MIAA  SHRUGS  OFF  FRAPORT MOVE ON  ANNULMENT  OF  NAIA-3  RULING

MANILA, SEPTEMBER 5, 2007
(STAR) By Rainier Allan Ronda - Manila International Airport Authority (MIAA) general manager Alfonso Cusi downplayed moves by Fraport AG to annul a decision of the International Center for Settlement of Investment Disputes (ICSID) unfavorable to the German firm.

Cusi’s comments came after the executive board of Fraport AG considered asking the World Bank’s ICSID to annul its decision on Fraport’s arbitration complaint regarding its investment in the Ninoy Aquino International Airport Terminal 3 (NAIA-3).

“If successful, a possible plea for annulment could lead to the arbitration procedure being restarted – whereby Fraport is claiming compensation of well over $400 million from the Philippine government for expropriation of the Manila terminal,” Fraport said.

Cusi said that the Fraport move was not a matter to be concerned about, saying that the ICSID’s Aug. 17 decision was very comprehensive and fair.

“Our legal team from the OSG (Office of the Solicitor General) will take care of that. I think it’s just part of the legal procedure,” Cusi told The STAR.

In a news release posted in their website, www.fraport.com, the German partner of the Philippine International Air Terminals Co., (Piatco), in building the still-mothballed NAIA-3 under a build-operate-transfer contract, said that the decision to pursue further legal action was made after an “extensive discussion of the World Bank arbitration tribunal’s decision.”

Fraport AG pointed out that the ICSID decision on their arbitration complaint was not unanimous.

“Only two of the three-tribunal judges hold the view that Fraport’s involvement in the Manila project is not protected under the German-Philippines Investment Guarantee Treaty and, thus, the tribunal court does not have jurisdiction for this case - citing that the so-called anti-dummy law was violated in 1999,” Fraport said.

Under the Philippine anti-dummy law, foreigners are prohibited from exercising any management influence in so-called public utility companies.

Fraport AG stressed that in a “comprehensive 24-page dissenting opinion on the decision,” one of the three judges said that the anti-dummy law relating to public utilities could not possibly apply to their case because the Philippine Supreme Court had declared the concession agreements for constructing and operating the new terminal at Manila Airport “null and void” from the start.

Fraport AG underscored that the arbitration court was bound to the SC decision.

“In the absence of a concession, there was no public utility; hence violation of the corresponding law was impossible,” Fraport AG claimed.

“Fraport adheres to its position that it did not violate Philippine law. All concluded agreements were drawn up together with Philippines and international law firms,” it said.

“After carefully evaluating the more than 200-page long decision, Fraport currently believes that essential documents presented at the proceedings, as well as argumentations and other aspects submitted by Fraport, were not or insufficiently taken into consideration by the court,” Fraport’s website posting declared.

“Therefore, Fraport’s executive board is examining all legal options, including application for annulment,” it said.

Issue of payment

Meanwhile, to finally settle the issue of payment of fees to the appraisal firm tasked to facilitate the valuation of NAIA-3, the Pasay City Regional Trial Court (RTC) has advised opposing parties —the government and Piatco — to share in the payment of the appraisal fee.

The court, through Judge Jesus Mupas of the Pasay RTC-Branch 117, encouraged the concerned parties to agree to the sharing for payment of the appraiser’s fee.

Piatco lawyers Eduardo delos Angeles and Enrique Galang, on the other hand, said that they are open to negotiation with respect to the sharing of payment of appraiser’s fee.

The compromise was the result of a recent conference held at Judge Mupas’ sala concerning NAIA-3 matters. Assistant Solicitor General Edgar Tupas who represented the government, lawyers Delos Angeles and Galang for Piatco, NAIA-3 Commissioners Fiorello Estuar and Angelo Panganiban, and court personnel were among those present during the closed-door meeting.

Earlier, Judge Mupas found DG Jones and Partners highly qualified of undertaking requisite appraisal of the NAIA-3 facilities, and therefore declared official its appointment as appraiser.

Based on the submitted proposal of DG Jones and Partners Philippines, its proposed appraisal fee is $1,900,000.

The amount has been itemized as follows: Fixed lump sum fee for valuation of work in place ($1,400,000.00); fixed lump sum fee for valuation of remaining works to complete ($200,000.00); and Provisional sum for joint survey/inventory ($300,000.00).

The court previously ordered the government to solely shoulder the appraisal fees.

The Office of the Solicitor General, however, said “the order for them to shoulder the appraisal fees of DG Jones and Partners Philippines Inc. in the amount of $1.9 million is excessive, exorbitant and unjust.”

“With the court ordering the government to pay the full amount of DG Jones’ appraisal fees, plaintiff would be obliged to pay for two appraisers, resulting in the dissipation of plaintiff’s resources, which to emphasize, consist of taxpayers’ money,” the government’s motion read. It said that there would only be a duplication of the efforts of their existing team of appraisers, in this case, Gleeds, Ove Arup and Gensler.

The appraisal is necessary in the final ascertainment of the just compensation to be paid to Piatco by the government in line with the expropriation of NAIA-3.

It was September of last year when the Pasay RTC released the “writ of possession” after payment of P3 billion by the government to Piatco. This effectively set the stage for the full government control of NAIA-3.

However, the amount was only the initial proffered value and that full compensation would still have to be made.

The government took over NAIA-3 in late December 2004 shortly after the Supreme Court nullified its build-operate-transfer contract with Piatco. — Rhodina Villanueva


Chief News Editor: Sol Jose Vanzi

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