ICC dismisses Southern Solar Power's claim against BPDB

The ICC tribunal dismissed the claim of Southern Solar Power, a Bangladeshi subsidiary of US-based SunEdison, against the Bangladesh Power Development Board (BPDB) without an evidentiary hearing, which is the first time in ICC history under article 22 of the 2017 ICC rules.

The company claimed US$18 million from BPDB and declaratory relief to reinstate a power purchase agreement from ICC tribunal.

"ICC found that all Southern's force majeure claims were manifestly devoid of merit on the basis that the company had not complied with the contract's notice requirements for a force majeure event. It therefore did not need to decide whether a force majeure event had occurred," Barrister Moin Ghani, the panel lawyer of BPDB told the Daily Observer on Thursday.

BPDB awarded Southern Solar to build a 200-megawatt solar power park, the country's first large-scale solar project in Teknaf in the Cox's Bazar district of Southeastern Bangladesh in 2017, later it signed a 20-year power purchase agreement.

Southern Solar Power turned to arbitration the following year after BPDB said it intended to terminate the agreement over Southern's failure to meet a deadline to secure financing for the project.

Southern also obtained an ex parte injunction from a Bangladeshi court to prevent the termination, which was later vacated.

However, BPDB lodged separate arbitration to the ICC, brought counterclaims for US$3.6 million in liquidated damages and a further US$84.7 million for Southern's alleged breaches of the contract and fraudulent misrepresentation.

Southern argued in the ICC case that brutal and systematic violence in Rakhine State in Myanmar had led to an exponential increase in the number of Rohingya refugees entering Cox's Bazar in 2017, dramatically expanding the footprint of refugee camps located close to the original project site.

It argued these developments constituted a force majeure event that excused performance of its obligations. Southern maintained the refugees had caused heavy road congestion and restricted access to the project site.

It said the placement of a large refugee camp had effectively blocked the path of necessary power transmission lines and that there were concerns around security of the site and safety of personnel. It also argued the crisis had a serious impact on the availability of international financing.

However, in its partial award, the tribunal said that Southern's case on the impact of the refugees on the project could not be fairly determined solely on the documents and witness statements under an article 22 procedure, quoting the award, Moin Ghani said.

BPDB submitted satellite imagery of the refugee migration from Human Rights Watch as well as reports by electricity grid experts that it said undermined Southern's case on force majeure. It also argued that any international financing issues were due to Southern's parent company, SunEdison, having entered chapter 11 bankruptcy proceedings in the US in 2016.

The Hong Kong-seated tribunal was chaired by Sir Richard Field of One Essex Court and included Hong Kong-based arbitrator Robert Whitehead SC and Omnia Strategy's Cherie Blair KC.

BPDB later withdrew that counterclaim. The tribunal issued a final award in April 2022 ordering Southern to pay a net sum of more than US$924,000 plus interest.

"We are going to file a separate case against the company to minimize our loss," Barrister Moin Ghoni said.