Olin Holdings Ltd. v. State of Libya, No. 21-CV-4150 (S.D.N.Y. Mar. 22, 2022)
In the 1990s, Libya made a number of legislative changes to foster foreign investment. This included entering into a number of Bilateral Investment Treaties, one of which was with Cyprus (the “BIT“). The BIT included a dispute resolution provision that allowed disputes between one of the countries and an investor from the other country to be submitted to a court where the investment was being made or to arbitration before the International Chamber of Commerce (the “ICC”) in Paris.
At the end of 2006, Olin Holdings Limited (“Olin”), a Cyprus-based LLC, completed construction of a new dairy factory in Libya. Shortly thereafter, Libya issued a decision expropriating a large parcel of land that included Olin’s factory site and ordered Olin to vacate the premises within three days. Olin first challenged Libya’s expropriation order in the Libyan courts, which initially found the order procedurally improper and unlawful under Libyan law. However, while Olin’s case was pending, Libyan authorities unilaterally transferred title of the factory site property back to its original owner.
Olin then commenced arbitration proceedings before the ICC and sought over $147 million in damages for Libya’s violation of the BIT, among other claims. Libya fully participated in these arbitration proceedings, before a three-member tribunal. Libya’s main argument in objecting to the arbitration proceeding was that the tribunal lacked jurisdiction to arbitrate the parties’ dispute, given that Olin had already instituted litigation in Libyan courts. Nonetheless, the tribunal found that the BIT’s dispute resolution provision did not preclude arbitration—even though related lawsuits were previously filed in Libyan courts—because the language of the BIT did not suggest that the choice of one forum would preclude the other.
Following this decision and a three-day evidentiary hearing, the tribunal later entered its final award finding in favor of Olin and awarding it more than €20 million in damages, costs, and attorneys’ fees. Olin then sought to have the final award confirmed by the district court. Libya objected to Olin’s petition to confirm the award, arguing that the issue of whether this dispute could be arbitrated, despite Olin first proceeding with lawsuits in Libyan courts, was not for the tribunal to decide, and thus, the court should review the final award de novo.
The court found that the parties had delegated the issue of arbitrability to the arbitration tribunal by agreeing to proceed under the ICC Rules. More specifically, Article 6, section 3 of the ICC Rules provides that claims “concerning the existence, validity, or scope of the arbitration agreement,” and “any question of jurisdiction . . . shall be decided directly by the arbitral tribunal.” The court thus found the parties’ agreement to proceed in accordance with the ICC Rules as clear and unmistakable evidence of the parties’ intent to arbitrate issues of arbitrability and not have them decided by courts. Because the arbitrability issue had been delegated to the arbitrators, the court’s review of the arbitral tribunal’s decision did not require a de novo review, but instead a far more lenient deferential review.
In conducting its deferential review of the arbitral tribunal’s final award, the court found that the tribunal’s 143-page award thoughtfully and thoroughly addressed Libya’s defenses to Olin’s claims, including the argument that the tribunal lacked jurisdiction over the dispute. The court also found that the tribunal’s monetary award, which was significant, was significantly less than the amount originally sought by Olin and was fair and reasonable based on the evidence.
This article was originally published in the North America Newsletter.