts of our talented legal team, including our international legal experts, and the extraordinary efforts put in by government officials and particularly Petrobangla, to make this happen."
Dr Bhuiyan, who worked with Hossain, told bdnews24.com that Chevron now has very limited legal options open to it.
"According to the Convention on settlement of investment disputes, the company has only two options. One is to seek a revision of the award, the other is to seek its annulment," Bhuiyan said.
"Clause 51 of the convention states that a revision of the award could only happen if there was a discovery of a new decisive fact that was unknown to the applicant. Since the decision in this case concerned the legal construction of the contract between Petrobangla and Chevron (relating to blocks 12, 13 and 14) – and there was no dispute between the parties on issues of fact – there is no possibility of any new relevant facts emerging."
He went on to say that clause 52 of the convention states that annulment could only occur if one of five circumstances was found to have taken place.
"It would have to be shown that either the Tribunal was not properly constituted, it manifestly exceeded its powers, there was corruption on the part of a Tribunal member, there had been a departure from a fundamental rule of procedure, or the award failed to provide reasons," he said.
"None of these can apply to this arbitration."
Bhuiyan also raises the possibility that Bangladesh may have saved hundreds of thousands of dollars more than the $240 million Chevron claimed in the case, or the $312 million, which petrobangla is now estimating.
"It all depends on whether Chevron finds any new gas in these fields–over and above what it has now estimated. Because of the decision [ Tuesday], the government will continue to be able to deduct 4 percent from the Chevron bills," he said.
Depending on how much additional gas found, this could amount to a lot of money.
The ICSID was set up as a World Bank organisation by the 'Convention on the Settlement of Investment Disputes between States and Nationals of Other States, 1965." Bangladesh became a party to the Convention in 1980.
Moin Ghani deliberated in the arbitration for the Bangladesh government alongside Hossain and Bhuiyan. Senior Advocate Mahmudul Islam was also part of the team.
The government was also represented by foreign lawyers: Toby Landau QC (Essex Court Chambers), and Jeremy P Carver (solicitor), Samuel A Stern (Hills Stern & Morley LLP), and professor Laurence Boisson de Chazournes (University of Geneva).
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