Role of Domestic Court and International Arbitration in ensuring climate justice

in Bangladesh

Barrister Tapas K. Baul1

Umme Wara2

Abstract:

In this article, the authors have analysed the Niko case to show that presently in

Bangladesh climate viz-a-viz environment victims, both an individual and Bangladesh, as

a state, can go to two forums, i.e., the national court and the international arbitration

centres. The authors have also discussed briefly on the pros and cons of both the forums,

i.e., the national court and the international arbitration. In the later part of this article, the

authors have discussed why international bodies, e.g., Niko, prefer arbitration as a dispute

resolution mechanism rather than litigation. The authors have also presented other case

studies to show in which situations arbitrations are better solutions than litigation and

where not. In conclusion, the authors wished that Bangladesh should build up a legal

regime to have a better justice system for the environment cum climate victims.

1. Introduction

Recently, an international Arbitration Tribunal, International Centre for Settlement of

Investment Disputes (ICSID), has decided in favour of the ‘climate victims’ of

Bangladesh against a ‘giant’ international gas extracting company ‘NIKOi’ and due to

that decision, now it will be possible for the domestic courts of Bangladesh to hear the

pending money suit on compensation. The fact of the suit was that in a Gas Mine of

Magurchara two gas explosions took place on 2005 resulting into an environmental

disaster in the surrounding area.ii The explosion also had disastrous effects on the lives

of all living beings, including the human beings, in the neighbouring forests, fields, water

bodies, low lands and villages.iii NIKO was the company in charge of excavating and

supplying gas from that reservoir and it is claimed that the disaster took place due to

their negligence.iv Subsequently, in 2006v, Bangladesh Environmental Lawyers

1 Prosecutor, International Crimes Tribunal, Bangladesh and Advocate, Supreme Court of Bangladesh.

2 Assistant Professor of Law, Jagannath University, Dhaka, Bangladesh.

Association (BELA) filed a public interest litigation in the High Court Division of the

Supreme Court of Bangladesh against the government, Bangladesh Petroleum

Exploration and Production Company Limited (BAPEX), Bangladesh Oil, Gas and

Mineral Corporation (Petrobangla) and Nikovi and subsequently got an injunction order

that barred Petrobangla from paying gas bills to the company until the compensation

was settledvii. Later, on 27 May 2008 Petrobangla served on Niko legal notice claiming

TK 746.50 crore as damages for the blowoutsviii and filed the above-mentioned money

suit in the environment court of Dhaka. Finally on 2010, Niko formally requested for

arbitration to ICSID against Bangladesh and others.ix Now in this outset, it has become

pertinent to have a critical look towards the role of the courts of Bangladesh in ensuring

climate justice.

In this chapter, we will evaluate the avenues available to the climate victims of

Bangladesh to get justice for the wrongs done against them. To do so, we will not get

limited within the national mechanisms alone, we will evaluate the international

components of justice as well. It will be relevant to evaluate the performance of the

actors, both direct and indirect, who have some role to play one way or the other in

ensuring access to justice to the climate victims of Bangladesh. So first, we should find

the existing avenues, or forums, available under our judicial system in Bangladesh for

the climate victims.

2. Laws and Forums for the environmental and climate victims

The main sources of environmental law in Bangladesh are: the Constitution, statutory

laws and by-laws, customs, traditional perceptions and practices, international

conventions, treaties and protocols.x There are 187 environment related laws which can

be compartmentalized into land use and administration, water resources, fisheries,

forestry, energy and mineral resources, pollution and conservation, wildlife and

domestic animals, displacement, vulnerable groups, relief and rehabilitation, local

government, rural and urban planning and protection.xi The procedural rules for the

Courts to administer these laws would be derived mostly from the existing procedural

codes, i.e., the Civil Procedure Code, 1908, the Criminal Procedure Code, 1889 and the

Evidence Act, 1872.xii

Regarding forums, there are three forums to address environment and climate injustice,

i.e., by filing a suit in the environment court, by filing public interest litigation in the

form of writ petition under Article 102 of the Constitution of the People’s Republic of

Bangladesh and by filing a complaint before the international bodies subject to the

question of jurisdiction and presence of such provision in the agreement signed

between the parties. We will start our discussion with the power of the environment

court to ensure climate justice and while doing so we will also highlight on the pros and

cons of the relevant act, i.e., Poribesh Adalat Ain, 2000 (Environment Court Act, 2000).

