Maynilad Wins Arbitration Against the Republic of the Philippines under the Undertaking Letter

SyCip Salazar Hernandez & Gatmaitan, as lead counsel, represented Maynilad Water Services, Inc. (Maynilad) in an arbitration case against the Republic of the Philippines, which was represented by the Office of the Solicitor General and Rajah & Tann Singapore LLP. This arbitration case was an UNCITRAL-governed international arbitration held in Singapore.

The case against the Republic was an offshoot of an earlier rate rebasing arbitration case filed by Maynilad as Concessionaire against a Republic-owned water utility, Metropolitan Waterworks and Sewerage System (MWSS). There, a three-man appeals panel chaired by Professor Bernard Hanotiau issued a final award in 2015 upholding Maynilad’s rate rebasing adjustment pursuant to its 1997 Concession Agreement with the utility.

As the MWSS refused to fully implement the rebasing award, Maynilad claimed compensation from the Republic of the Philippines (Republic), pursuant to the latter’s 1997 Undertaking Letter, for the losses occasioned by a delay or non-implementation caused by the Republic or any of its agencies in implementing any increase in standard rates.

The Republic refused to honor Maynilad’s demand and Maynilad brought the matter to a second arbitration against the Republic before another three-man Arbitral Tribunal (with Kevin Kim as Chair).

On July 24, 2017, the tribunal unanimously found in a final First Partial Award that the Republic had breached its Undertaking Letter and ordered it to indemnify Maynilad for the PhP3.425 billion in actual losses it had suffered from March 11, 2015 to August 31, 2016, without prejudice to Maynilad seeking further recourse against (i) MWSS for losses from January 1, 2013 to March 10, 2015, and (ii) the Republic for losses from September 1, 2016 onwards. The Tribunal expressly stated that it would entertain an additional claim from Maynilad for losses from September 1, 2016 onwards in case the parties are unable to settle that matter between themselves.

The SyCipLaw team was composed of partners Emmanuel M. Lombos and Arlene M. Maneja, and associates Mark Xavier D. Oyales and Ricardo Jesus E. Gutierrez, who were assisted by Jericho R. Tiu and Nikko Emmanuel D. Silva.