Libya Loses €100 Million Legal Dispute with Austrian Construction Company

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Libya lost a legal dispute with an Austrian construction company, worth more than €100 million euros, according to a report by the international legal platform Global Legal Chronicle.

The American law firm Latham & Watkins managed to obtain a court ruling in favour of Austrian company STRABAG SE (Strabag). Libya has been ordered to pay Strabag over €100 million in compensation, costs, and interest.

Strabag had invested in, and operated, a Libyan company called “Al Hani” which was performing major road and infrastructure works, when the civil war in Libya broke out. Al Hani’s sites suffered theft and damage from numerous forces. After the war, efforts to claim the outstanding payments, and for force majeure losses were consistently stymied by various state authorities.

In 2015, Strabag initiated arbitration, claiming it was owed money under the contracts and that the country was liable for damage to its sites and equipment during the revolution.

The arbitration was conducted under the ICSID Additional Facility Rules. After a two week hearing held at the World Bank in Paris in 2018, the tribunal issued its final award in June 2020, in which it declared that Libya had breached the Libya-Austria BIT.

Strabag was awarded damages for the equipment that had been requisitioned or damaged during the Libyan civil war. This is alongside significant damage for money contractually due to Al Hani under the contracts for the various projects, which multiple Libyan authorities had withheld over the years.

Libya subsequently petitioned the courts of the District of Columbia, the seat of the arbitration, to vacate the award, alleging that the tribunal had refused to decide whether the advance payments that had been made to Al Hani by the Libyan authorities should be reimbursed, and that the award was consequently not final.

On 30 September 2021, District Judge Dabney L. Friedrich rejected Libya’s attempt to vacate the award, and Libya appealed, modifying its arguments in a further attempt to challenge the award.

However, on 27 May 2022, the U.S. Court of Appeals for the District of Columbia affirmed the district court’s decision, confirming that the award was final. In so holding, the court agreed with Strabag that the tribunal had in fact considered Libya’s arguments in respect of the advance payments, and had rejected Libya’s claim that the advanced payments should be set off against the amount awarded to Strabag.