3. Poribesh Adalat Ain (Environment Court Act, 2000) and Poribesh Adalat

(Environment Court)

Within 3 years of UN Conference on Environment and Development (UNCED), 1992xiii in

Rio de Janeiro of Brazil, Bangladesh as a signatory state to the Rio Declaration, took its

first step towards fulfilling its international commitment by enacting Poribesh

Songrokkhon Ain, 1995 (Environment Conservation Act, 1995). Since commitments

recorded in the Rio Declaration call for legal and judicial activismxiv and subsequent

National Environmental Policy of 1992, government finally enacted Poribesh Adalat Ain,

2000. Although this piece of enactment has given opportunity to both environmental

and climate victims to access the judicial process and opportunity for the national

courts to exercise international principles, like: sustainable developmentxv,

intergenerational equityxvi, the precautionary principlexvii, polluter pays principlexviii

etc., lacunas have been identified.

Lacunas of the law which are related with the environment court as well, at a glance,

are:

There are only two environmental courts, i.e., one in Dhaka and

another one in Chittagong for the whole countryxix, even though

there was supposed to be one environmental court for each

division, which means there should have been at least seven

environmental courts in the countryxx.

As per the law, the environmental courts should have been headed

by a judge of the status of the Joint District Judgexxi, however, in

reality Assistant Judges play the role of a judge in the

environmental courtsxxii.

According to section 4 of the Environmental Courts Act, the judges

of the environment courts should have dealt with the

environmental cases alone, however, in reality they deal with

heap of other cases and practically, they hear other cases and

occasionally hear environmental cases.

The major objection regarding the Act of 2000 lies with sub-

section 3 of section 5. As per this sub-section, the environmental

courts will have no jurisdiction over any complaint, unless and

until the Inspectorxxiii of the Directorate of Environment submits

his written report to the Court. This means, primarily the judicial

mechanism has to be triggered by an executive. This is wrong in

so many levels. First, this is against the principles of separation of

power. Secondly, if the concerned officer is a corrupted person,

which is very common in Bangladesh, then it is quite possible that

he will submit a polluter-friendly report, moreover, he may not

submit any report or may cause delay, since initially no time limit

to submit the written report was included in the Act of 2000.

However, a checking procedure has been introduced by

amendmentxxiv, and now if the Inspector fails to submit the report

within 60 days then the Judge may take the case into cognizance

without the written report subject to opportunity to the Inspector

to come up with a reasonable explanation for not submitting the

report.

Even though the environment court enjoys the exclusive

jurisdiction for trial of an offence or for compensation falling

under the Environment Conservation Act and other

environmental laws, however the government is yet to declare

the other laws which are to be dealt with by the environment

court.xxv In addition, the government has not yet framed

necessary procedural rules for the smooth functioning of the

court.xxvi

Again under section 7 of the Environmental Conservative Act, the

Director General of the Department of Environment has the

authority to impose compensation upon the polluter if it appears

to him that any act or mission is causing harm to the ecosystem,

however, neither the Act nor the Rules of 1997 is yet to spell out

the procedure in which to calculate environmental damage for the

purpose of paying compensation.xxvii

Section 12 of the Bangladesh Environment Conservation Act, 1995

imposes restriction upon free establishment of industrial unit or

project without environmental clearance certificate under section

7 from the local government authority, however, till today neither

the Act nor the Rules provides any procedure to be followed by

the local government authority in issuing such no objection

certificates and due to absence of procedures this provision of

public hearing has not yet been incorporated in the

environmental conservation Act or rules.xxviii In addition, it is yet

to be reviewed that whether local government authority has that

capacity or not.

Questions can also be raised regarding the jurisdiction of the court.

Which types of polluters are the subject-matters of this court?

Initially, we have two types of polluters, i.e., national polluters

and international polluters. National polluters can also be divided

into categories, i.e., citizens or national enterprises and foreigners

or international enterprises living and working in Bangladesh

through their local branch, like – Niko. International polluters can

also be divided into two categories, i.e., private individuals or

enterprises and other states. By the term ‘state’, from the climate

/ environmental perspective, we can consider all the states

irrespective of their proximity since the polluter / responsible

state can be thousand miles away from Bangladesh but causing

significant damage to the victims by destroying their climate and

/ or environment. After a plain reading of the Preamble and long

title of the Act of 2000 together with section 5 of the Act, it can be

stated that the environment court of Bangladesh can exercise

their jurisdiction over the national polluters be it a citizen or a

foreign element. The proceeding against Niko is a good example

of this proposition. However, foreign elements are not within the

jurisdiction of this court. Hence, these courts do not have any

power over foreign elements and the climate / environmental

victims.

