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Cablegate: Chevron's Arbitration Ordered Stayed by Bangladeshi Court

VZCZCXRO3028
RR RUEHCI
DE RUEHKA #1219 2070908
ZNR UUUUU ZZH
R 260908Z JUL 07
FM AMEMBASSY DHAKA
TO RUEHC/SECSTATE WASHDC 4618
INFO RUEHNE/AMEMBASSY NEW DELHI 0053
RUEHKT/AMEMBASSY KATHMANDU 9201
RUEHIL/AMEMBASSY ISLAMABAD 1753
RUEHLM/AMEMBASSY COLOMBO 8026
RUEHGO/AMEMBASSY RANGOON 2560
RUEHCI/AMCONSUL KOLKATA 0848

UNCLAS DHAKA 001219

SIPDIS

SIPDIS

E.O. 12958: N/A
TAGS: ETRD EPET PREL BTIO BG
SUBJECT: CHEVRON'S ARBITRATION ORDERED STAYED BY BANGLADESHI COURT


1. SUMMARY. Chevron Bangladesh, a wholly-owned subsidiary of
Chevron USA, was recently ordered by a local court in Bangladesh to
halt international arbitration against the GOB stemming from a gas
pipeline dispute with Petrobangla, a GOB corporation charged with
oil, gas & minerals exploration and development. Chevron Bangladesh
has been in contact with the Embassy regarding this matter, and a
meeting between Steve Wilson, Chevron Bangladesh's President and the
CDA a.i. is scheduled for Monday, July 30. END SUMMARY.

2. FACTS OF THE CASE. Chevron Bangladesh and Petrobangla entered
into a contract which included provisions for dispute resolution
through The International Centre for Settlement of Investment
Disputes (ICSID). Petrobangla began charging Chevron a four-percent
tariff on gas moved through their pipelines, despite arguments from
Chevron that Petrobangla has already purchased the gas and it is no
longer Chevron's liability. NOTE: Chevron does NOT/NOT request
assistance regarding arguing the facts of the case. They are only
concerned with the forum in which it is heard. END NOTE.

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3. THE ARBITRATION. Chevron instituted ICSID Case: ARB/06/10 to
arbitrate the matter, naming the Government of Bangladesh as the
defendant; ICSID accepted the matter for arbitration, and has formed
a tribunal. Petrobangla instituted "Title Suit No 140 of 2007" in a
Bangladesh court, including a request to stay the arbitration.
ICSID communicated with the Bangladeshi court, requesting that it
allow the arbitration to proceed. Media reports that the
Bangladeshi court issued an order July 22, 2007 to Chevron
effectively staying the arbitration and threatening fines if it is
disobeyed.

4. NEXT STEPS. Chevron Bangladesh President Steve Wilson will be
meeting with the CDA a.i. and Econoff on Monday, July 30 at 1300 to
discuss this matter. Post will report any substantive content of
that meeting septel.

PASI

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