Qatar Pharma for Pharmaceutical Industries and Dr Ahmed Bin Mohammad Al Haie Al Sulaiti v. Kingdom of Saudi Arabia
ICC · Investment (ICSID and treaty) · Saudi Arabia · 23 Oct 2024
Why it matters
This is a landmark award under the OIC Agreement, a rarely invoked investment treaty. The Tribunal confirmed that Article 17 provides consent to arbitration without requiring a separate agreement, and that minor breaches of host state law do not trigger the clean hands doctrine to bar claims. It also awarded compensation for loss of enterprise value and receivables, setting a precedent for OIC-based investor-state disputes.
Summary
Qatar Pharma, a Qatari pharmaceutical company, and its chairman Dr. Al Sulaiti invested in Saudi Arabia through a scientific office and warehouses. In 2017, Saudi Arabia, along with other states, imposed a blockade on Qatar, severing diplomatic relations and closing borders. The Claimants alleged that Saudi measures, including the seizure of products and denial of permits, expropriated their investment and violated fair and equitable treatment (FET), full protection and security (FPS), and other protections under the OIC Agreement. Saudi Arabia objected to jurisdiction, arguing that Article 17 of the OIC Agreement does not provide consent to arbitration and that the claims were inadmissible due to Claimants' alleged violations of Saudi pharmaceutical laws (clean hands doctrine). The Tribunal, by majority, upheld jurisdiction, finding that Article 17 constitutes a standing offer to arbitrate. It also rejected the clean hands objection, holding that only serious violations of international law or fundamental principles could bar claims, and the alleged breaches of Saudi regulations were minor. On the merits, the Tribunal found that Saudi Arabia breached FET, FPS, and the obligation to grant permits (Article 5), but dismissed the expropriation claim because the measures were temporary and did not permanently deprive Claimants of their investment. The Tribunal awarded compensation for loss of enterprise value (QAR 276.8 million to Qatar Pharma) and loss of receivables and inventory (SAR 62.4 million and QAR 24.1 million to Dr. Al Sulaiti), plus interest. The award was issued on 23 October 2024, with the place of arbitration in London.
The detail
Parties: Qatar Pharma for Pharmaceutical Industries and Dr Ahmed Bin Mohammad Al Haie Al Sulaiti v. Kingdom of Saudi Arabia
Case number: ICC Case No. 25830/AYZ/ELU
Outcome: The Tribunal found Saudi Arabia breached Articles 2, 5, and 8 of the OIC Agreement and ordered payment of QAR 276,783,057 to Qatar Pharma, SAR 62,373,653 and QAR 24,142,807 to Dr. Al Sulaiti, plus interest at 2.82% p.a. from 5 December 2018. The expropriation claim was dismissed. Each party bears its own legal costs.
Quantum: QAR 276,783,057; SAR 62,373,653; QAR 24,142,807
Applicable law: OIC Agreement (Agreement for Promotion, Protection and Guarantee of Investments among Member States of the Organisation of the Islamic Conference, 5 June 1981); ICC Arbitration Rules (2017); international law; Saudi municipal law for Article 9.
Issues in play: The case involved the interpretation of Article 17 of the OIC Agreement (consent to arbitration) and the clean hands doctrine under Article 9. The Tribunal had to determine whether the OIC Agreement provided consent to arbitration and whether Claimants' alleged violations of Saudi law barred their claims.
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