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Shell Exploration files new arbitration case against PH

Shell Philippines Exploration B.V. filed a new arbitration case against the government before the International Center for Settlement of Investment Disputes in Washington D.C. over a tax dispute on the Malampaya gas project in northwest Palawan.

Spex, operator of the Malampaya gas project registered the case on July 20, 2016.

“We can confirm that Spex has filed a request for arbitration with the International Center for the Settlement of Investment Dispute. The case has been filed pursuant to the bilateral investment treaty between the Philippines and the Netherlands,” Spex said in statement.

Listed as claimants were King & Spalding, Singapore, New York, NY, USA and Houston, TX, USA and Romulo Mabanta Buenaventura Sayoc & de los Angeles, Makati City. The Office of the Solicitor General was named as respondent.

Spex has a pending separate arbitration case against the government lodged with the arbitration tribunal in Singapore.

The Office of the Solicitor General moved to dismiss the arbitration case filed by Spex at the Singapore tribunal.

Shell sought intervention from the arbitration tribunal in Singapore regarding the Commission on Audit’s decision to collect P53.14 billion in taxes from the contractors of the Malampaya gas to power project.

The CoA ruled in May last year that service contractors’ payment of income tax for the Malampaya project was not included in the government’s 60 percent share of the Malampaya royalties.

Aside from Spex holding 45 percent, other members of the  SC 38 consortium are Chevron Malampaya LLC with 45 percent and state-owned PNOC Exploration Corp. with 10 percent.

The Energy Department warned CoA that imposing P53.14 billion in taxes to the contractors of the Malampaya project would create havoc on the petroleum industry.

The department, in a 30-page positiopn paper, said the CoA decision had “sent a very wrong signal to the existing and future petroleum exploration investors in the country.”

It said petroleum exploration, especially offshore, involved great risk, huge capital and high technical capability and that foreign investors decided where to put their money based on “the certainty and stability of investment riles and regulatory regime of a country.”

It said the CoA decision had totally wreaked havoc to the representation of the government to these investors that the Philippines honors and respects the sanctity of contracts and agreements.

“The trust and confidence of foreign investors in the stability and certainty of our investment laws and regulations that the government, for a long period of time, has painstakingly built and nurtured, has been greatly damaged,” it said.

Topics: Shell Philippines Exploration B.V. , arbitration case , International Center for Settlement of Investment Disputes , tax dispute , Malampaya gas project
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