MANILA, 18 August 2007 — The World Bank’s arbitration court thrashed a compensation claim of German airport operator Fraport AG that would have cost the Philippines about 27.6 billion pesos or $425 million, officials said.
Fraport filed the claims suit with the Washington-based International Center for Settlement of Investment Disputes (ICSID) in 2003 after the Philippine government revoked the contract to build the new airport terminal that was awarded to the Fraport-led Piatco consortium allegedly due to provisions highly disadvantageous to public interest.
In 2004, the government expropriated the Ninoy Aquino International Airport (NAIA) Terminal 3 and has vowed to fight for full control of the facility.
Solicitor General Agnes Devanadera, the government’s chief lawyer, said the ICSID Tribunal stated that the dispute is not within its jurisdiction.
“This is not just a victory of an airport but of a sovereign state, of Philippine institutions maligned and accused of being unfair and corrupt,” she added.
In a statement, President Gloria Macapagal Arroyo said the ruling was a vindication for the Philippines.
“This is a significant milestone in our quest for modernity and progress,” said Arroyo, who wants to tout the terminal as a showcase of the country’s improving infrastructure program to further attract investors.
The government hopes to open the NAIA Terminal 3 within the year. The facility was built on a 65-hectare site. It has 140 check-in counters, 118 immigration counters, nine moving walkways and a 20,000 square-meter shopping complex.
Lawyer Manuel Gaite, deputy executive secretary for legal affairs, said that with the Washington case out the way, the only legal obstacle now is the case filed by Piatco (the Philippine International Air Terminals Co. Inc.) before the International Chamber of Commerce based in Singapore.
Piatco requested the arbitration after the government declared its contract to operate Terminal 3 null and void in 2002.
Devanadera said she is confident the Philippine government would get the same favorable ruling from the Singapore court. (Additional input from agencies)
