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CJ Logistics Headquarters (Photo courtesy of CJ Logistics) |
[Alpha Biz= Kim Jisun] A dispute over Libya’s Great Man-Made River (GMMR) project, which had been considered resolved by agreement more than 20 years ago, has resurfaced on the international arbitration stage.
After CJ Logistics filed a claim with the International Chamber of Commerce (ICC) seeking the return of unrecovered guarantees, Libya’s Man-Made River Authority (MMRA) responded with a counterclaim totaling approximately USD 2.7 billion (about KRW 3.9 trillion), nearly 80 times the amount sought by CJ Logistics.
Industry and legal experts view MMRA’s counterclaim as less a substantive dispute than a strategic move aimed at delaying proceedings, noting that the underlying issues were already settled through a waiver of claims and formal confirmation of project completion.
According to CJ Logistics’ regulatory filing and industry sources on January 20, the dispute dates back to October last year, when CJ Logistics initiated ICC arbitration seeking issuance of the Final Acceptance Certificate (FAC) and recovery of USD 33.5 million (approximately KRW 48.4 billion) in unrecovered performance guarantees plus interest. The guarantees stem from the GMMR construction project, which has been suspended for more than a decade due to Libya’s civil war.
In response, MMRA submitted its answer to the ICC on January 5, filing a counterclaim worth approximately USD 2.697 billion (about KRW 3.89 trillion). MMRA demanded compensation for alleged pipe defects and replacement costs incurred during Phase 1, operational losses, and liquidated damages related to delays in Phase 2 of the project.
The GMMR project, launched in 1983, is a massive national infrastructure initiative designed to transport groundwater from the Sahara Desert to Libya’s northern coastal cities. Once dubbed one of the “Eight Wonders of the World,” the project was originally undertaken by Dong-A Construction. Following the company’s bankruptcy, CJ Logistics assumed the project and completed the remaining construction work.
CJ Logistics argues that MMRA’s counterclaim is baseless, citing the Completion Agreement signed in 2004. Under this agreement, the parties mutually waived all claims, direct and indirect, arising from Dong-A Construction’s execution of the project. Based on this settlement, the Libyan government issued the Provisional Acceptance Certificate (PAC) in 2005, formally recognizing the substantial completion of the works.
Observers also point to inconsistencies in MMRA’s legal stance. While MMRA argues that the dispute falls outside ICC jurisdiction and should instead be heard in Libyan courts, it nevertheless filed its own counterclaim with the ICC, effectively contradicting its jurisdictional objection.
Moreover, MMRA has yet to pay the approximately USD 3 million (about KRW 40 billion) advance on arbitration costs required to proceed with the counterclaim. Under Article 37(6) of the ICC Arbitration Rules, failure to pay the required advance within the prescribed deadline results in the counterclaim being deemed withdrawn.
Alphabiz Reporter Kim Jisun(stockmk2020@alphabiz.co.kr)
