For Claimants
David Huebner, Esq.
Susan Rosenthal, Esq.
Sheppard Mullin Richter & Hampton LLP
41/F Raffles City Office Tower
268 Xizang Road Central
Huangpu District, Shanghai 200001
China
For Respondent
Fredrick E. Sherman, Esq.
Thomas E. Lynch, Esq.
Jones Day
222 East 41st Street
New York, NY 10017-6702
USA
and
Chong Yee Leong, Esq.
Chong Boon Leong, Esq.
Rajah & Tann 4 Battery Road
#26-01 Bank of China Building
Singapore
"The rights and benefits of TLL contained in this Agreement may not be limited in any way by any statements made in the Prior Contracts... but may be broadened or made more extensive by the Prior Contracts..." (Section 19.11) "[T]his Agreement and the Prior Contracts should be read and construed so as to maximize the rights and benefits to TLL or Hongsa Lignite as the case may be and not to subtract from them in any way."
"The laws of the Lao People’s Democratic Republic shall apply (I) with respect to the authorization and execution of this Agreement by the Government, (II) with respect to the FIL [Foreign Investment Law] in force on the date of execution of this Agreement by the Government, (III) with respect to any of the laws of the Lao People’s Democratic Republic and the specified consents specifically referred to by name in this Agreement as being applicable, and (IV) with respect to the lease and the mineral rights deed. With respect to overall governing law and construction and to all other matters not specifically mentioned in the preceding clauses (I)-(IV), this Agreement shall be governed by, and construed in accordance with, the laws of the State of New York, United States of America, without reference to principles of conflict of laws, unless otherwise agreed to by both parties hereto."
"i. Your failure to produce the Project Definite Study by end February 2005;
"ii. Your failure to procure the due execution of the Power Purchase Agreements pursuant to the Project by end December 2005;
"iii. Your failure procure [sic] the execution of the Engineering Procurement Contract for the Project by end December 2005;
"iv. Your failure to procure the due execution of the Fuel Supply Agreement for the Project by end December 2005."
ARTICLE 14
SETTLEMENT OF DISPUTES
"14.1 Arbitration. (i) In the event that a dispute arises out of this Agreement including any matter relating to the interpretation of this Agreement, each party shall use its best efforts to settle the dispute amicably through consultation in good faith with the other party or, if both parties agree, through ad hoc non-binding mediation in the Lao People’s Democratic Republic to be structured by the parties in order to provide a framework for the Government and TLL to attempt to arrive at a settlement which is acceptable to both of them. Whether amicable consultations, ad hoc non-binding mediation, or neither is used by the parties, if no settlement is reached within thirty days of the date on which such dispute first arises, then either party may submit the dispute to arbitration conducted in Malaysia at the Kuala Lumpur Regional Centre for Arbitration in accordance with the UNCITRAL Rules; provided, that, this clause shall not be construed to prevent any party from bringing any action in a court of competent jurisdiction for injunctive or other provisional relief. It is specifically understood by the parties that such dispute may be submitted by either party to arbitration regardless of the magnitude thereof, the amount in dispute, or whether such dispute would otherwise be considered justiciable or ripe for resolution by any court or arbitral tribunal. In the event that such dispute has been submitted to arbitration as described herein, any ad hoc mediation efforts shall immediately cease.
"(ii) The arbitration shall take place at a time noticed by the arbitral panel regardless of whether any of the parties fails to participate. The proceedings shall be conducted in the English language. There shall be three arbitrators appointed in accordance with the UNCITRAL Rules.
"(iii) Each arbitration shall be conducted in Kuala Lumpur, Malaysia, and the parties agree to exclude any right of application to any court or tribunal of competent jurisdiction in connection with any question of law arising in the course of any arbitration.
"(iv) The Director of the Kuala Lumpur Regional Centre for Arbitration shall appoint the arbitrators for each arbitration. Only persons who are attorneys or former judges with experience in international commercial agreements and, in particular, the implementation and interpretation of power purchase agreements under New York law shall be appointed as arbitrators. No arbitrator shall be a present or former employee or agent of, or consultant or counsel to, either party or an affiliate of either party. In no case shall admission to practice law in Malaysia be a requirement to service as an arbitrator.
