A top Ethiopian government official has claimed the International Court of Arbitration Chamber of Commerce has dismissed a claim by PetroTrans that the Horn of Africa nation had unlawfully revoked its contracts.
Ethiopian authorities revoked the company’s exploration and development contracts, signed in 2011, saying PetroTrans had failed to carry out its contractual obligations.
The ministry of Mines, Petroleum and Natural Gas said the company had failed to commence work within the initial contractual timeframe. Minister Tolosa Shagi said after revising the date of commencement, the company still failed to start developing the gas project in time.
The Geneva Tribunal decided in favour of the Ethiopian ministry, rejecting PetroTrans’ request either to be reinstated or paid a compensation of $1.4 billion.
Tolosa said the court passed its ruling on December 2015, but notified the litigants about the decision only last week. The case, which also resulted in the termination of other four agreements between the ministry and the Hong Kong-based firm, took three years to finalise.
Tolosa said the verdict would set a precedent in the future in dealing with companies that flout contract regulations.
The agreement, signed in July 2011 between the Ministry and PetroTrans gave the latter the right to explore and develop petroleum and natural gas in five blocks in the eastern part of the country.
After revoking the agreement following the company’s failure to carry out its contractual obligations, the Ethiopian government awarded the project to a Chinese company, Poly-GCL in November 2013.