Strabag SE v. Libya

Case summary

At a glance

Parties: Strabag SE (Austria) v. State of Libya
Case no.: ICSID Case No. ARB(AF)/15/1
Forum and rules: ICSID Additional Facility; Arbitration (Additional Facility) Rules 2006; place of proceeding Washington, D.C.; hearing held in Paris
Treaty: Austria–Libya BIT (signed 18 June 2002, in force 1 January 2004)
Tribunal: Prof. John R. Crook (President), Prof. Antonio Crivellaro, Prof. Nassib G. Ziade (partial dissent on advance payments and set-off)
Sector: Construction; road and urban infrastructure
Outcome: Jurisdiction upheld; breaches of Articles 5 and 8(1) (umbrella clause) found; Libya's set-off for unrecovered advance payments refused by majority (29 June 2020). U.S. courts refused vacatur and confirmed the award; the Madrid Superior Court of Justice granted exequatur.
Amount: Claimed: EUR 112,087,995. Awarded: EUR 74,937,003.60 (60% of EUR 124,895,006.00 loss to Al Hani), plus simple interest at EURIBOR + 4%. Costs: Libya to pay EUR 7,101,763.01 and GBP 1,118,721.20 (75% of Strabag's legal costs) and USD 497,533.80 towards the arbitration costs.

The dispute

Strabag SE, an Austrian construction group, held an indirect 60% stake in Al Hani General Construction Co., a Libyan joint venture with the State-owned LIDCO. Al Hani carried out six road and infrastructure contracts with Libyan agencies (RBA, TPB and HIB): Benghazi, Misurata, TIAR, TIAR-NE, Garaboulli and the large Tajura urban development contract. The 2011 revolution halted the work. Equipment was requisitioned, looted or destroyed, and payment certificates, delay and additional-work claims and retentions remained unpaid. Strabag claimed under the Austria–Libya BIT, chiefly under the war-losses clause (Article 5) and the umbrella clause (Article 8(1)). Libya objected that there was no investment and no investor, that Strabag could not claim for Al Hani's assets, and that the claims were contract claims belonging before the Libyan courts. It also denied liability and asked that any contract award be set off against about EUR 98 million in advance payments it said were unearned.

Key holdings

Jurisdiction upheld. Strabag had an investment (its indirect 60% interest in Al Hani, loans, facilities and equipment) and was an investor even though it invested through German subsidiaries, because the Treaty covers assets owned or controlled 'directly or indirectly'. The Tribunal did not need to decide whether the Salini criteria apply, since they were met in any event. Award ¶¶ 108–120
Strabag could claim 60% of Al Hani's own losses. In practice Al Hani was controlled and funded by Strabag and operated as its subsidiary in all but name, so the two were economically identical. Award ¶¶ 128–136
The contracts with RBA, TPB and HIB fall under the umbrella clause. Libya 'entered into' those obligations because the agencies exercised governmental authority, were funded by and dependent on the State, and acted under State direction (including REKABA and the Twenty Committee). The clause requires no exercise of puissance publique. Award ¶¶ 164–188
The clauses choosing the Libyan courts do not bar treaty jurisdiction. Since 2011 the Libyan courts have not been a practicable or safe forum, so the clauses could not reasonably be performed. Award ¶¶ 196–208
Article 5 (war losses) is not a lex specialis that excludes the Treaty's other protections. On the contract claims, the Tribunal found force majeure since 2011. It awarded EUR 28.54 million in force majeure losses only under the Garaboulli, TIAR and Tajura contracts, whose amended clauses provide for compensation, with the Tajura share reduced to restore the 'financial equilibrium' of that contract. Award ¶¶ 228, 813, 869–874
By majority, Libya's set-off for unrecovered advance payments was denied. The Tribunal had jurisdiction over the set-off and found no unjust enrichment or misuse of funds. But unconditional bank guarantees securing the advance payments remained in effect, and without the parties' consent under Article 15 of the Treaty it could not order arrangements to protect Strabag from double exposure. Arbitrator Ziade dissented: the Tribunal should have settled all accounts, and the award may compensate costs already funded by advance payments. Award ¶¶ 897–921; Ziade dissent ¶¶ 32–44
Libya pays 75% of Strabag's legal costs and 75% of the arbitration costs, and bears its own costs. Simple (not compound) interest runs at EURIBOR + 4%: from 1 January 2012 on the war-loss and force majeure awards and from 1 March 2011 on the contract awards. Award ¶¶ 945–948, 963–964

Procedural history

24 June 2015ICSID receives Strabag's application for access to the Additional Facility and its Request for Arbitration. The Secretary-General registers it on 20 July 2015.
7 December 2015Tribunal constituted.
8 September 2016Procedural Order No. 3 rejects Libya's request for bifurcation.
9–20 July 2018Hearing on jurisdiction and merits in Paris.
29 June 2020Award: Strabag awarded EUR 74,937,003.60 plus interest and costs; Libya's set-off denied by majority.
22 June 2020Partial Dissenting Opinion of Nassib G. Ziade on advance payments and set-off.
15 September 2020Libya petitions the U.S. District Court for the District of Columbia to vacate or modify the award under 9 U.S.C. §§ 10 and 11.
30 September 2021District Court (Judge Dabney L. Friedrich) denies vacatur and confirms the award, but refuses Strabag's request for a bond.
27 May 2022U.S. Court of Appeals for the D.C. Circuit affirms in an unpublished judgment.
18 June 2024Madrid Superior Court of Justice grants exequatur of the award; Libya, declared in default, did not oppose.

Tribunal, counsel and experts

Decided by: John R. Crook President — appointed by the parties jointly
Antonio Crivellaro Co-arbitrator — appointed by the claimant
Nassib G. Ziadé Co-arbitrator — appointed by the respondent (dissented in part on advance payments and set-off)
Dabney L. Friedrich Judge, U.S. District Court for the District of Columbia
José Manuel Súarez Robledano Judge, Madrid Superior Court of Justice (President of the Chamber; rapporteur)
Francisco José Goyena Salgado Judge, Madrid Superior Court of Justice
María Prado Magariño Judge, Madrid Superior Court of Justice
For the claimant: Latham & Watkins LLP · Ramón Rodríguez Nogueira · Javier J. Izquierdo · Marta Robles
For the respondent: Curtis, Mallet-Prevost, Colt & Mosle LLP
Experts: Patrick A. McGeehin (claimant) · Chris Osborne (claimant) · William Berkowitz (claimant) · Ivan Jerram (claimant) · Faraj A. Ahnish (claimant) · Ian Michael Osbaldeston (respondent) · Richard Lee Edwin (respondent) · Igor Corelj (respondent) · Al-Koni Ali Abuda (respondent)