Fraport AG Frankfurt Airport Services Worldwide v. Republic of the Philippines
Andal, Kristina Marie Joy B.
Facts of the Case
This case concerns a dispute submitted to the International Centre for Settlement of
Investment Disputes ("ICSID" or the "Centre") on the basis of the "Agreement between
the Federal Republic of Germany and the Republic of the Philippines on the Promotion
and Reciprocal Protection of Investments" dated April 18, 1997 and in force since
February 1, 2000 (the "BIT" or "Treaty"), and the Convention on the Settlement of
Investment Disputes between States and Nationals of Other States, which entered into
force on October 14, 1966 (the "ICSID Convention").
Claimant is Fraport AG Frankfurt Services Worldwide ("Fraport" or "Claimant"), a
company incorporated in Germany. Fraport was formerly known as Flughafen Frankfurt
Main AG ("FAG"). Respondent is the Republic of the Philippines ("The Philippines," the
"Government," or "Respondent").
The Tribunal has been charged with the daunting task of deciding a dispute which has
already been submitted to a first ICSID Tribunal, to an ICSID ad hoc Committee and which
has been the subject of a related ICC arbitration and numerous Philippine proceedings.
This dispute centers around the invalidation of a concession to build and operate a new
international terminal ("Terminal 3") at Ninoy Aquino International Airport in Manila further
to the first airport privatization in Asia.
Claimant, Fraport, is a direct and indirect investor in the concession project company,
known as the Philippines International Air Terminals Co., Inc. ("PIATCO").
In July 1997, pursuant to a concession agreement, PIATCO was awarded, under
President Fidel V. Ramos, the Terminal 3 Concession under the Philippines’ Built-
Operate-Transfer law. In 1999, Fraport, an experienced airport operator, became an
investor in PIATCO and a "cascade" of other Philippine companies that had ownership
interests in PIATCO.
Between 2001 and 2002, the relationship between PIATCO and Respondent soured for
disputed reasons, including disagreements over the renegotiation of the terms of the
concession agreement, as it will be explained in Section IV below.
In November 2002, as construction of Terminal 3 neared completion according to Fraport,
President Gloria Macapagal-Arroyo announced that the Philippine Government had
determined that the concession contracts were legally invalid and would not be honored.
On May 5, 2003, the Philippine Supreme Court declared the Terminal 3 concession to be
void ab initio because the consortium behind PIATCO allegedly did not meet the financial
qualification requirements to have been awarded the concession originally, among other
reasons.
