German airports’ company Fraport AG has filed a new request for institution of arbitration proceedings against the Republic of the Philippines at the World Bank’s International Centre for Settlement of Investment Disputes (ICSID) in Washington, D.C. This relates to a $425m compensation claim – plus interest – for building Manila Airport’s Terminal 3.

Last December, an ICSID ad-hoc committee unanimously decided to annul the ICSID award of August 16, 2007. In the annulled award the tribunal had decided, based on a two-to-one vote, that it did not have jurisdiction to hear Fraport’s case. 

Thus, Fraport now has the right to resubmit its case to a new ICSID tribunal. Fraport’s access to the ICSID arbitration system is based on the bilateral investment treaty between the Federal Republic of Germany and the Republic of the Philippines. This treaty provides foreign investors with the option of legal recourse to an ICSID tribunal for divergences resulting from an expropriation or from unfair or illegal treatment. 

In the new arbitration proceedings, Fraport says it will again claim compensation of about $425m – plus interest – for its terminal project at Ninoy Aquino International Airport (NAIA) in the Philippine’s capital Manila. 

Fraport’s project was expropriated by the Philippine state, just as the terminal was nearing completion. The Manila Airport Authority has since been using the passenger terminal for domestic and international flights since mid-2008. Fraport claims that except for partial payment of some $59m made to the project company, the Philippine Government has yet to pay any compensation to Fraport.