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April 18, 2021
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International tribunal rejects PNG Government’s dismissal of PNGSDP case

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by Allanah Leahy – EM TV Online

Chairman of Papua New Guinea Sustainable Development Program Ltd (PNGSDP), Sir Mekere Morauta, released a statement last Wednesday notifying of a decision made by the International Centre for Settlement of Investment Disputes (ICSID).

The ICSID has rejected the Papua New Guinea Government’s 16 July application for the dismissal of PNGSDP’s case which seeks restitution of the company’s 63.4 per cent shareholding in the Ok Tedi mine.

Chairman of PNGSDP Sir Mekere Morauta last week welcomed ICSID’s rejection of the PNG government’s application, allowing the case to proceed.  

“This is very good news for the people of Western Province,” he said. “It means that the second of PNGSDP’s court battles to protect its investments is off to a strong start.

“The ICSID decision gives the people good reason to hope that PNGSDP will ultimately be able to resume sustainable development in the province funded by the dividends from the mine.”

The decision is the initial phase of PNGSDP’s efforts to reclaim their shares in Ok Tedi mine after they were cancelled following what is described by PNGSDP as a breach of prohibition against unlawful expropriation.

PNGSDP attributes this to the PNG Government’s adoption of the Mining (Ok Tedi Tenth Supplemental Agreement) Act 2013 (the “Tenth Supplemental Act”), as well as the Mining (Ok Tedi Mine Continuation) (Ninth Supplemental Agreement) (Amendment) Act 2013.  

Sections 4(5) and 4(6) of the Tenth Supplemental Act provide:

(5)          All references to PNGSDP in the constitution of Ok Tedi Mining Ltd (OTML) and in the Fifth Restated Shareholders Agreement shall, on and from the coming into operation of this Act, be read and construed as a reference to the State.

(6)          On and from the coming into operation of this Act, the Charge is void and of no legal effect and shall not create any interest of any nature whatsoever in any share of OTML.

Section 6 of the Tenth Supplemental Act provides:

Notwithstanding anything to the contrary in any Act, the State has all necessary powers to restructure PNGSDP and its operations to ensure that PNGSDP applies its funds for the exclusive benefit of the people of the Western Province.

The PNG Government had previously appealed to the ICSID for the dismissal of PNGSDP’s claims, arguing that the claims were without legal merit. The ICSID’s rejection of their appeal has thus given Sir Mekere and PNGSDP reason to look forward to the case going ahead.

“We welcome the ICSID decision and look forward to putting our arguments in the next phase of the proceedings,” he said.

“The O’Neill Government’s expropriation of PNGSDP’s investment in Ok Tedi, and other actions the government has taken against PNGSDP, have unlawfully and immorally deprived the people of Western Province of the sustainable development benefits to which they are entitled through PNGSDP.

“PNGSDP will continue to fight for the rights and benefits of Western Province. We have a legal and moral duty to do so.”  

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