Dentons has won a final judgement from Papua New Guinea’s (PNG) Supreme Court, staying a US$3 billion arbitration against its client, the Independent State of Papua New Guinea.

Arbitration commenced in 2015, when IT&S claimed US$3 billion against the State for not actioning a claimed Project Agreement with the State for an extremely large scale forestry and road project in Western Province.

Acting on instructions from the PNG Attorney General and State Solicitor Dentons’ PNG litigation team, led by Partner Erik Andersen as lead counsel, contested the arbitration and challenged its jurisdiction in the PNG courts.

After a lengthy court battle Dentons received the judgement in the final court of appeal. The Supreme Court ruled that claiming by arbitration was not authorised, permanently staying the arbitration and awarding all costs to the State. This was an extremely significant win, given at current exchange rates the size of the arbitration claim represents approximately one-third of the country’s annual budget.

State Solicitor and instructing counsel Daniel Rolpagarea said: “Given the size of the claim against PNG and the severe impact an adverse ruling would have had on the country’s budget, the win means that government finances can instead be deployed to fund essential government services like health, education and critical infrastructure.”

Erik Andersen said that the Supreme Court’s decision demonstrates the complexities of the case, and highlights how important it is for firms to have a deep understanding of the local market.

“Commercial arbitration in jurisdictions who have not yet adopted modern standard forms of arbitration law, such as UNCITRAL model law, means that having teams on the ground is crucial. Dentons has been in PNG for over 50 years, so we were able to draw on our long experience to achieve the best outcome for our client." 

Dentons PNG Managing Partner Stephen Massa said Dentons was delighted with the outcome.

“We are humbled by the trust placed in Erik Andersen and our team by the highest levels of government on a matter with potentially enormous ramifications for the country. Repaying that trust with such a completely satisfying result for our client and for PNG is what we all worked for.”

About Dentons

Redefining possibilities. Together, everywhere. For more information visit dentons.com