Litigation experts help secure permanent stay to massive arbitration claim that would have devastated the country’s budget
Dentons has notched a massive win for Papua New Guinea, securing a final judgement from the country’s supreme court to stay a massive arbitration claim.
The global legal giant secured the permanent stay against a US$3bn claim by IT&S, which commenced arbitration against PNG in 2015 over what was said to be the independent state’s inaction on a project agreement for a massive forestry and road project in the Western Province.
The Dentons litigation team in PNG, instructed by the PNG attorney-general and state solicitor, challenged the arbitration and its jurisdiction in the country’s courts. The team was headed by partner Erik Andersen.
The four-year battle has ended with the supreme court ruling that a claim by arbitration is not authorised, thereby permanently staying the arbitration. It also awarded all costs to the state. Dentons said that the award would have wreaked havoc on the PNG budget, as the size of the claim and the prevailing exchange rate meant a judgment against PNG would have wiped out a third of the country’s yearly budget.
“Given the size of the claim against PNG and the severe impact an adverse ruling would have had on the country’s budget, the win means that government finances can instead be deployed to fund essential government services like health, education and critical infrastructure,” said Daniel Rolpagarea, state solicitor and instructing counsel.
Andersen said that Dentons was uniquely placed to secure the win in this matter.
“Commercial arbitration in jurisdictions who have not yet adopted modern standard forms of arbitration law, such as UNCITRAL model law, means that having teams on the ground is crucial. Dentons has been in PNG for over 50 years, so we were able to draw on our long experience to achieve the best outcome for our client,” he said. “With more than 10,000 lawyers across the globe, Dentons can draw on the experience of local teams in over 170 countries.”