• Monday, Jun 01, 2020
  • Last Update : 01:37 pm

'This victory sends a clear message to foreign investors'

  • Published at 11:00 am May 5th, 2020
Barrister Moin Ghani-Niko gas case
Barrister Moin Ghani Collected

A tribunal formed under the World Bank's International Centre for Settlement of Investment Disputes (Icsid) found Niko negligent, thus, liable for the blowouts as the drilling was being carried out under its arrangements and supervision

A tribunal formed under the World Bank's International Centre for Settlement of Investment Disputes (ICSID) found Niko negligent, thus, liable for the blowout as the drilling was being carried out under its arrangements and supervision

Bangladesh has won an international arbitration on February 28 against Niko, the Canadian company responsible for the blowout in the Chhatak gas field (Tengratila neighbourhoods) in Sunamganj in 2005.

A tribunal formed under the World Bank's International Centre for Settlement of Investment Disputes (ICSID) found Niko negligent and thus liable for the blowouts, as the drilling was being carried out under its arrangements and supervision.

It also said Niko must compensate Bangladesh with the latter's authorities claiming $1 billion in damages. 

Barrister Moin Ghani, the lawyer representing the country at ICSID, says Bangladesh may realize a maximum of $330 million of the total sum since Niko has in effect become bankrupt.

In an interview with Dhaka Tribune, the lawyer shares his experiences while dealing with the case and also detailed its ins and outs. 

DT: First up, tell us something about your impression of winning the arbitration that came after almost a decade long complex litigation.

MG: It was a very difficult case to win. Niko was granted the gas field in 2003 and the blowout happened in 2005. After almost 15 years of the blowout -- with many of the records and evidence destroyed, lost, or hidden from us -- we had to establish that the blowout was not just an accident, as claimed by Niko, but was actually caused by its negligence. 

We are obviously very happy with this great victory over an international oil company. This ends Niko's 10-year long effort to have an international arbitration tribunal to find that it was not liable.

Right from the beginning of Niko's investment in Bangladesh, the Canadian company had been embroiled in numerous controversies, including bribery and corruption. Thus, this victory was important to send a clear message to foreign investors that they cannot get away with doing what they please in Bangladesh. 

The timely and priceless support from the prime minister, the law minister, the state minister for energy and top energy sector officials made the [victory over Niko] possible.

DT: How did you engage yourself in the process of representing the country when many international lawyers refused to stand for Bangladesh government at the ICSID?

MG: When I was requested to take over the case in July 2015, the case had already gone on for five years and the proceedings were coming to an end. The tribunal had issued a decision on jurisdiction and another decision on the payment obligation of Petrobangla for gas supplied by Niko. The parties had already submitted their pleadings on liability and damages without any evidence or expert reports of the damages caused by Niko. 

Many top international lawyers had refused to take over the case since they saw it as a lost cause. I was first encouraged by the state minister for energy to take up the challenge. 

After an initial review, when I informed him that this was a tough case to win, he very encouragingly said that we don't necessarily have to win, but we have to put up a fight so that foreign investors understand that Bangladesh is capable of putting up a fight before international tribunals. 

I contacted my former colleagues at Foley Hoag LLP, a law firm in Washington DC where I used to work. We successfully convinced the tribunal to grant us an extension of time for presenting our case with additional expert reports and evidence of the harm caused by Niko. We received assistance from international experts and in 2016 filed a memorandum on damages. 

DT: The ICSID on May 18, 2010 turned down Chevron's claim of around $240 million from Petrobangla. And now Bangladesh won over Niko. What's your take on being a counsel in both the cases that took almost 10 years each for a settlement?

MG: Since Bangladesh's independence, we won before the ICSID twice. Interestingly, both wins came during the Awami League tenure with me having the rare privilege of acting as counsel in both cases. 

International arbitration cases are often complex and require special expertise. I have worked for top international firms in both the UK and the US. It has been my experience that all developing nations, not just Bangladesh, often face an uphill task in successfully defending cases before international tribunals. This is where the question of leadership comes in. Without effective political will and leadership the sovereign states generally lose out. 

DT: While it is said that Niko has gone bankrupt now, how would Bangladesh realize the compensation?

MG: Actually, the company has not gone bankrupt. Rather its creditors have taken over its management. The Canadian company has its assets in Bangladesh seized now. Similarly, it also lost all its assets in India in December last.

We can adjust the compensation with Niko's shareholding in Block 9 (worth about $300 million) that Bangladesh has already seized. Also, Bangladesh no longer needs to pay Niko $30 million against the purchase of its share of gas, meaning we will not get more than one-third of the compensation. 

DT: Is there any chance that Niko could challenge the verdict?

MG:  No, absolutely not. All Niko can do is seek an annulment on some limited grounds; that too, after the final verdict comes out. 

DT: Since Bangladesh is currently facing an acute shortage of natural gas, what impact do you think the latest victory will have on the foreign companies engaged in the country's dwindling energy sector?

MG: Regarding the actions of investors, I want to differentiate between bad foreign investors, who use unlawful means to obtain government contracts, and good foreign investors, who comply with the applicable laws and acceptable international industry standards. We hope the decision will be a warning for bad foreign investors and encourage good foreign investors to operate in Bangladesh.

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