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LIA initiates ICSID arbitration alongside criminal complaint

Commercial Dispute Resolution | 14 December 2023

LIA initiates ICSID arbitration alongside criminal complaint

by Robert Li

Libya’s sovereign wealth fund has instructed criminal counsel alongside its launch of an arbitration claim, in an increasingly bitter investment dispute with Belgium and involving a member of the royal family.

Sovereign wealth fund the Libyan Investment Authority has launched arbitration proceedings against Belgium concerning frozen funds. Filed at the World Bank division, the International Centre for Settlement of Investment Disputes (ICSID) on Monday (11 December), the claim invokes the 2004 bilateral investment treaty (BIT) between Libya, and Belgium and Luxembourg as the basis for consent to arbitration.

The roots of the convoluted dispute go back to a 2008 contract between Global Sustainable Development Trust (GSDT) – a non-profit organisation led by Prince Laurent, the brother of current Belgian monarch King Philippe – and the Libyan Ministry of Agriculture as part of the government of the late Muammar Gaddafi, to reforest sections of desert in the North African country.

A later settlement between the parties was then complicated by GDST’s separate EUR 67 million litigation in the Belgian courts for alleged contract breaches, lost profits and legal costs. The action subsequently targeted Libya’s EUR 14 billion in funds, many of them held at Belgian bank Euroclear, which have been frozen since 2011 due to UN sanctions on Libya for mistreatment of civilians during its period of political instability.

The failure to unfreeze the funds was followed by GSDT’s filing of a criminal report alleging Euroclear’s involvement in money laundering, and accusing LIA and its chair and CEO, Ali Mahmoud Hassan Mohammed, of serious criminal impropriety, culminating in the issue of a since-deleted Interpol notice. LIA responded in July by submitting a criminal complaint of its own against Prince Laurent personally.

Following its filing of the ICSID arbitration on Monday, LIA announced it has retained the services of high-profile Belgian criminal lawyer Sven Mary, who confirmed the legal team’s meeting with federal police this week, and further adding in a statement: “This is an important next step in this criminal case. We believe we have compelling evidence to support our client’s case which alleges fraud, extortion and trading in influence by Prince Laurent. These are serious allegations that the police are now assessing, and we are confident that there is indeed a case to answer.”

CDR contacted the Belgian government’s Department for Foreign Affairs, Foreign Trade and Development Cooperation, which declined to comment.

In the ICSID arbitration of LIA v Belgium, the claimant is represented by London-based Lindeborg Counsellors at Law and Harding Mitchell Solicitors, who have in turn instructed 3 Hare Court barrister Matthew Happold. Taylor Wessing is acting for the respondent, led by partner Karel Daele with senior associate Elizabeth Montpetit.

Last month, UK defence contractor Babcock and the UK government agreed to pause the arbitration process between them, following a dispute arising from the spiralling costs of a warship contract.

 source: Commercial Dispute Resolution