BD to claim $106m from Niko as ICSID rejects its pleas

FE Report Bangladesh's local court will settle the case over compensation worth $106 million from Canadian NIko Resources over two consecutive blowouts at Niko-operated Chhatak gas field as International Centre for Settlement of Investment Disputes (ICSID) rejected Niko's pleas over the issue, Petrobangla Chairman Hussain Monsur said. Niko's pleas over the issue, Petrobangla Chairman Hussain Monsur said. He said the ICSID in its verdict pronounced Tuesday stated that "It has no jurisdiction over Bangladesh, which therefore will no longer be a respondent in this arbitration," meaning that the case of compensation will be settled as per local regulations. "The ICSID's verdict has gone in our favour," Mr Monsur told the FE in an instant reaction. "We can get the compensation from Niko, if the local court's verdict comes in our favour," he added. Final decision now lied with the district judge's court of Bangladesh, he added. Petrobangla held Tuesday an instant press briefing after a team of lawyers secured Bangladesh's right to claim $106 million from Niko in Bangladesh's court at the tribunal of ICSID. Tawfique Nawaz, a senior lawyer of Supreme Court, led the Bangladeshi team. He was assisted by Imtiaz Farooq, advocate of Supreme Court, on behalf of Juris Counsel, supported by Alison Catherine McDonald and Luis Gonzalez Garcia of Matrix Chamber in London. In the proceedings before the tribunal, the Bangladesh team challenged the jurisdiction of the ICSID tribunal to hear the claims made by Niko Resources (Bangladesh) Ltd. In its decision, the tribunal, presided over by Michael E Schneider, said it "has no jurisdiction over Bangladesh, which therefore no longer be a respondent in this arbitration." After the blowouts in 2005 the government took Niko to a local court demanding Tk 7.46 billion ($110 million) as compensation for damages from the Tengratila gas field blowouts. The case is still pending with the court. A Bangladesh law firm also brought a public interest litigation against Niko and subsequently got an injunction order that barred the government from paying gas bills to the company until the compensation issue was settled. Niko in 2009 had filed a petition with the High Court seeking payment of its gas bills. But the court upheld the lower court verdict and directed the government to refrain from making any payment to Niko until the case lodged by the government was resolved. Failing to settle the issue in local court, the Canadian company later moved to ICSID and lodged an arbitration suit with it to settle the dispute over payments for gas sales from the Feni field and the compensation issue for Tengratila gas field blowouts in Bangladesh. Niko Resources attained operatorship of the Feni field under the terms of a 2003 joint venture agreement (JVA) with state-run Bangladesh Petroleum Exploration and Production Company (Bapex), which gave it an 80 per cent stake. The remaining 20 per cent stake went to Bapex. The company also had attained exploration rights over three onshore gas fields -- Feni, Chhatak and Kamta -- following the JVA as the fields were declared 'abandoned' by Petrobangla.