4. International arbitration: its jurisdiction and procedure

This article has started with Bangladesh’s ongoing legal attempt against the oil

company, i.e., NIKO, and as it has been suggested Bangladesh is fighting against NIKO in

two fronts, one – the District Court of Dhaka and another – in ICSID, where a dispute

will be settled through Arbitration. Therefore, in this part of the article, we will start

with simple questions, like – what is arbitration? what are the procedures that are

followed in an arbitration? how can it help to ensure the justice for the climate or

environmental disaster victims of Bangladesh? etc.

Arbitration is a consensual method of dispute resolution outside the court system by

one or more (usually three) independent and neutral arbitrators which the parties

agreed voluntarily. The arbitral award is final and binding and is enforceable as a

court’s decree. If the country where the award is given is a contracting state of the

Convention on the Recognition and Enforcement of Foreign Arbitral Awards, 1958 (also

known as the New York Arbitration Convention), it may be enforced in any of the 148

countries that are members either through an adhoc arbitration or an Institutional one ;

Bangladesh Institute for International Arbitration (BIAC).

Since Bangladesh is a party to the New York Convention and the ICSID Convention 1965

(Convention on the Settlement of Investment Dispute between States and Nationals of

Other States) and the Arbitration Act 2001 provides for enforcement of foreign arbitral

awards in accordance with the New York Convention, Bangladesh has entered into over

20 bilateral investment treaties (BITs) with other states, most of which contain specific

dispute resolution provisions for the settlement of disputes between investors and

Bangladeshxxix. But to initiate arbitration, it is good to have a relevant clause while the

agreement is signed between the parties mentioning if any dispute arises which is an

arbitrable one shall be resolved by arbitration. According to section 9(2) of Arbitration

Act of 2001, an arbitration agreement shall be in writing. An arbitration agreement shall

be deemed to be in writing if it is contained in- (a) a document signed by the parties; (b)

an exchange of letters, telex, telegrams, fax, e-mail or other means of telecommunication

which provide a record of the agreement; or (c) an exchange of statement of claim and

defence in which the existence of the agreement is alleged by one party and not denied

by the other. Thus any party can resolve their disputes through arbitration which is

different than a litigation in few ways.

5. Arbitration vs. Litigation:

Litigation is a lawsuit, heard and adjudicated in court by judge(s). Arbitration, on the

other hand, is the outcome of an agreement between two or more parties to a contract

to resolve a dispute through a specific process outside of the courts. In arbitration, the

disputant parties nominate one (or, three) neutral and independent arbitrator(s). It is

responsibility of arbitrator/ arbitrators to examine claims and counter claims, to hear

witnesses, to peruse evidence and to arrive at a decision known as an arbitral award.

Unlike in litigation, the rights of appeal are limited in arbitration. Arbitral award is

enforceable as a decree of court if the time for making an application to set aside the

arbitral award under section 42 of the Arbitration Act 2001 has expired, or such

application having been made has been refused (section 44 of the Arbitration Act 2001).

The basic purpose of arbitration is to resolve certain types of disputes speedily, with

confidentiality and by the parties’ chosen arbitrator(s). Almost all types of civil disputes

can be arbitrated. This includes contractual disputes, shareholder disputes, commercial

disputes, family disputes, tort, etc. In some countries, a few categories of criminal cases

are also resolved through arbitration. It is always advisable to check with your counsel

to determine if the case is suitable for arbitration.

Arbitration provides distinct advantages over court litigation. Arbitration is a private

method of settling disputes; parties can tailor the arbitration proceeding in the manner

they choose. For example, parties involved in arbitration can agree to limit the number

of witnesses each side will present, set parameters on the amount and type of evidence

that will be presented, and pre-determine what issues the arbitrator’s award should

cover. Another important advantage of arbitration is that in arbitration the parties can

choose their arbitrator(s) having experience in the subject matter of the dispute. If the

parties had gone to court, it is uncertain if the judge dealing with their case would have

expertise or experience in areas/ matters of the dispute. The arbitrator’s knowledge

allows for a quick, in-depth analysis of the issues, which in turn saves time and expense.

