Annulment of the Arbitral Award dated 22 March 2013 issued under the Unified Agreement for the Investment of Arab Capital in the Arab States
Key takeaways from the judgment:
1. The Court started by stating that "proportionality of compensation" is one of the enshrined rules of public policy amongst nations. In this regard, the Court was of the opinion that it could review an arbitral award if it is clear or apparent that the award orders an un-proportional quantum of compensation in a manifest manner.
2. The Court has considered this principle of "proportionality of compensation" to be one of the rules of "equity and justice" as well that has to be respected and applied even in the realm of reviewing arbitral awards.
3. The Court further considered that the principles of equity and justice pertain intrinsically to the notion of "international public policy."
4. The Court relied upon Article (9) of the Unified Agreement for the Investment of Arab Capital in the Arab States which states that the compensation due to the Arab investor should be an equitable one and proportional to the damages.
5. The Court further based its reasoning on the fact that its duty to combat the "abuse of rights".
6. Upon reviewing the award, the Court was of the opinion that the quantum of compensation was based solely upon faulty and very theoretical assumptions that do not mirror the reality. According to the Court, the Kuwaiti investor started its negotiation with the Libyan government by requesting only USD 5 Million, then the claims of the Kuwaiti investor have started rising up "dramatically" till it reached USD 2.05 Billion.
7. The Court gave a detailed and special attention to the merits of calculating the lost profits by the Kuwaiti investor. In sum, the Court found that a crucial distinction should be made between loss of actual profits and lost opportunity. In the eyes of the Court, both concepts are distinct and could not be equated in any manner.
8. It must be noted as well that the Court has rejected again the application by Financiere Cer (a third-party funder) to join the proceedings before the Egyptian Courts as it did not find such party to have a clear interest in the case at hand.
Note: Key takeaways, the document and the translation provided to Transnational Dispute Management (TDM, ISSN 1875-4120) by Shehata & Partners Law Firm.