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BusinessConsta JV, Ethio-Djibouti Railway case moves from The Hague to Addis Ababa

Consta JV, Ethio-Djibouti Railway case moves from The Hague to Addis Ababa

Lawyers for the Ethio-Djibouti Railway Company, the Chemin de Fer Djibouto-Ethiopien, have filed a petition with the Court of Cassation of the Ethiopian Federal Supreme Court seeking a review of a 20-million Euro arbitral award rendered in The Hague for what they call a fundamental error of law.

The case against the Railway company, which took more than three years to complete, arose out of a repair works contract financed by the European Development Fund signed in 2006.  According to papers filed with the Court of Cassation of the Federal Democratic Republic of Ethiopia, the three-member panel of arbitrators composed of Professor David Arias of Spain, Professor Eduardo Silva Romero of France, and Professor James Gathii of Kenya rendered a split decision in favor of the Contractor, Consta JV, with Professor James Gathii of Kenya dissenting and writing separately.  

While the Railway’s lawyers refrained from commenting, the Petition, which has become pubic through filing with the Court of Cassation for review last week, indicates that the two arbitrators constituting the majority of The Hague-based Tribunal that decided the case misunderstood and misapplied Ethiopian law and rendered a fundamentally erroneous judgment.  It also alleges that the Ethiopian party was denied due process because of pervasive conflict of interest and bias on the part of the majority of the arbitrators. 

The Reporter has learnt that the Court of Cassation has just admitted the claim and issued a stay of execution of the award until such time that it hears the disputing parties. Court papers also show that, although the case was administered by the Permanent Court of Arbitration (PCA), the legal seat of the Tribunal was Addis Ababa.  The law that the Tribunal applied was Ethiopian law, under the terms of the railway rehabilitation contract the parties signed in 2006, according to court papers.  The arbitration itself was administered under the European Development Fund’s own Rules of Procedure that equate the final arbitral award with a final judgment of domestic courts of the relevant states, the same papers reveal.

The Reporter has also learned that this was one of two arbitration cases simultaneously filed against Ethiopian government entities at the Permanent Court of Arbitration (PCA) under the European Development Fund Rules claiming a total of more than 100 million Euros.  The other case, which was dismissed in its entirety by the same Tribunal, was brought against the Ministry of Water, Irrigation, and Energy.  According to the PCA website, the Ethiopian and Djibouti parties were represented by the Washington, D.C. based law firm of Addis Law Group LLP (ALG).   Consta JV and its affiliate company Mattioli JV were represented by the Italian firm of Arblit-Radicati di Brozolo Sabatini. 

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It is to be recalled that ALG was the same firm that successfully represented the Ministry of Mines of Ethiopia in the recent 1.4 billion-dollar case initiated by a Chinese oil company involving five Ogaden Blocks.

The Petition for Cassation Review was filed by Dr. Zewdineh Beyene Haile (PhD, SJD), who routinely argues cases before the Supreme Court and the Court of Cassation.  It is unclear how long the Cassation review will take.

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