Unicon Limited v. Islamic Republic of Afghanistan

Case summary

At a glance

Parties: Unicon Limited (United Kingdom) v. Government of Afghanistan (Ministry of Energy and Water)
Case no.: UNC 211/ELU
Forum and rules: UNCITRAL Arbitration Rules 2013; ICC as appointing authority; seat Paris, France
Treaty: Contract clause (Article 45 GCC / Article 45.1 SCC of Contract No. MEW/005/92/CQS)
Tribunal: Dr Sally El Sawah (Sole Arbitrator)
Sector: Electricity transmission; consultancy services
Outcome: Claims upheld in substantial part (23 November 2022). The respondent did not take part in the arbitration.
Amount: Claimed: USD 444,807 (Amendment No. 3), USD 444,807 (Amendment No. 4), USD 275,972 (damages for 2014), USD 575,471 in interest, plus an unquantified amount for harassment and extortion. Awarded: USD 444,807 plus interest of USD 200,914.87 to the date of the award; USD 444,807 plus 6% interest from the date of the award; costs of USD 184,800 (legal) and USD 52,773 (arbitration).

The dispute

On 12 October 2013 Unicon Limited, a London consultancy, signed a lump-sum contract with Afghanistan's Ministry of Energy and Water (MEW). Unicon was to provide transaction advisory services for the CASA-1000 Project, a World Bank-financed electricity transmission link between Central Asia and South Asia. The contract was extended three times, and Unicon also worked during two gap periods without charge. Unicon alleged that MEW officials asked it for bribes and, when it refused, held back payment. MEW never paid the invoice under Amendment No. 3 and never signed Amendment No. 4, although a Deputy Minister had promised that Unicon would receive USD 3 million in total through extensions. Unicon claimed under the contract and Afghan law: the unpaid invoice, the value of the unsigned Amendment No. 4, damages for the unpaid gap periods, compensation for extortion and harassment, and interest. Afghanistan did not take part in the proceedings and raised no defences.

Key holdings

The seat of arbitration is Paris. The contract required a neutral country, the parties had chosen the ICC in Paris as appointing authority, and Paris is a major arbitration centre. ¶¶ 144–147
The arbitration began on 18 September 2021. By their practice the parties had accepted notice by email, and the Notice of Arbitration was received when the Procurement Director, Mr Abram, was copied on the Minister's email acknowledging it. The respondent was duly notified and had ample opportunity to present its case. ¶¶ 156–178
The Tribunal has jurisdiction over both the State of Afghanistan and the Ministry. The Ministry has its own legal personality, but it is a mere instrumentality and organ of the State: under the Afghan Constitution it is an administrative unit, and the State received the World Bank grant and took part in performing the contract. The Tribunal relied on Dallah v. Pakistan and on Compañía de Aguas del Aconquija/Vivendi v. Argentina. ¶¶ 180–189
The respondent must pay USD 444,807 for invoice CK16 under Amendment No. 3, with no deduction for taxes. Simple interest runs at 6% a year from 15 August 2015, which comes to USD 200,914.87 at the date of the award. ¶¶ 192–206, 232–233
The respondent had committed to pay a lump sum of USD 3 million through successive extensions and had agreed to conclude Amendment No. 4. It therefore owes USD 444,807 for not performing that commitment, with interest at 6% from the date of the award. The claim of USD 275,972 for the no-charge gap periods would count the same loss twice, because the USD 3 million already covered those periods; it was dismissed. ¶¶ 207–227, 234
The claim for extra compensation for extortion and harassment was dismissed. Unicon did not prove any damage beyond the non-payment already compensated, the Tribunal has no power to award punitive damages, and moral damage was not proved. Interest on the late-paid earlier invoices was also refused: Unicon was deemed to have waived it. ¶¶ 228–231
Costs: the respondent pays 70% of Unicon's legal costs (USD 184,800) and all of the arbitration costs (USD 52,773), with interest from the date of the award at the Afghan legal rate. ¶¶ 240–243

Procedural history

12 October 2013Unicon and MEW sign Contract No. MEW/005/92/CQS. It is later extended by Amendments No. 1, 2 and 3, the last running to 25 June 2015.
17 September 2021Unicon issues the Notice of Arbitration. It is sent by email on 18 and 19 September 2021.
22 November 2021Unicon asks the ICC to act as appointing authority and appoint a sole arbitrator.
27 January 2022The ICC International Court of Arbitration appoints Dr Sally El Sawah as Sole Arbitrator.
15 March 2022The Terms of Appointment and Procedural Timetable are finalised.
8 May 2022Unicon files its Statement of Claim. The respondent files no Statement of Defence by the 1 July 2022 deadline.
24 October 2022The proceedings are closed.
23 November 2022Final Award is issued in Paris: the claims are largely upheld.