Unless parties decide otherwise, arbitration hearings are confidential and the decisions

reached are generally not matters of public knowledge. On the other hand, court

proceedings are generally in the public domain. The companies involved may not want

the public to be aware of the details of their business dealings. Arbitration Award is final

and binding on both the parties. A party may challenge an Arbitration Award on very

limited grounds. Usually, courts have very limited scope to set aside an Arbitral Award.

Finally, unlike court’s order, Arbitration Award is enforceable in 148 countries around

the world, if the place of arbitration occurs within a country which is signatory to New

York Conventionxxx.

In arbitration, parties must ensure that all the required documents, evidences and

witnesses are submitted; otherwise, their case may suffer. Secondly, an arbitration

award is very difficult to set aside on appeal. This can be a serious problem for a party

that is not prepared for a decision against it. Arbitration can sometimes be as expensive

as court litigation. However, since the parties are in control of the arbitration process,

they may design it in a way to prevent lengthy extensions and also contain costs.

Case Study: Saipem S.p.A. v. The People’s Republic of Bangladeshxxxi (“Saipem v.

Bangladesh”)

i) Background and the ICC Arbitration:

Saipem S.p.A., an Italian oil & gas company, and Petrobangla (Bangladesh Oil, Gas &

Mineral Corporation), a Bangladeshi public entity, entered into an agreement on

February 14, 1990, to build a natural gas pipeline in Bangladesh. This contract was

governed by the laws of Bangladesh and set forth an arbitration clause. Such clause

referred any dispute between the parties to the Rules of Conciliation and Arbitration of

the International Chamber of Commerce (ICC) and established Dhaka, Bangladesh as the

venue of the arbitration. The whole project was significantly delayed because of strong

opposition by the local population. Although the parties agreed on extending the

completion date, they could not reach an agreement regarding compensation and

additional costs as a consequence of such delay.xxxii Also, a controversy arose in relation

to a warranty bond and retention monies. In accordance with the original contract’s

arbitration clause, Saipem initiated an ICC arbitration tribunal seeking outstanding

payments owed under both the original contract and the subsequent extension

agreement.

During the ICC arbitration, Petrobangla brought before the ICC tribunal various

procedural requests.xxxiii Since the ICC tribunal denied such requests, Petrobangla

brought an action before the First Court of the Subordinate Judge of Dhaka seeking the

revocation of the ICC Tribunal’s authority. The grounds of this action were an alleged

misconduct of the arbitrators and a breach of the parties’ procedural rights when

deciding the above-mentioned procedural requests made by Petrobangla.

Additionally, Petrobangla filed an action in the High Court Division of the Supreme

Court of Bangladesh to stay all further proceedings of the ICC arbitration. A week later,

an injunction restraining Saipem from proceeding with the ICC arbitration was issued

by the Supreme Court of Bangladesh. Subsequently, Saipem filed an objection to the

injunction restraining it from proceeding with the ICC arbitration. Thereafter, on April

5, 2000, a decision revoking the authority of the ICC arbitration Tribunal was issued by

the First Court of the Subordinate Judge of Dhaka. Even though this last decision was

subject to two degrees of appeals, Saipem decided not to do so. According to Saipem,

“the latter decided not to file an appeal because any expectations to succeed appeared

unsustainable under the circumstances.”xxxiv

Despite the decision revoking the authority of the ICC tribunal rendered by the

Bangladeshi courts, the ICC tribunal decided to resume proceedings. Subsequently,

Petrobangla secured various injunctions from the High Court Division of the Supreme

Court of Bangladesh restraining the continuance of the ICC arbitration tribunal.xxxv

Nevertheless, on May 9, 2003, the ICC arbitration tribunal issued a final arbitration

award holding inter alia that Petrobangla had breached its contractual obligation to

compensate Saipem for the time extension and additional works.

