Gulf News | 12 February 2024
Kuwait’s Agility gets favourable verdict on $380m Iraq funds
Dubai: The Kuwaiti company Agility gets another opportunity to reclaim its legacy investment in an Iraqi telecom firm. The charges brought by Agility relate to more than $380 million in diverted funds.
This marks quite a turnaround for Agility, because three years ago, an international arbitration tribunal - under the International Centre for the Settlement of Investment Disputes (ICSID) – had in fact denied claims filed by the company that ‘Iraqi officials had expropriated more than $380 million invested by Agility in an Iraqi telecom company’.
But last Thursday (February 8), an annulment committee of ICSID upheld Agility’s challenge to the original award and partially annulled it.
“The annulment committee agreed with Agility that the original Tribunal had erroneously shielded Iraq’s actions from scrutiny, thereby failing to examine whether Iraq’s actions and omissions violated the protections afforded to Agility under the BIT,” said a statement.
Agility will now re-file its claims before an arbitral tribunal who will be able to determine Agility’s claims.
In February 2017, Agility filed its claims with ICSID, a World Bank organization that serves as a forum for investor-state dispute resolution.
The claim was that Agility’s investments in Korek Telecom were expropriated, and that it was denied ‘due process and fair and equitable treatment’ in breach of the Kuwait-Iraq bilateral investment treaty.
Agility’s indirect investment in Korek had been approved by Iraq’s Communications and Media Commission in 2011.
“After many hundreds of dollars had been invested (including by way of license fees paid to the CMC), three years later in 2014 the CMC unilaterally decided to annul its own prior approval and declare Agility’s transactions as null and void,” the statement added.
“That decision of the CMC was then forcibly implemented in 2019 by Iraq stripping Agility’s indirect shareholding in Korek and transferring its stake to Iraqi shareholders.”
According to Agility, “in the original ruling, the tribunal failed to exercise jurisdiction over Iraq’s implementation of the CMC decision despite clearly having jurisdiction and it failed to answer whether the manner in which Iraq implemented the CMC decision violated the Kuwait-Iraq bilateral investment treaty. The original decision was obviously flawed.
“As a result of the self-evident error in the original ruling, Agility applied for annulment before an ad hoc committee constituted by ICSID.”
As a result of last week’s verdict, Agility will now have the opportunity to re-file its claims before a freshly-constituted arbitral tribunal at ICSID who will be able to determine Agility’s claims
- Relating to Iraq’s expropriation of Agility’s investment;
- Its failure to treat Agility fairly and equitably; and
- Its failure to accord Agility with full protection and security as required by the BIT.
To date, there have been four claims against Iraq filed with the ICSID. Three of those claims have been in connection with the actions of the CMC, and three stem from investments in companies based in the semi-autonomous Kurdish area of northern Iraq.
Separately, Agility is also moving expeditiously to enforce its arbitral award of more than $1.6 billions directly against Korek and others.