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International Arbitration Forum

Kontinental Conseil Ingénierie v. Gabonese Republic

Case summary

At a glance

Parties
Kontinental Conseil Ingénierie (KCI) (Tunisia) v. the Gabonese Republic
Case no.
PCA Case No. 2015-25
Forum and rules
Arbitration under the auspices of the Permanent Court of Arbitration, seated in Paris; set-aside proceeding before the Paris Court of Appeal
Treaty
Agreement on Promotion, Protection and Guarantee of Investments among Member States of the Organisation of the Islamic Conference (1981) (OIC Agreement)
Court
Paris Court of Appeal (judgment signed by Dominique Guihal, presiding judge of the chamber)
Underlying award(s)
Award of 23 December 2016 (Pierre Mayer, President; Nassib G. Ziadé and Mathias Audit, co-arbitrators)
Sector
Construction; social housing
Outcome
The Court rejected KCI's application to partly set aside the award (25 June 2019).
Amount
Award: EUR 4,267,200 with interest to KCI for breach of fair and equitable treatment. Court costs: KCI to pay Gabon EUR 50,000 under Article 700 of the Code of Civil Procedure, plus the costs of the proceedings.

The dispute

Under a memorandum of understanding of 22 August 2011, Gabon awarded KCI, a Tunisian company, a contract to build 5,000 social housing units in the province of Nkoltang. On 4 November 2011 the parties signed a site-servicing agreement and a construction agreement. KCI carried out part of the works and asked for payment of some invoices. On 20 September 2012 the ministry told KCI that the works would stop. KCI started arbitration under the OIC Agreement on 6 March 2015. The tribunal found that Gabon had breached fair and equitable treatment and awarded EUR 4,267,200 with interest. It declined jurisdiction over claims based on umbrella clauses in other treaties, which KCI had sought to import through the most-favoured-nation (MFN) clause. KCI then asked the Paris Court of Appeal to set aside parts of the award. It argued that the tribunal had wrongly declined jurisdiction and had breached the adversarial principle, both on expropriation and in its finding that the agreements had been terminated by mutual consent. Gabon argued that the adversarial-principle ground was inadmissible and, in any event, unfounded.

Key holdings

  1. The set-aside judge reviews the tribunal's decision on jurisdiction in full, in law and in fact, whether the tribunal accepted or declined jurisdiction. The same applies where jurisdiction rests on a treaty. ¶ 12
  2. The MFN clause in Article 8 of the OIC Agreement covers only substantive advantages, such as national treatment, fair and equitable treatment and the conditions for expropriation. It does not extend to procedural dispute-settlement advantages or widen the tribunal's jurisdiction. The OIC Agreement has no umbrella clause, so the tribunal had to rule only on breaches of the Agreement's international obligations, not on breaches of the site-servicing and construction agreements. ¶¶ 16–17
  3. Combining the MFN clause with umbrella clauses in the Gabon–Benelux and Gabon–Germany BITs cannot be taken to reflect what the OIC Contracting Parties intended. The tribunal rightly called this reading "artificial": it would turn every contract breach into a treaty breach. The jurisdictional ground was rejected. ¶¶ 15, 18–19
  4. The ground based on the adversarial principle is admissible. KCI challenged the award itself, not the tribunal's letter of 4 April 2017, and could not have raised the objection during the arbitration. ¶ 22
  5. No breach of the adversarial principle. Before the tribunal, Gabon had argued that the agreements ended by a mutual "rupture". The tribunal merely gave the facts debated before it a legal characterisation ("résiliation") and raised no new ground. Arbitrators need not submit their reasoning to the parties in advance. ¶¶ 23–29
  6. The application to set aside the award was rejected. KCI was ordered to pay the costs and EUR 50,000 to Gabon under Article 700 of the Code of Civil Procedure. ¶¶ 30–33

Procedural history

  1. 22 August 2011Memorandum of understanding awarding KCI the Nkoltang social housing contract. The site-servicing and construction agreements followed on 4 November 2011.
  2. 20 September 2012The ministry notified KCI of the decision to stop the works.
  3. 6 March 2015KCI commenced arbitration under the OIC Agreement.
  4. 23 December 2016Award in Paris under PCA auspices. The tribunal upheld jurisdiction under the OIC Agreement but declined it over umbrella-clause claims, found a breach of fair and equitable treatment, and awarded EUR 4,267,200 with interest.
  5. 4 April 2017The tribunal informed the parties by letter that there was no need for an additional award, as KCI had requested.
  6. 25 June 2019The Paris Court of Appeal rejected KCI's application for partial annulment of the award.

Tribunal, counsel and experts

Decided by
  • Dominique Guihal Judge, Paris Court of Appeal (presiding judge of the chamber)
  • Pierre Mayer President (arbitrator in the underlying award of 23 December 2016)
  • Nassib G. Ziadé Co-arbitrator (arbitrator in the underlying award of 23 December 2016)
  • Mathias Audit Co-arbitrator (arbitrator in the underlying award of 23 December 2016)

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Keywords

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

Case ID
PCA Case No. 2015-25
Economic sector
Outcome
In favour of Investor
Treaty
OIC Investment Agreement (1981)
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