Foley Hoag Secures Victory for Bangladesh's State Owned-Oil and Gas Companies in ICSID Arbitration against Niko Resources

May 4, 2020

Two Bangladeshi State-owned oil and gas companies, Bangladesh Oil, Gas & Mineral Corporation (Petrobangla) and Bangladesh Petroleum Exploration and Production Company Limited (BAPEX) defeated an effort by the Canadian company Niko Resources to avoid liability for two blowouts of its gas wells in Bangladesh.

Niko Resources instituted the arbitration in 2010 under the Convention on the Settlement of Investment Disputes between States and Nationals or Other States (the ICSID Convention).

In a uniquely postured case, Niko Resources had asked the arbitration tribunal to declare that it was not liable for two blowouts that occurred during its operations at the Chattak Gas Field in northeast Bangladesh.  In a unanimous decision, the three-arbitrator panel found that Niko’s breach of the Joint Venture Agreement with BAPEX caused the blowout of the Chattak-2 gas well.

The ICSID tribunal further held that Niko must pay compensation for direct injury and damage caused by the blowout and ordered that a damages phase of the arbitration continue to determine the quantum of Niko’s liability.

Foley Hoag was hired to take over representation of Petrobangla and BAPEX in the proceedings in 2015.

“It is an honor for Foley Hoag to serve as counsel to Petrobangla and BAPEX,” said Derek Smith, partner in the firm’s International Litigation and Arbitration Department, and lead counsel in the arbitration. “This is an important victory for the people of Bangladesh because it ensures that an investor whose improper operations caused massive loss of natural resources and environmental damage will be held responsible.”

Foley Hoag’s team of lawyers also included partners Paul Reichler and Tafadzwa Pasipanodya, associate  Alejandra Torres Camprubi, and former Foley Hoag attorneys Erin Argueta and Oonagh Sands.  Barrister Moin Ghani and Barrister Imtiaz Uddin Ahmed Asif acted as Bangladeshi counsel in the arbitration.

The firm has successfully represented Bangladesh and its State-owned entities in international legal disputes continuously for over 10 years, beginning with its representation of Bangladesh in a litigation before the International Tribunal for the Law of the Sea to delimit the maritime boundary between Bangladesh and Myanmar and establish Bangladesh’s rights to an extended continental shelf beyond 200 nautical miles from its coast, as well as its representation of Bangladesh in an arbitration under the Law of the Sea Convention to delimit the maritime boundary between Bangladesh and India in the Bay of Bengal.

Foley Hoag specializes in the representation of sovereign States in disputes with other States and foreign investors before international courts and arbitral tribunals. It is consistently ranked in Band One, the highest level, for Public International Law by Chambers Global, which reports: “Foley Hoag LLP stands out because of its high level of competence and admirable record of cases handled and won.”

About Foley Hoag LLP

Foley Hoag provides innovative, strategic legal services to public, private and government clients across the globe. We have premier capabilities in the life sciences, healthcare, technology, energy, professional services and private funds fields, and in cross-border disputes. The diverse backgrounds, perspectives and experiences of our lawyers and staff contribute to the exceptional senior level service we deliver to clients ranging from startups to multinational companies to sovereign states. For more information, visit www.foleyhoag.com or follow @FoleyHoag on Twitter.