Arbitral tribunal postpones Malampaya tax proceedings

By Alena Mae S. Flores – October 05, 2020 at 08:15 pm
from manilastandard.net

The International Center for Settlement of Investment Disputes said Monday it suspended the proceedings on the arbitration case filed by Shell Philippines Exploration B.V. against the Philippine government over the Malampaya gas project’s corporate income tax issue to March 2021.

“The proceeding is suspended until March 1, 2021, pursuant to the parties’ agreement,” ICSID said in its latest proceedings report.

Spex, the operator of the Malampaya gas project in northwest Palawan, filed the arbitration case with ICSID, part of the World Bank Group based in Washington D.C., on July 27, 2016 pursuant to a bilateral investment treaty between the Philippines and the Netherlands.

Spex registered the arbitration case at ICSID under the subject dispute heading of “hydrocarbon concession, taxation.”The oil and gas company is represented by King & Spalding (USA) and Romulo Mabanta Buenaventura Sayoc and De Los Angeles, while the government is represented by the Office of the Solicitor General and Arnold & Porter (USA, UK).

The case stemmed from the Commission on Audit’s issuance of a notice calling for the collection of around P151 billion from the Malampaya consortium frrom 2002 to June 2015, arising from the COA’s tax interpretation that corporate income tax should not form part of the government’s share in the Malampaya project.

Following the resignation of arbitrator V.V. Veeder in February this year, Juliet Blanch accepted the appointment as presiding arbitrator. The tribunal in August issued a ruling suspending the proceedings until March next year.

Spex also filed a separate arbitration case with the International Chamber of Commerce in Singapore in 2015.Spex received a favorable ruling last year that finally resolved the Malampaya tax dispute.

Spex is the operator of the Malampaya gas project in northwest Palawan with a 45-percent stake. The company is selling its interest in the Malampaya project as part of its Shell Group’s cash preservation measures.