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Astaldi makes technical errors in Kramis Dam

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  • Astaldi makes technical errors in Kramis Dam

    May 5 , 2007 -- Kramis Dam in Mostaghanem (western Algeria) was constructed in 2005. This project cost 10 billion DA. However, it was proved that this dam could not be used in view of many technical errors made by “Astaldi”.

    According to experts, Kramis Dam could not retain water because it would be dangerous for the inhabitants of that area.

    A reporter from Echorouk went there and noticed leaks and cracks. When asked, “Astaldi” officials seemed to not care about that.

    Mr. Nourredine Nhila, a regional director said “We received Kramis Dam on December 30, 2004. At that time, construction failures did not appear. However, once it was heavily raining, we started to notice leaks and cracks.

    This dam was constructed for 36 months. The construction started on August 7, 2001. The operation was undertaken by an Italian group including Astaldi and Todini.

    Leaks have reached the dam side in the right; which caused the collapse of a house there where workers live. “That’s why it is impossible for Kramis Dam to retain water at the present because we have not determined the exact failure yet”, says Mr. Nhila.

    He added that they were obliged to transfer an average of 500,000 cubic meters of the dam water to the sea. 190 families live next to the dam.

    In addition, although the dam has recently been constructed, dirt started to fill it in a record time. The problem was in the weak water barriers which collapsed because they were not built according to normal standards.

    The Water Ministry has asked the help of well-known experts such as EDF (Electricité De France). All of them said there was no technical solution for Kramis dam. They mentioned that catastrophes would happen if this dam retained water.

    Last edited by Guest 123; 28th November 2008, 22:45. Reason: Picture link fixed

  • #2

    November 28, 2008 -- In a 12 November 2008 final award, an ICSID tribunal has dismissed all claims by two Italian investors, L.E.S.I S.p.A. and ASTALDI S.p.A, in a dispute with the government of Algeria over a failed contract to construct a hydraulic dam.

    While the contract with the National Agency for Dams (NAD) was signed in 1993, progress was severely hampered by security problems as Algeria descended into civil war. After nearly 10 years of delays, an amendment to the contract was proposed by the investors and accepted by NAD. However, the amendment required authorization from African Bank of Development, which provided funding for the project. The Bank refused authorization, and instead recommended a new contract, for which NAD would be required to put out another call for tenders. NAD consented and consequently terminated the contract.

    In their claim, the Italians alleged breaches of the provisions on indirect expropriation, fair and equitable treatment, and full protection and security in the Algeria-Italy bilateral investment treaty.

    In dismissing the charge of indirect expropriation, the Tribunal held that violating the contract does not, by itself, amount to expropriation. The Tribunal noted that the national laws of Algeria allow the unilateral termination of a contract by the State if compensation is provided. Given that NAD had committed to pay compensation, it concluded that expropriation cannot result from the mere absence of agreement on the amount to be offered.

    The Tribunal also found no breach of Fair and Equitable Treatment provision, having determined that NAD’s decision to terminate the contract and launch a second call for tender was transparent and non-discriminatory.

    (Notably, the Algeria-Italy BIT does not contain a Fair and Equitable Treatment clause; however, by use of Most Favourable Nation clause, the Italian investors benefited from the F&E clause in the Algeria-Belgium BIT).

    Finally, in regards to the alleged breach of the full protection and security standard, the Tribunal held that this commitment is weaker during periods of war or civil strife. As with many BITs, the Algeria-Italy treaty provides two levels of application for this standard: one general offer of full protection and security to covered investors, and a second that prohibits treatment less favourable than that offered to national or third-party foreign investors during periods of war or civil strife. In a departure from some other tribunals, who have held states to a high level of protection in spite of civil unrest, this Tribunal determined that the two provisions cannot be used simultaneously, and considered armed conflicts to be exceptional situations which lead to a dispensation from the general principle.

    The award in L.E.S.I. S.p.A. et ASTALDI S.p.A. v. Algeria is available in French here (.pdf file).


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