"(v) At any oral hearing of evidence in connection with any arbitration, each party or its legal counsel shall have the right to examine its witnesses and to cross-examine the witnesses of the opposing party. No evidence of any witness shall be presented in written form unless the opposing party shall have an opportunity to cross-examine such witness, except as the parties may otherwise agree in writing or except under extraordinary circumstances where the interests of justice require a different procedure.
"(vi) Any award or determination of the arbitral panel shall be final, nonappealable, binding, and conclusive upon the parties, and judgment may be entered in any court of competent jurisdiction. The parties waive to the extent permitted by law any rights to appeal or any review of such award by any court or tribunal of competent jurisdiction.
"(vii) The costs of arbitration shall be borne by the losing party, unless otherwise determined by the arbitration award.
"(viii) The Government believes that the Supreme Court of the Lao People’s Democratic Republic would enforce an arbitral award rendered pursuant hereto against assets of either party in the Lao People’s Democratic Republic."
James H. Carter, Esq. (Chairman)
Sullivan & Cromwell LLP
125 Broad Street
New York, NY 10004-2498
William B. Conway, Jr., Esq.
Skadden, Arps, Slate, Meagher & Flom LLP
1440 New York Avenue, N.W.
Washington, DC 20005-2111
(Appointed by Claimants)
Rory O. Millson, Esq.
Cravath, Swaine & Moore LLP
825 Eighth Avenue
New York, NY 10019-7475
(Appointed by Respondent)
(a) "that Respondent not execute or otherwise conclude any agreement or take any other action to award, transfer, sell, lease, or otherwise demise to any third party the assets, benefits, rights, interests, and/or privileges conveyed to Claimants in the PDA, including Claimants’ exclusive rights to exploit lignite deposits at the site and develop the Project; and
(b) "that Respondent pay to Claimants their costs incurred on this Petition, including attorneys fees."
"15.1. Term; Termination, (a) This Agreement shall remain in effect until the Transfer Date (including any extensions thereof pursuant to Section 2.3 hereof), unless written notice of termination is given by one party to the other pursuant to the provisions hereof.
"(b) This Agreement may be terminated (i) by TLL at any time prior to two years from the date hereof, if during such time TLL determines that the implementation of the Project is not feasible; (ii) by TLL if any of the conditions precedent set forth in Article 7 hereof is not met and is not otherwise expressly waived by TLL; and (iii) in addition, in the event that either party is in default under this Agreement after having been given notice by the other party and a reasonable opportunity to cure pursuant to Article 13 hereof, if the non-defaulting party wishes to terminate this Agreement, it may do so upon the approval of the arbitration panel constituted in accordance with Article 14 hereof.
"In the event of termination of this Agreement, compensation shall be paid to TLL or the Government, as the case may be, as determined by the arbitration panel constituted in accordance with Article 14 hereof which shall include TLL’s total investment cost plus a premium and consideration of the Lenders and Investors in the event of a default on the part of the Government."
"The Tribunal considered Claimants’ Petition for Interim Relief, pursuant to Article 26 of the UNCITRAL Arbitration Rules, at a hearing on 3 October 2008 and in accordance with the parties’ prior written submissions. The Tribunal at that time indicated its preliminary view that the Project Development Agreement dated as of July 22, 1994 between Respondent and the first Claimant may be terminated only in accordance with the terms of Article 15.1 of that Agreement and has not yet been terminated. The Tribunal considers that, having given its view on this matter, no further action is required on the Claimants’ Petition for Interim Relief, and it therefore is denied."
