Platinum Blackstone PTY LTD (formerly known as Nexbis Pty Ltd) v. Republic of Maldives, SIAC ARB No. 003 of 2014
SIAC · Investment (ICSID and treaty) · Singapore · 24 Nov 2016
Why it matters
This case is significant for its detailed analysis of the distinction between bribery and conferring an undue advantage under Maldivian anti-corruption law, and the application of transnational public policy. The Tribunal held that a contract is not voidable for corruption unless the claimant was involved in bribery or illegal conduct. It also clarified the standard for insolvency under a concession agreement and the interpretation of contractual fee provisions.
Summary
The dispute arose from a Concession Agreement (CA) between Nexbis Pty Ltd (Claimant) and the Government of the Republic of Maldives (Respondent) for the design, implementation, and operation of a border control system. The Claimant sought damages for breach of contract after the Respondent terminated the agreement. The Respondent raised several defences: frustration (due to lack of parliamentary budget approval), insolvency of the Claimant, and corruption (alleging that Maldivian officials had conferred an undue advantage on the Claimant in violation of the Prohibition and Prevention of Corruption Act (PPCA)). The Tribunal, composed of sole arbitrator Chan Sek Keong, rejected all defences. On frustration, it found that the Respondent's failure to secure budget approval was a self-induced frustration. On insolvency, the Tribunal applied a strict test and found that the Claimant was not insolvent at the relevant time. On corruption, the Tribunal distinguished between bribery and conferring an undue advantage, holding that the Respondent's own officials had acted improperly but the Claimant was not involved in any corrupt act. Therefore, the contract was not voidable. The Tribunal also addressed damages, interpreting the CA to allow a passenger fee of only US$2 (not US$4 as claimed) and limiting damages to the period before the Claimant entered voluntary administration. The award was issued under SIAC Rules with Singapore law as the governing law.
The detail
Parties: Platinum Blackstone PTY LTD (formerly known as Nexbis Pty Ltd) v. Republic of Maldives, SIAC ARB No. 003 of 2014
Case number: italaw/cases/7154
Outcome: The Tribunal dismissed the Respondent's defences of frustration, insolvency, and corruption, and found the Claimant entitled to damages for breach of the Concession Agreement, but limited the passenger fee to US$2 per passenger and awarded damages only up to the date of voluntary administration.
Applicable law: Concession Agreement for the Maldives Immigration Border Control System dated 17 October 2010; SIAC Rules (5th Edition, 1 April 2013); Singapore law (governing law of the contract); Maldivian law (Prohibition and Prevention of Corruption Act) and transnational public policy considered.
Issues in play: The case involved a collision between the Claimant's contractual rights under Singapore law and the Respondent's defence that the contract was tainted by corruption under Maldivian law (PPCA) and transnational public policy. The Tribunal had to determine whether internal procedural lapses by Maldivian officials, without any involvement by the Claimant, could render the contract voidable.
Read the full decision at italaw ↗
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