In order to set aside the arbitration award, Petrobangla filed an action before the High

Court Division of the Supreme Court of Bangladesh under Sections 42(2) and 43 of the

Bangladeshi Arbitration Act 2001. This court denied the petition on April 21, 2004

stating that it was “misconceived and incompetent inasmuch as there is no Award in the

eye of the law, which can be set aside…A non-existent award can neither be set aside

nor can it be enforced.”xxxvi According to this decision, the ICC award was rendered non-

existent and was unenforceable in Bangladesh. Nonetheless, Saipem did not appeal this

decision.

ii) The ICSID Arbitration

Saipem, on October 5, 2004, filed a request for arbitration with the International Centre

for Settlement of Investment Disputes (ICSID). The parties in the ICSID arbitration were

Saipem and the Government of Bangladesh and the claims were based on the breach of

the Bilateral Investment Treaty (BIT) between Italy and Bangladesh.xxxvii The basis of

Saipem’s claims was the undue intervention of the Bangladeshi courts in the ICC

arbitration, which precluded the enforcement of the ICC award in Bangladesh or

elsewhere. According to Saipem, those acts constituted an expropriation and deprived

Saipem of any compensation. Thus, Saipem in its request for arbitration sought inter

alia a declaration that Bangladesh expropriated Saipem of its investments without

compensation and that Bangladesh breached its obligations under the BIT.

On June 30, 2009, the ICSID Tribunal rendered the final award. The Tribunal considered

that the expropriated “property” consisted of “Saipem´s residual contractual rights

under the investment as crystallized in the ICC Award.”xxxviii Also, the ICSID Tribunal

concluded that the actions of the Bangladeshi courts were not a direct expropriation,

but “measures having similar effects” within the meaning of Article 5(2) of the BIT.xxxix

These actions deprived Saipem of the benefit of the ICC Award.xl The decision of the

Supreme Court of Bangladesh that the ICC Award was a nullity “is tantamount to a

taking of the residual contractual rights arising from the investments as crystallized in

the ICC Award. As such, it amounts to an expropriation within the meaning of Article 5

of the BIT”.xli

The ICSID Tribunal concluded that the revocation of the arbitrators’ authority by the

Bangladeshi courts was contrary to international law, specifically to the principle of

abuse of rights and the New York Convention and, therefore, such revocation

constituted an expropriation within the meaning of Article 5 of the BIT.

The ICSID Tribunal concluded that courts of Bangladesh abused their rights when

exercising supervisory jurisdiction over the ICC arbitration process. Although national

courts have discretion to revoke an arbitrator´s authority in cases of misconduct, they

cannot use this discretion to revoke the authority of arbitrators based on reasons

wholly unrelated to such misconduct. In addition, the ICSID Tribunal determined that

the actions of the courts of Bangladesh were against the New York Convention,

specifically Article II (1), which imposes on Contracting States the obligation of

honoring arbitration agreements. Furthermore, the ICSID Tribunal deemed that “the

expropriation of the right to arbitrate the dispute in Bangladesh ... corresponds to the

value of the award rendered without the undue intervention of the court of

Bangladesh.”xlii Thus, the ICSID Tribunal established that Saipem was entitled for relief,

which was equivalent to the amount awarded in the ICC award plus interest.

In sum, the circumstances of this case were unique and it is very unlikely that they will

happen again. According to previous ICSID awards, an investor should exhaust local

remedies in order to initiate investment arbitration based on acts of the judiciary. The

ICSID Tribunal in this case found that this condition is not applicable in the case of

expropriation, with no further explanation. Therefore, the ICSID Tribunal’s holding

in Saipem v. Bangladeshseems to be restricted in such a way that most likely will not be

applied in future cases. It is a learning for us also not to misuse any of the power

ensured by the Arbitration Act and concerned Arbitration Rules. If these rules and

regulations are exercised with a bonafide intention to resolve a dispute between the

parties especially from different countries within shortest possible time, arbitration is

the best option for it.

6. Last few words:

Presently, on the one hand, lots of local and foreign investors prefer Bangladesh for

investment in the rising industrial sectors as well as in the gas mines and in the oil

reserves and on the other hand, national debates are taking place on government-

private initiative to set up a coal based power plant around Sundarban and a uranium

based power plant in Rupganj and their environmental aspects. These kinds of

dilemmas have triggered the old debate between the right to development and the right

to have a sustainable environment. Within all these confusions, the government and the

members of the civil society should not forget about necessity of having a strong dispute

resolution system for the environment and the climate victims, since forums, like – the

court or the arbitration, national or international, will finally decide about the fate of the

victims, who are entitled to their right to life, which depends both on the right to have a

healthy environment and right to development. Therefore, at the end, we wish

Bangladesh should build up a legal regime to have a better justice system for the

environment cum climate victims.

i ‘NIKO loses to Bangladesh’, www.natunbarta.com/english/national/2013/08/21/8078, accessed on

16.09.2013. ii ibid No. 1

iii ibid

iv Niko Resources (Bangladesh) Ltd. v. People’s Republic of Bangladesh and Others, ICSID Case No.