"7.1. Conditions Precedent. The rights and the obligations of the parties under this Agreement (other than those relating to licenses and consents, immigration controls, security, dispute resolution, proprietary information, assignment, and termination) shall be conditional upon:
"(i) the signing of the financing documents and their approval by TLL, TLL’s receipt of the initial disbursement of funds thereunder, and the receipt of commitments for such equity as are required by TLL in order to satisfy the requirements of the Lenders and Investors;
"(ii) the documents relating to the security provided for the financing having been entered into by each of the parties thereto;
"(iii) The granting of the Specified Consents set forth in Schedule 5 hereto;
"(iv) the due execution and delivery to TLL of the power of attorney under the signature of the Vice Chairman of the Committee on Planning and Cooperation of the Lao People’s Democratic Republic as per Schedule 7 hereto to execute and deliver this Agreement and to approve in all respects the transactions contemplated hereby on the part of the Government;
"(v) the due delivery to TLL of the Government’s Cabinet notification number authorizing the entering into and delivery of this Agreement on the terms and conditions contained herein and approving in all respects the transactions contemplated hereby as per Schedule 7 hereof;
"(vi) the due execution and delivery to TLL of the certificate of the Ministry of Justice of the Lao People’s Democratic Republic certifying in all respects the legality of this Agreement and the entering into of this Agreement under the Laws of the Lao People’s Democratic Republic as per Schedule 8 hereof;
"(vii) the due execution and delivery to TLL of the form of Government legal opinion as per Schedule 9 hereto;
"(viii) the due execution and delivery to the Government of the officer’s certificate under the signature and seal of the board of directors of TLL in favor of Siva Nganthavee as per Schedule 10 hereto; and
"(ix) the due execution and delivery to the Government of the TLL board of directors resolution authorizing the entering into of this Agreement by TLL on the terms and conditions contained herein and approving in all respects the transactions contemplated hereby.
A useful analogy can be drawn between the contract at issue and a contract for the sale of goods. If the contract here was in all respects the same, except that it was for the sale of oil or some other tangible commodity instead of the sale of electricity, the parties would unquestionably be governed by the demand for adequate assurance of performance factors in UCC 2-609. We are convinced to take this prudent step because it puts commercial parties in these kinds of disputes at relatively arm’s length equilibrium in terms of reliability and uniformity of governing legal rubrics.
Norcon at 468.
"...in the event that either party is in default under this Agreement after having been given notice by the other party and a reasonable opportunity to cure pursuant to Article 13 hereof, if the nondefaulting party wishes to terminate this Agreement, it may do so upon the approval of the arbitration panel constituted in accordance with Article 14 hereof."
"as determined by the arbitration panel constituted in accordance with Article 14 hereof which shall include TLL’s total investment cost plus a premium and consideration of the Lenders and Investors."
"In the event of termination of this Agreement, compensation shall be paid to TLL or the Government, as the case may be, as determined by the arbitration panel constituted in accordance with Article 14 hereof which shall include TLL’s total investment cost plus a premium and consideration of the Lenders and Investors in the event of a default on the part of the Government."
Thus, "in the event of a default on the part of the Government," as here, Section 15.1 provides that compensation shall be paid to TLL "which shall include TLL’s total investment cost plus a premium and consideration of the Lenders and Investors."
Project Cost Category | Claimants’ Expert (US$) | Respondent’s Expert (US$) | |
1. | Road Construction | 7,552,248 | 6,720,601 |
2. | Financial Consulting | 1,663,754 | 1,585,296 |
3. | Engineer Consulting | 12,702,343 | 12,097,683 |
4. | Management Fee | 5,186,604 | 5,800 |
5. | Legal Consulting | 629,359 | 616,674 |
6. | Administrative Expenses | 8,050,985 | 0 |
7. | Survey Expenses | 8,032,042 | 1,011,852 |
8. | Interest Expenses | 126,053,749 | 0 |
9. | Exchange Loss | 9,099,736 | 0 |
TOTALS: | 178,970,821 | 22,037,907 |
a. The GOL has been denied the opportunity of recovering its share of profits from mining operations at Hongsa as promised by Claimants under the Prior Contracts;
b. The GOL has not been able to recover substantial tax revenue, fees, and concession rents that should have been generated from the mining operations;
c. The GOL has not received the benefit of training of Laotian labor and technologists that Claimants were obligated to provide under the Prior Contracts; and
d. The GOL has lost the use of the revenues that were to have been generated by the mining operations.
"The arbitral tribunal shall fix the costs of arbitration in its award. The term costs includes only:
"(a) The fees of the arbitral tribunal to be stated separately as to each arbitrator and to be fixed by the tribunal itself in accordance with article 39;
"(b) The travel and other expenses incurred by the arbitrators;
"(c) The costs of expert advice and of other assistance required by the arbitral tribunal;
"(d) The travel and other expenses of witnesses to the extent such expenses are approved by the arbitral tribunal;
"(e) The costs for legal representation and assistance of the successful party if such costs were claimed during the arbitral proceedings, and only to the extent that the arbitral tribunal determines that the amount of such costs is reasonable;
"(f) Any fees and expenses of the appointing authority as well as the expenses of the Secretary-General of the Permanent Court of Arbitration at The Hague."
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