Box 7-12: Telecommunications-related Investment Disputes Outside the ICSID [7.1.4]

  • Ameritech v. Polish Government. During the 1990’s, Ameritech (now SBC Communications) provided analogue cellular telephone service through a joint-venture with Poland's state-owned telephone company. Ameritech filed for arbitration against the Polish Government under the UNCITRAL rules in 1996, alleging that the Polish authorities had violated contractual undertakings and provisions of the U.S.-Poland bilateral investment treaty when Poland declined to award a digital GSM cellular licence to Ameritech and instead put the licence out for tender. Ameritech disposed of its stake in the Polish joint-venture in December of 1996 and settled its arbitration claim with Poland around the same time.1
  • Telekom Malaysia v. Government of Ghana. When Ghana Telecom (GT) was privatized in 1997, Telekom Malaysia (TM), through a subsidiary named G-Com consortium (in which it holds an 85% stake), paid US$38 million for a 30% stake, with the remainder held by the Government of Ghana (GoG). TM was given a five-year management contract to run the company for the duration of GT's fixed line duopoly with new entrant Westel. In 2000, TM tendered an additional US$50 million deposit for a further 15% equity stake. However, according to trade reports, the additional 15% stake was never acquired by TM, and its $50 million down-payment was returned by the GoG.2 Upon termination of the management contract, the new GoG declined to renew TM's deal and put the management of the company out to tender. At this point, relations between the GoG and TM began to deteriorate, and the Malaysian company attempted to sell its stake back to the GoG. Following a period of negotiation, on September 2002, TM commenced arbitration proceedings before the Permanent Court of Arbitration at The Hague, Netherlands under the Malaysia-Ghana bilateral investment treaty, alleging that it had been dispossessed and had lost control of its investment, claiming a sum of US$174 million. The arbitration proceeding was conducted under the UNCITRAL Rules. More than two years into the proceedings, in early May of 2005, the GoG and TM announced that they had reached an amicable settlement of their international arbitration dispute. Through such settlement, the GoG agreed to pay TM an undisclosed sum over a period of two years, after which the GoG would acquire TM’s minority stake in GT.3
  • France Telecom v. Lebanon. France Telecom initiated an arbitration on 20 June 2002 pursuant to the terms of a bilateral investment treaty between France and Lebanon. France Telecom’s subsidiary had been offering GSM mobile service pursuant to a Build Operate and Transfer (BOT) contract since 1994. France Telecom alleged that: (i) its BOT contract was prematurely terminated; (ii) it was the victim of expropriation; and (iii) it had failed to receive fair and equitable treatment at the hands of the Lebanese state. The French firm claimed some US$771 million in damages, including compensation for the remainder of the BOT contract. The Lebanese Government filed a counter-claim for $840 million in damages against France Telecom. Initially, France Telecom pursued arbitration both at the International Chamber of Commerce, and under the UNCITRAL rules, but ultimately pursued the claim solely under the UNCITRAL rules. In a recent decision of 22 February 2005, the arbitration panel rendered a US$266 million award against Lebanon. Lebanon has filed an application to the Swiss Federal Supreme Court to set aside the award.
  • William Nagel v. Czech Republic. Mr. Nagel filed action at the Stockholm Arbitration Institute under the U.K.-Czech Republic bilateral investment treaty against the Czech Republic. After the authorities held a public tender for two mobile phone contracts, neither of which was awarded to Mr. Nagel, the U.K. businessman launched an arbitration against the Czech Government alleging that it had reneged upon a commitment to award him a GSM mobile phone licence. The claim was ultimately dismissed by the tribunal on the grounds that Mr. Nagel's earlier understanding with the Czech authorities did not qualify as an "investment" under the UK-Czech treaty.

ENDNOTES

1 Peterson, Investors Looking Beyond ICSID in Investment Treaty Telecoms Cases.

2 See Update on Telekom Malaysia's Investment in Ghana - Government of Ghana Admits US$50m Liability to Telekom Malaysia, at http://209.85.165.104/search?q=cache:BYBRv5ETo3UJ:tm.com.my/about_TM/newsroom/2004/040331_2.htm+%22Government+of+Ghana+Admits+US%2450m+Liability+to+Telekom+Malaysia%22&hl=en&ct=clnk&cd=3&gl=us.

3 Luke Eric Peterson, Telekom Malaysia and Ghana look to settle UNCITRAL arbitration, INVEST-SD: Investment Law and Policy News Bulletin, 27 May 2005, available at http://www.iisd.org/pdf/2005/investment_investsd_may27_2005.pdf.

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