The Office of the Solicitor General (OSG) said the Singapore-based ICC denied Piatco’s motion to nullify its application to set aside the ruling issued by the tribunal on July 22, 2010, which also ordered Piatco to pay the government more than $6 million in costs.
The Singapore High Court 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 this decision, the OSG said.
The Singapore court did not give credence to 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. The court said the records of the case showed that Piatco fully argued its case before the arbitration tribunal.
The government took over the operations of Naia 3 in 2004 after the Supreme Court (SC) nullified the concession for the build-operate-transfer arrangement on Naia 3 between the government and Piatco; the court said its contract was contrary to law and public policy. That agreement had authorized Piatco to build the $650-million Naia 3, as well as a franchise to operate and maintain the terminal during the concession period of 25 years. The Supreme Court said Paircargo Consortium, the 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, D.C.
In August 2007, the ICSID affirmed the SC’s nullification of the concessions and rejected Fraport’s claim because of its violation of the anti-dummy law.
In July 2011, the ICC also rejected Piatco’s claim because of illegality, owing to Piatco’s violation of the anti-dummy law.
The law requires that the operation, management and control of public utilities, such as Naia, should remain with Filipinos.
The ICC tribunal found that Piatco and its foreign investor Fraport, illegally ensured that Fraport would control the public utility through secret shareholder agreements and loans.
In its final award in May, the international tribunal 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.
