Shearman & Sterling achieves significant victory for EGAS
Shearman & Sterling has achieved a significant victory on behalf of its client, Egyptian Natural Gas Holding Company (“EGAS”), in a legal battle lasting more than three years. On May 24, 2016, an arbitral tribunal comprised of leading international arbitrators David St. John Sutton (Chairman), Klaus Reichert SC and Professor Laurent Aynès issued an award rejecting claims for alleged contractual penalties totaling more than $270 million plus interest as it found that the claimant had assigned to a third party all of its rights under the relevant contract.
In a closely reasoned 104-page award, the tribunal examined detailed legal arguments made by the parties concerning the effect under English law of certain project financing arrangements entered into by the claimant in 2007. The tribunal – which was chaired by one of the preeminent authorities on English arbitration law – concluded that the claimant had absolutely assigned its rights to an offshore security trustee acting on behalf of a large consortium of banks. As a consequence of the assignment, the claimant could not seek to recover any amounts under the contract. In addition, the tribunal rejected the claimant’s attempt to salvage its claims by entering into a deed of reassignment with the lenders during the course of the arbitration.
Emmanuel Gaillard, head of Shearman & Sterling’s international arbitration practice, commented, “This is an important decision not only for litigators, but also for project finance lawyers. It confirms the fundamental principle of the law of assignment according to which, following an absolute assignment, only the assignee will be able to enforce any assigned rights vis-à-vis the debtor.”
Partner Mohamed Shelbaya added, “We welcome this robust and unanimous decision, confirming important and well-established principles of English assignment law, and dismissing in their entirety the claims brought against our client, EGAS, after three years of hard-fought legal proceedings.”
Shearman & Sterling’s team included partners Emmanuel Gaillard (Paris-International Arbitration), Yas Banifatemi (Paris-Public International Law) and Mohamed Shelbaya (Paris-International Arbitration), together with counsel Daniel Reich (Paris-International Arbitration); and associates James Herbert (Paris-International Arbitration), Edward Taylor (London-International Arbitration), Peter Frilay, Yasmine El Maghraby, Chaymaa Shady, Rayan Keyrouz and Ross Galvin (all Paris-International Arbitration).
The successful outcome of this dispute further consolidates Shearman & Sterling’s exceptional track record in the field of international arbitration and confirms the reputation of its global international arbitration practice as the market leader for sensitive and high-stakes international disputes.
(Shearman & Sterling Press Release)