A Middle East construction firm has been given the go-ahead to seize assets from Libya’s state oil company to recover nearly $1 billion after construction of a tourist resort project was cancelled.
A court in Paris has ruled that Al-Kharafi Group of Kuwait can pursue the National Oil Corporation's assets in France, including those held in a joint venture with French company TotalEnergies. The Libyan company does not own shares in TotalEnergies.
Al-Kharafi signed a deal in 2006 – when the country was ruled by Muammar Qaddafi – with Libya’s tourism authority to build a five-star development in an area east of Tripoli and was granted a 90-year lease.
Construction of the complex, which was to feature apartments, a commercial centre and restaurants, was expected to take seven and a half years and cost about $130 million.
But soon after the contract was signed, several Libyan public bodies lay claim to ownership of the land and Al-Kharafi was asked to leave. At one stage, the company complained that its workers had been assaulted by police officers, who claimed to own the land.
Al-Kharafi was offered an alternative site but refused, and in 2010 the Libyan government terminated the licence for the construction project.
The company went to arbitration and in 2013 was awarded $900 million in compensation for the profits it should have made from investing in the 14 resorts and facilities throughout the period of the lease.
Since then, Al-Kharafi has been targeting assets owned by the Libyan government in a bid to recoup what it says it is owed, including a luxury jet once used by Qaddafi.
The Libyan government went to court in 2015 and successfully prevented the seizure of the Airbus A340, which had been stored in the southern French city of Perpignan since 2012.
An attempt to seize assets belonging to the Libyan Investment Authority, the country’s sovereign wealth fund, also failed. The LIA successfully argued that because it was under sanctions, its assets could not be subject to enforcement measures.
Al-Kharafi then shifted its attention to the NOC. A French court ruled in 2022 that NOC constituted an extension of the Libyan state, making it liable to have its assets seized to pay the debt.
In July last year, the company was approved to seize the NOC's stake in joint ventures with TotalEnergies. The French company has been present in Libya since 1954 and is currently involved in several oil and gas ventures with the NOC.
The latest appeal by the Libyans to the Paris Court of Justice was unsuccessful, though other avenues of appeal are still open. With interest, the amount owed to Al-Kharafi is $960.2 million.
