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Philippine Court Awards $175 Million Compensation on Airport Construction Claim

5/25/2011

 
A Philippine trial court has awarded Philippine International Air Terminals Co. Inc. (PIATCO) compensation of $176 million on its claims related to the expropriation of Terminal 3 at the Ninoy Aquino International Airport in 2005.  The award is just slightly higher than the government's proposed damages calculation of approximately $156 million. 

Philippine Transportation Secretary Jose de Jesus welcomed the court decision as an important step towards the government's goal of privatizing the facility.  But this may be just the beginning of the process of resolving a long-standing dispute.

The court's award represents only about 20% of the $846 million in damages that PIATCO claimed in the lawsuit.  PIATCO plans to appeal the decision. 

The government also faces an ongoing arbitration brought by PIATCO’s German shareholder, Fraport AG, at the International Center for the Settlement of Investment Disputes (ICSID) in Washington, D.C.   Fraport is claiming damages of $425 million plus interest in that arbitration. Lawyers for both PIATCO and the Government said the court decision would have no bearing on the ICSID arbitration.

The Terminal 3 contract was awarded to PIATCO in 1997 during the Estrada administration, but the Arroyo Administration declared the contract void on the grounds of irregularities.  The Philippine Supreme Court officially voided the contract in 2003, leading to the court case over just compensation.

John Howley
Woodbridge, New Jersey

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