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International Arbitration Forum

Spentech Engineering Limited v. United Arab Emirates

Case summary

At a glance

Parties
Spentech Engineering Limited (Kenya) v. United Arab Emirates
Case no.
ICSID Case No. ARB/24/16
Forum and rules
ICSID Convention arbitration; ICSID Arbitration Rules 2022. Place of proceeding: Washington, D.C.
Treaty
UAE–Kenya BIT of 23 November 2014
Tribunal
Ms. Loretta Malintoppi (President), Sir Christopher Greenwood, Mr. Christopher Adebayo Ojo
Sector
Construction; works at the UAE Embassy in Mogadishu, Somalia
Outcome
All claims were dismissed under Rule 41 as manifestly without legal merit, because the Tribunal manifestly lacked jurisdiction (28 July 2025). Spentech has applied for annulment.
Amount
Claimant's figure for the outstanding contract balance: USD 8,641,797. Awarded: nothing. The Claimant bears all costs of the proceeding (USD 244,038.32). It must pay the UAE USD 12,137.46 for legal fees and expenses and USD 122,019.16 for its share of the advances, with simple interest at 4.37%.

The dispute

Spentech, a Kenyan construction company, says that between 2016 and 2020 it signed contracts with the UAE Embassy in Mogadishu for works in Somalia. The works included the Sheikh Zayed Hospital, the Hodan army barracks, flagpoles, roadworks and Embassy Project Phase I. The contracts were governed by UAE law and gave jurisdiction to the UAE courts. Spentech alleges that the UAE stopped the works and refused to pay the full balance owed. It also alleges that Embassy staff seized its property and that its CEO was detained for four months. It claimed expropriation, breach of fair and equitable treatment and of full protection and security, and denial of justice under the BIT. The UAE objected under Rule 41 that the claims were manifestly without legal merit, because no investment had been made in UAE territory: an embassy is part of the territory of the receiving State, not the sending State.

Key holdings

  1. A claim may be dismissed under Rule 41 even if it raises novel or complex issues. The test is whether the claim, on its face, lacks legal merit clearly and obviously, not how elaborate the parties' arguments are. Award ¶¶ 202–204
  2. The Rule 41 objection is assessed on the case as set out in the Request for Arbitration and the Clarifications. Spentech's later recasting of its investment as intangible contractual rights, claims to money and intellectual property located in the UAE was an impermissible change of case. The Tribunal nevertheless also reviewed the new formulation. Award ¶¶ 213–222
  3. "Territory" in Article 1(1)(e)(ii) of the BIT means defined geographic areas, not areas within the UAE's "territorial prescriptive and enforcement jurisdiction". Under international law, the premises of a diplomatic mission are territory of the receiving State. The UAE Embassy in Mogadishu is therefore part of Somalia, and the Vienna Convention on Diplomatic Relations does not assign sovereignty or sovereign rights over it. Award ¶¶ 225–231
  4. Choice-of-law and forum clauses in favour of the UAE do not determine where an investment is located. The benefits thesis applies only to financial instruments with a strong connection to the host State. Under the principle of unity, the centre of gravity of all of Spentech's activities, including drawings, meetings and procurement in the UAE, was the construction projects in Somalia. Award ¶¶ 232–238
  5. The Tribunal manifestly lacks jurisdiction on every ground invoked, individually and in combination. The claims are dismissed as manifestly without legal merit, because the scope of treaty territory and the rule that an embassy is not territory of the sending State are genuinely indisputable. Award ¶¶ 240–241, 269
  6. Under Rule 52(2), costs follow the event. The Claimant bears all costs of the proceeding, USD 244,038.32. It must pay the UAE its "more than reasonable" legal fees and expenses of USD 12,137.46 (including a symbolic USD 6,000 for in-house counsel) and USD 122,019.16 for the UAE's expended advance. Both sums carry simple interest at 4.37%, a rate benchmarked on the 180-day SOFR average as an equivalent of LIBOR under Article 7(1)(b). Award ¶¶ 254–268, 269

Procedural history

  1. 26 April 2024Request for Arbitration filed under the UAE–Kenya BIT.
  2. 24 May 2024The Acting Secretary-General registered the request.
  3. 16 September 2024Tribunal constituted.
  4. 25 October 2024Procedural Order No. 1 set the timetable for the Rule 41 objection.
  5. 31 October 2024The UAE filed its Rule 41 Objections.
  6. 8 November 2024Procedural Order No. 2 on transparency and confidentiality.
  7. 28 May 2025Hearing on the Rule 41 Objections held by video conference, organised under Procedural Order No. 3 of 30 April 2025.
  8. 28 July 2025Award: all claims dismissed under Rule 41; the Claimant to bear all costs.
  9. 26 January 2026ad hoc Committee constituted in the annulment proceeding brought by Spentech. Submissions on continuation of the stay of enforcement had been scheduled for December 2025 to January 2026.
  10. 11 March 2026Procedural Order No. 1 in the annulment proceeding fixed the calendar, with a hearing on annulment scheduled for 10 November 2026. The published documents do not show the outcome of the annulment proceeding.

Tribunal, counsel and experts

Decided by
For the claimant
Jural Consulting Limited · Mohammed Muigai LLP
For the respondent
Office of International Legal Affairs of the Presidential Court of the United Arab Emirates

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Keywords

Summary generated with AI from the published documents — refer to the award for the authoritative text.

Case ID
ICSID Case No. ARB/24/16
Country
Economic sector
Treaty
Kenya - United Arab Emirates BIT (2014)
Section