ARB/10/11 and ICSID Case No. ARB/10/18, Date of decision: 19 August, 2013, paragraph Nos. 94-97. v ‘Bangladesh no longer a party to Niko arbitration: ICSID’, New Age, 21 August, 2013,

http://newagebd.com/detail.php?date=2013-08-21&nid=61927, accessed on 16.09.2013 vi ibid No. 5, paragraph Nos. 98.

vii ibid No. 6

viii ibid No. 5, paragraph No. 100

ix ibid No. 5, paragraph No. 105

x Justice Mainur Reza Chowdhury, ‘Legal and Institutional Framework: Promoting Environmental Management

in Bangladesh’, 13(3), viewed on 17 September 2013 from

www.unep.org/delc/Portals/119/publications/Speeches/Bangladesh.pdf xi

ibid No. 11 xii

ibid No. 11 xiii

Informally known as the Earth Summit. For more, see: www.un.org/geninfo/bp/enviro.html xiv

‘Rio Declaration in Principle 11 requires the states to enact effective environmental legislation and standards,

access to judicial and administrative review process becomes relevant[..]

to uphold people’s right that such laws

would endure. Right to participation and access to environmental decision making process[...]

need express legak

recognition that the judiciary can safeguard in appropriate instance’ [footnotes deleted], ibid No. 11, 13(1). xv

FAP-20 case, (1997) 49 DLR (AD) 1 xvi

‘This implies that we have a duty to defend and improve the environment for present and future generations

and to use natural resources in a manner that ensures the preservation of the eco-system for the benefit of

present and future generation.’ Jona Razzaque, ‘Access to environmental justice: Role of Judiciary in

Bangladesh’, 13(5), viewed on 01.10.2013, from www.biliabd.org/.../jona%20.pdf xvii

‘... provides guidance in the development and application of international environmental law where there is

scientific uncertainty. The purpose is to encourage the decision makers to consider harmful effects of their

activities on the environment before they pressure those activities. ibid No. 17 xviii

‘... is used to prevent, control and reduce environmental harm. This principle expects polluters to bear the

costs of measures carried out by the public authorities with respect to potential and actual environmental

damage.’ ibid No. 17, 13(6) xix

Ministry of Law, Justice and Parliamentary Affairs, Letter dated 16.10.2001, Memo. No. 1273-bichar-4/5c-

4/2000, “Regarding the establishment of two Divisional Environmental Courts in two Divisions, i.e., Dhaka and

Chittagong and the establishment of one Environmental Appellate Court in Dhaka” (translated by the authors),

signed by Senior Assistant Secretary, Law, Justice and Parliamentary affairs. xx

Section 4 of the Environmental Courts Act, 2000 xxi

ibid No. 21 xxii

ibid No. 20 xxiii

For definition, see: sec. 2(kha) of the Environment Courts Act 2000 xxiv

The original sub-section 3 was replaced by section 5 of Act No. 10 of 2002

xxv Salahuddin M. Aminuzzaman, 2010, ‘Environmental Policy of Bangladesh: A Case Study of an Ambitious

Policy with Implementation Snag’, 18(11), viewed 12 October 2013, from:

www.monash.edu.au/research/.../paper_salahuddin_aminuzzaman.pdf xxvi

ibid No. 26 xxvii

ibid No. 26 xxviii

ibid No. 26

xxix

Bhuiya, sharif & Jahan, Karishma, Dr. Kamal Hossain and Associates, Global Arbitration Review, The

International Journal of Public and Private Arbitration, 2008, p 15

xxx <www.biac.org.bd> last accessed on 10.11.13

xxxi Saipem v Bangladesh (ICSID Case No.ARB/05/7) Unreported award June 20, 2009.

xxxii De Roa, Felipe Suescun, Comments on the ICSID Award Saipem v. Bangladesh: Would its Rationale be

Applicable in Future Cases?, International Institute for Conflict Prevention and Resolution

<http://www.cpradr.org/Resources/ALLCPRArticles/tabid/265/ID/714/Comments-on-the-ICSID-Award-

