Award

Strabag SE v. Libya

ICSID · Investment (ICSID and treaty) · Libya · 29 Jun 2020

Why it matters

This award is significant for its detailed analysis of the umbrella clause in the Austria-Libya BIT, confirming that contractual breaches can rise to treaty violations. It also addresses the burden of proof for military necessity under the war damages clause and the treatment of advance payment guarantees in set-off claims. The dissenting opinion highlights tensions between treaty and contract claims.

Summary

Strabag SE, an Austrian construction company, brought claims against Libya under the Austria-Libya BIT for losses related to road and infrastructure contracts. Strabag worked through a joint venture, Al Hani, with a Libyan partner. During the 2011 Libyan revolution, Strabag's equipment was requisitioned, damaged, or lost. After the conflict, Strabag faced difficulties recovering payments and completing projects. The Tribunal found it had jurisdiction over the treaty claims, including contract-based claims via the umbrella clause. It held Libya liable for failing to provide full protection and security for equipment requisitioned during the conflict, but not for equipment lost or destroyed during hostilities. The Tribunal also found Libya liable for unpaid payment certificates and certain delay damages under the contracts. However, it rejected claims for force majeure losses and set-off of advance payments, leaving that issue for separate proceedings. The award included a dissenting opinion on the set-off issue. The case is notable for its application of the BIT's war damages clause and the umbrella clause.

The detail

Parties: Strabag SE v. Libya

Case number: ICSID Case No. ARB(AF)/15/1

Outcome: Tribunal found jurisdiction and some treaty breaches; awarded compensation for certain claims, denied others; set-off of advance payments not allowed.

Applicable law: Austria-Libya BIT (2002); ICSID Additional Facility Rules; Libyan law for contracts

Issues in play: The case involved the interplay between treaty protections (fair and equitable treatment, full protection and security, umbrella clause) and contractual rights under Libyan law, particularly regarding force majeure and set-off of advance payments.

Read the full decision at italaw

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