Government wins case vs Piatco at ICC

MANILA, Philippines - The government has again won its case against the bid of the Philippine International Air Terminals Co. (Piatco) in Singapore for compensation worth $565 million over the revocation of its contract to operate the Ninoy Aquino International Airport (NAIA) Terminal 3.

The high court of Singapore also affirmed the ruling of the International Chamber of Commerce (ICC)’s arbitration tribunal in July last year that dismissed the claim of Piatco, the Office of the Solicitor General said yesterday.

The court junked the consortium’s motion to set aside ICC’s decision, which also ordered Piatco to pay the government more than $6 million in costs.

The Singapore High Court, according to the OSG, held that the international tribunal acted within its powers in dismissing Piatco’s claims on the ground of illegality and that the arbitration tribunal observed due process in arriving at the decision.

It junked Piatco’s claim that the ICC tribunal misapplied the Anti-Dummy Law and found it disingenuous for Piatco to insist that it was not given the right to be heard on the issue considering that the case records show that Piatco fully argued its case before the arbitral tribunal.

The government had taken over the operations of NAIA 3 in 2004 following a ruling of the Supreme Court declaring null and void for being contrary to law and public policy the concession for the build-operate-and-transfer arrangement of NAIA 3 entered into between the government and Piatco.

The agreement authorized Piatco to build the $650-million NAIA 3 and grant a franchise to operate and maintain the terminal during the concession period of 25 years.

The contracts, however, were nullified, by the court as it held that Paircargo Consortium, predecessor of Piatco, did not possess the requisite financial capacity when it was awarded the NAIA 3 contract and that the agreement was contrary to public policy.

Piatco sued the government before the ICC in Singapore where it sought to recover at least $565 million in damages. Its foreign investor, Fraport, separately sued the government at the International Center for the Settlement of Investment Disputes (ICSID) in Washington.

In August 2007, the ICSID affirmed the Supreme Court’s nullification of the concessions and rejected Fraport’s claim because of its violation of the Anti-Dummy Law.

Last July, the ICC also rejected Piatco’s claim because of illegality arising from Piatco’s violation of the Anti-Dummy Law.

The law requires that the operation, management and control of public utilities such as the NAIA airport should remain with Filipinos.

The ICC tribunal found that Piatco and its foreign investor Fraport, illegally ensured that Fraport shall control the public utility through secret shareholder agreements and loans.

In its final award last May, the international tribunal further ordered Piatco to pay the government more than $6 million in costs.

Piatco has since applied to the Singapore High Court to also annul the ICC tribunal’s award on costs.