World Bank Accepts Fraport AG's Request for Arbitration Against the Philippine Government
Frankfurt/Main, Germany (ots) - FSE: FRA - The World Bank's International Centre for Settlement of Investment Disputes (ICSID) has registered Fraport AG's "Request for Arbitration" against the Government of the Philippines.
Fraport is demanding more than $425 million of compensation arising from the Philippine government's expropriation and unfair and inequitable treatment of Fraport's investment in a new passenger terminal (IPT3) built at Ninoy Aquino International Airport (NAIA) in Manila, the Philippines. Fraport's arbitration request comes only after more than six months of discussions with the Philippine government failed to produce any offer by the Philippine government to compensate Fraport for its investment of more than $425 million. Fraport lodged its "Request for Arbitration" in September 2003. Registration of the request by the ICSID means that the arbitration initiated by Fraport shall now proceed toward the ultimate resolution of the dispute.
The ICSID was established by international treaty -signed by 137 countries including Germany and the Philippines - to establish an impartial forum for adjudicating claims for expropriation and unfair and inequitable treatment of foreign investments, as occurred to Fraport. Germany and the Philippines have entered into a bilateral investment treaty (BIT). The BIT allows for disputes such as Fraport's to be settled by arbitration before the ICSID. Fraport has been advised by its legal counsel that it has an extremely strong case. Fraport expects to prove to the satisfaction of the arbitration tribunal that it is entitled to the more than $425 million in damages.
Fraport's investment dispute in the Philippines continues to attract growing international concern and scrutiny. For example, the U.S. Department of Commerce highlighted the inequitable treatment experienced by Fraport in its recently published Country Commercial Guide on the Philippines 2004. This report states that "the judicial system has intervened in commercial issues with dire impact for the private sector. This most recently happened in May 2003 when the Supreme Court ruled to overturn the contract to build a new international airport (terminal) awarded to PIATCO, a Philippine-German consortium". Commenting on the investment climate in the Philippines, the report also says that the "Supreme Court decision to nullify the Build-Operate-Transfer (BOT) contract for the construction and operation of a new terminal at Manila International Airport is a troubling example of the vagueness of the Philippine legal system".