Saipem-v-Bangladesh-Would-its-rationale-be-applicable-in-future-cases-2011-Writing-Contest-Winner.aspx>

last accessed on 08.11.13

xxxiii “In particular (i) a request to strike from the record the witness statement of Mr. Clark [a key witness on

behalf of Saipem], (ii) a request that all witnesses be allowed to be present in the hearing room during the entire

hearing, (iii) a request that a letter from Petrobangla which was not on record be filed during cross-examination

of a witness, (iv) a request to strike from the record a “draft aide-mémoire” of the World Bank and certain cost

calculations prepared by Saipem, and (v) a request that transcripts be made of the tape recordings of the

hearing.”Saipem v Bangladesh Unreported June 20, 2009, at 31 xxxiv

“Because of the hostile climate in Bangladesh and because we were firmly convinced that the revocation of

the authority of the Arbitral Tribunal was completely illegal by all standards, we knew that we had no

alternative but to proceed with the arbitration. Our Indian counsel advised us that an appeal against the

injunction against the continuation of the arbitration was possible in theory, but unsustainable in substance. It

was clear that we would not be in a position to defend ourselves before the local courts and that the climate was

incompatible with a fair trial. As is confirmed by the witness statement of Mr. Nassauto, our witnesses,

including the members of the arbitral tribunal, would have risked being in physical danger had they come to

testify in Dhaka. Clearly the members of the ICC Tribunal would have been key witnesses in those proceedings.

The testimony of the Arbitrators would have been crucial, since the only reason for the revocation of the

authority of the ICC tribunal was the alleged misconduct of the proceedings imputed to the Arbitrators. They

could have demonstrated that no misconduct had ever been committed by them and that they had properly

conducted the arbitration proceedings pursuant to the ICC Rules and even to the provisions of the Bangladeshi

Arbitration Act.” Saipem v Bangladesh Unreported June 20, 2009, at 43. xxxv

Petrobangla filed an action in the First Court of the Subordinate Judge of Dhaka in order to set aside the ICC

tribunal’s decision to resume the proceedings. In addition, Petrobangla filed a request seeking a declaration that

the ICC Arbitration Tribunal was unlawful based on the decision of the Dhaka Subordinate Judge that revoked

the authority of the ICC Tribunal. Also, Petrobangla asked for an interim and a permanent injunction against the

continuance of the ICC Arbitration Tribunal, which was refused the same day. On May 27, 2001, Petrobangla

appealed this decision before the High Court Division of the Supreme Court. Within the same day, the High

Court Division issued an injunction restraining Saipem from pursuing the ICC Tribunal. Thereafter, this

injunction was confirmed by several decisions of the High Court Division of the Supreme Court. xxxvi

Saipem v Bangladesh Unreported June 20, 2009, at 50. xxxvii

Agreement of 20 March 1990 between Government of the Republic of Italy and Government of the

People's Republic of Banglaesh on the Promotion and Protection of Investments. The treaty entered into force

on 20 September 1994. xxxviii

Saipem v Bangladesh Unreported June 20, 2009, at 128. xxxix

Article 5 defines expropriation as follows: “(1) The investments to which this Agreement relates shall not

be subject to any measure which might limit permanently or temporarily their joined rights of ownership,

possession, control or enjoyment, save where specifically provided by law and by judgments or orders issued by

Courts or Tribunals having jurisdiction. (2) Investments of investors of one of the Contracting Parties shall not

be directly or indirectly nationalized, expropriated, requisitioned or subjected to any measures having similar

effects in the territory of the other Contracting Party, except for public purposes, or national interest, against

immediate full and effective compensation, and on condition that these measures are taken on a non-

discriminatory basis and in conformity with all legal provisions and procedures.” Agreement of 20 March 1990

between Government of the Republic of Italy and Government of the People's Republic of Bangladesh on the

Promotion and Protection of Investments. The treaty entered into force on 20 September 1994. xl

Saipem v Bangladesh Unreported June 20, 2009, at 129. xli

Saipem v Bangladesh Unreported June 20, 2009, at 129; Accord “[t]he taking away or destruction of rights

acquired, transmitted and defined by a contract is as much a wrong, entitling the suffer to redress, as the taking

away or destruction of tangible property”. Rudloff Case (Interlocutory), American-Venezuelan Commission, IX

United Nations Reports of International Arbitral Awards (Recueil des Sentences Arbitrales) 250. In Ruth

Teitelbaum. “Case Report on Saipem v. Bangladesh”. xlii

Saipem v Bangladesh Unreported June 20, 2009, at 204.