Dutch tribunal okays Cypriot firm to sue Somalia over 2013 coastguard deal

GOOBJOOG NEWS|ROTTERDAM: A tribunal in the Netherlands has granted a Cypriot firm a go-ahead to file a case against the Somali government over what it terms a breach of contract in a multi-million coastguard contract that the two parties entered into in 2013.

The tribunal ruled earlier this month that AMO Shipping Company (AMOSC) can sue the Federal Republic of Somalia (FRS) after it determined that the latter was a legal entity which could enter into a contract and could be sued. The ruling follows a new filing by AMOSC in 2020 against FRS after it withdrew a case against FGS in 2019.

In its latest ruling, the Unum Transport Arbitration and Mediation observed that FRS could be sued declining prayers by the Federal Government that FRS could not enter into a contract. The ruling sought to distinguish between the Federal Government of Somalia and the Federal Republic of Somalia.

The legal quandary

“According to FRS, AMOSC cannot bring a claim against the FRS, because the FRS cannot and does not carry rights and obligations that originate from civil law. Thus, the FRS cannot be a party to commercial arbitral proceedings,” the tribunal said. “The civil law entity that embodies or represents Somalia in civil law and commercial matters is, exclusively, the Federal Government of Somalia (“FGS” ) which is, according to FRS, the de jure contracting party to the Building Contract.”

In a letter dated November 30, 2021, to the tribunal, Somalia argued that FRS is not a legal entity according to article 52 of the Somali Civil Code. “According to FRS, the Somali Civil Code states that the FRS is not a legal entity. Furthermore, FRS argues there is no provision in the Somali legal system apart from art. 52 of the Somali Civil Code which affords legal personality to the FRS.”

The verdict

The dispute on the definition of the two entities stems from the Contract entered into between the Somali government then represented by Defence Minister Abdihakim Fiqi and AMOSC on July 29, 2013. The words Federal Government of Somalia and the Federal Republic of Somalia are used interchangeably in the documents forming the basis for a legal distinction by the tribunal.

In its finding, the tribunal said there were ‘strong and convincing indications that FRS has the legal capacity to enter into civil law contracts, with the FGS having the authority to represent the FRS.’

“The Tribunal holds that either “Lo Stato” in art. 52 of the Somali Civil Code is to be interpreted as FRS, or that Somali law in practice entails that FRS and FGS are interchangeable concepts in the context of (legal entity status under) domestic Somali civil law,” the Dutch-based arbitrator said setting the stage for the substantive part of the case which entails a demand for compensation by AMOSC.

AMOSC is seeking the arbiter compels Somalia to pay € 66 million on account of instalments due in the first instance and secondly issue an ‘irrevocable Letter of Credit in the initial amount of €132 million or if a Letter of Credit is issued after payment of the €66 million to AMOSC, issue an irrevocable Letter of Credit as referred to in article 4.3 of the Building Contract in the remaining amount of €66 million.’