After the fall of Gaddafi’s regime, foreign companies that had performed work in Libya rushed to the international tribunals seeking compensation. Since the counterparty in public procurement agreements in Libya is a public entity established by the Libyan government, foreign companies file their claims against both the government entity and the state of Libya. It is understood that the aim of such a litigation strategy is to have the state of Libya and the government entity jointly liable.
Since I served as an expert witness on Libyan administrative and civil law on behalf of the Respondent in Tekfen-TML Joint Venture v. Man-made River Authority and the State of Libya, and my law firm was retained to advise the Respondent, it is worth noting that the case addressed the issue of defining a “government entity.” The case was first brought before the International Chamber of Commerce in Geneva, Switzerland.
The Arbitral Tribunal decided not to hear the allegations against the State of Libya, concluding that the Man-Made River Authority was not a “government entity.” As a result, the Arbitral Tribunal determined that the State of Libya is not responsible for violations committed by the Man-Made River Authority and, by a majority decision, dismissed the claim against the State of Libya. Similar questions of state responsibility frequently arise in cases involving international investment disputes and arbitration awards.
The Arbitral Tribunal upheld the claim against the Man-made River Authority in part. It awarded the Tekfen-TML Joint Venture USD 40,134,129, payable immediately by the Man-made River Authority, after setting off a counterclaim of USD 354,520. By a majority decision, the Arbitral Tribunal found that the Man-made River Authority is an independent legal entity under Libyan law. Accordingly, the Arbitral Tribunal rejected the Tekfen-TML Joint Venture’s notion that the Man-made River Authority was an organ of the Libyan state or an auxiliary of the state, and thus identical to the state. Under Libyan law, the Libyan Supreme Court (the “Supreme Court”) considers various factors to determine whether an entity is a “state entity” or a “state organ.” The Supreme Court examines, inter alia, whether the entity/organ:
In practice, the Supreme Court did not rely solely on the “independent legal personality” factor to determine whether an entity is a “state entity.” A precedent in which the Supreme Court applied the Test is its decision in Cassation No. 296/24, dated 25 April 1978, in which the Supreme Court concluded that the Agriculture Development Board (“ADB”), which had an independent legal personality, is a government entity. The Supreme Court reviewed and analyzed in detail the powers and practices granted to ADB by Law 146/1972, which established the ADB.
As mentioned by the Supreme Court and based on Law 146/1972, the ADB:
1. has a separate legal personality;
2. is chaired by the Minister of State for Agricultural Development;
3. has a mission to participate in the development of the national economy in the agricultural sector by increasing agricultural production to ensure self-sufficiency in grain, meat, and other products, and to protect natural resources, etc.;
4. establishes general policy for agricultural development in the areas listed in Law 146/1972;
5. oversees the integrated agrarian development plan.
In its conclusion, the Supreme Court ruled that
“The Agricultural Development Board, which enjoys legal personality, administrative authority, which is a part of public authority, and participates in the development of the national economy in the agriculture sector, should be considered as one of the state's public facilities…”
