PIATCO Case Update

The Office of the Solicitor General (OSG) on Wednesday announced the victory of the Philippine government before the Singapore Supreme Court (SC) after it set aside the ruling of the International Chamber of Commerce (ICC) against the builder of the Ninoy Aquino International Airport (NAIA) Terminal III.

The OSG is an attached agency of the Department of Justice (DOJ).

In a statement, Solicitor General Jose Anselmo “Joel” Cadiz said that the Singapore SC denied the appeal filed by the Philippine International Air Terminals Co. Inc.(PIATCO) to set aside the 2010 decision by the ICC saying that they violated the Philippines’ Anti-Dummy Law.

The Anti-Dummy Law prohibits foreign nationals from intervening in the management, operation, administration or control of the business whether as an officer, employee or laborer in the Philippines.

On July 22, 2010, the ICC ruled that PIATCO and Fraport AG, its German investor Fraport AG committed illegality in the NAIA Terminal III Project.

The ICC tribunal found that PIATCO and Fraport illegally ensured that Fraport shall control the public utility through secret shareholder agreements and loans.

“The high court was unconvinced that the ICC tribunal misapplied the Anti-Dmmy Law and found it disingenuous for Piatco to insist that it was not given the right to be heard on the issue although the case records show that PIATCO fully argued its case before the arbitral tribunal,” Cadiz said quoting the Singapore SC ruling.

In the same decision by the ICC which was upheld by the Singapore SC, it ordered PIATCO to pay the Philippine government US$ 6-million in costs of proceedings.

Since 2002, the project to construct and operate the NAIA Terminal III has been the subject of a string of civil and criminal investigations due to allegations of violations of Philippine laws by PIATCO and Fraport.

The Senate Blue Ribbon Committee issued a report in December 2002 concluding that the Terminal III concession was void because PIATCO violated the Build-Operate-Transfer (BOT) Law and illegally attempted to purchase government approvals through a consultant.

Then, in 2003, the Philippine SC ruled that the Terminal III concessions were null and void ab initio due to PIATCO’s violations of the 1987 Constitution, BOT Law, banking laws and public policy.

PIATCO sued the Philippine government before the ICC in Singapore where it sought to recover at least US$ 565-million in damages.

PIATCO’s foreign investor, Fraport, separately sued the Philippine government at the International Center for the Settlement of Investment Disputes (ICSID) in Washington DC, United States.

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