Procedural Posture

This document is the Final Award rendered in ICC Arbitration No. 22370/DDA between Divine Inspiration Group (Applicant) and the Democratic Republic of Congo (Respondent). The dispute arose from two production sharing contracts (the 2007 and 2008 Contracts) for the exploration and exploitation of hydrocarbon resources in the Central Basin and the Albertine Graben.

Principal Legal Issues

The primary legal issues addressed by the Tribunal included the admissibility of the Applicant's claims, the legal effect of the contracts in the absence of a Presidential Order of Approval, and whether the Respondent's reallocation of oil blocks to third parties constituted a compensable breach. The Tribunal was also tasked with determining the appropriate quantum of damages, including sunk costs and lost profits, in the event of a breach.

Parties' Positions

The Applicant argued that the Respondent breached its contractual obligations by failing to issue the requisite Presidential Orders within a reasonable time and by unlawfully terminating the 2008 Contract to reallocate the rights to a third-party consortium. The Applicant sought termination of the contracts and full compensation. The Respondent contended that the claims were premature and inadmissible, asserting that the contracts never entered into force without the Presidential Orders, which fell under the discretionary power of the Head of State. The Respondent further argued that the 2008 Contract had lapsed and that the Applicant's claims for lost profits were highly speculative.

Tribunal's Reasoning and Findings

The Tribunal dismissed the Respondent's preliminary objections, affirming its jurisdiction and the Applicant's standing. On the merits, the Tribunal held that while the 1981 General Legislation on Mines and Hydrocarbons required a Presidential Order for the contracts to become fully effective, the Respondent was bound by a good faith obligation to facilitate the issuance of such orders. The Tribunal found that the Respondent breached this obligation by failing to issue the order for the 2007 Contract within a reasonable time, which administrative practice indicated should be approximately two years and four months. Regarding the 2008 Contract, the Tribunal determined that the Respondent unlawfully dispossessed the Applicant of its exclusive rights by reallocating the block to a third party. In assessing quantum, the Tribunal accepted the discounted cash flow (DCF) methodology applied by the Applicant's experts, noting the Respondent's failure to submit countervailing expert evidence, and concluded that the loss of opportunity was sufficiently certain to warrant compensation.

Operative Directions

The Tribunal ordered the termination of both the 2007 and 2008 Contracts at the exclusive fault of the Respondent. The Democratic Republic of Congo was ordered to pay the Applicant USD 617,400,178 in damages, comprising lost profits and incurred expenses. The Tribunal further awarded pre-award and post-award interest calculated at the rate of return on 20-year US Treasury bonds plus 2%, and ordered the Respondent to bear the full costs of the arbitration.