Arbitration Court Backs Government in Power Deal With US Firm

The government has won an arbitration case in a World Bank court, successfully countering a $300 million claim made by a U.S. based company over a failed power plant project dating back to 1996.

According to a statement from the Council of Ministers’ Press and Quick Reaction Unit released on Saturday, the claims made by the Cambodian Power Company (CPC) “have been dismissed in their entirety by an arbitral tribunal established under the auspices of the International Center for the Settlement of Investment Disputes (ICSID).”

CPC, which is a subsidiary of Delaware-based Beacon Hill Associates Inc., accused the government and state-owned power company Electricite du Cambodge (EdC) of breaching agreements signed in 1996 “for the financing, construction and operation of a 60 [megawatt] electric power plant in Phnom Penh,” the statement says.

The company claimed damages of nearly $300 million over the power plant venture—the value of which was estimated at $74 million—in Russei Keo district, which never came to fruition.

“After a hearing in Paris in September 2012, the ICSID tribunal rendered its award on 22 April 2013. The award held that the Kingdom of Cambodia did not breach the agreements directly or indirectly through the actions of EdC and dismissed all of the claims brought against the Kingdom of Cambodia,” the government’s statement reads.

“The ICSID tribunal further ordered Cambodia Power Com­pany to pay the Kingdom of Cambodia over US$5.6 million for legal costs and expenses in arbitration and costs of all relevant proceedings for almost the last four years.”

Peter Turner, a partner at Freshfields Bruckhaus Deringer LLP in Paris who led the government’s legal team in the case, declined to disclose additional details of the case since CPC had refused to have the detail of the tribunal’s verdict made public.

“All of the claims that were brought by the Cambodia Power Company were dismissed,” he said, adding that he was waiting to hear from CPC’s legal representatives about whether the company would agree to pay the award to the government.

Beacon Hill Associates is still registered as a foreign corporation in Wilmington, Delaware. The company’s president is William, or Bill, Garrett and an individual called Se Muy Tan also acted as a representative of the company.

The March 1996 deal—which made Beacon Hill Associates the biggest American investor in Cambodia at the time—fell apart just three months after it was signed in a ceremony attended by then-Second Prime Minister Hun Sen.

The major financer of the project, Hawaiian Electric Industries Inc., pulled out of the deal in June 1996, saying in a statement that it was “unable to work out fundamental differences on management of the project with Beacon Hill.”

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