Incompetent lawyers costing country dear
To the victors go the spoils – and the country pays. Successive governments, on assuming power, have routinely handed out lucrative legal appointments in high profile cases as a reward for political loyalty, often at the expense of national interest. In some cases, the failure to choose competent counsel has resulted in crushing losses in international courts, costing the country billions of Taka. "Unfortunately, no guidelines are followed when appointing lawyers to argue cases of critical importance," said Barrister Rafique ul Haque, one of the country's senior-most lawyers.
Haque, who has represented both Prime Minister Sheikh Hasina and leader of the opposition Khaleda Zia in court, added: "There are many able and experienced lawyers in the country, but the government seems to act arbitrarily in appointing whoever it wants, regardless of expertise."
The trail of cronyism stretches back a long way. In 2001, oil giants Shell and Cairn jointly sued Petrobangla and the government to stop Bangladesh from charging a transportation tariff on gas produced from the Sangu gas field. Petrobangla, on advice from its lawyers, agreed to arbitration by a sole expert. Energy expert James Barnes of the Texas-based law firm Barnes & Cascio was appointed the sole arbiter. The BNP-led alliance that had come to power, appointed the law firm of Khandoker Mahbub Uddin Ahmed, a ruling party leader, to represent Petrobangla.
Shell and Cairn successfully argued that Bangladesh was not entitled to a transportation tariff for use of its gas pipeline since the gas was being "delivered" to Petrobangla at the point where Shell's pipeline from Sangu joined the transmission pipeline. From that point, the gas was Bangladesh's property and the company was not liable to pay anything for its transportation, Shell's lawyers said.
Documents obtained as part of a joint investigation by UNB and the Dhaka Courier show that in the final determination on May 9, 2002, James Barnes upheld the Shell-Cairn position and ordered Bangladesh to refund billions of Taka it had realised as tariff, with interest.
Independent experts said that the Bangladeshi lawyers had failed to argue convincingly that under article 4.17 of the Gas Sales and Purchase Agreement of January 11, 1997, Bangladesh was entitled to charge a tariff if Petrobangla transported the gas on behalf of the gas producer to the contracted destination, in this case, Chittagong. Agreeing to arbitration by a "sole expert" was also a blunder, several specialists said.
Earlier, during the tenure of the previous Awami League government, Bangladesh failed to get adequate compensation for the devastating explosion at the Magurchara gas field operated by US company Occidental. Following the blowout in 1997, Occidental sold its stake to another US oil giant Unocal, and pulled out of the country taking advantage of legal loopholes. Unocal claimed to have "settled" the matter but energy experts say Bangladesh's claims of more than $550 million were ignored, using backdoor deals.
A senior Petrobangla official told UNB on condition of anonymity: "We estimated the losses at 6.9bn cubic metres of gas. Unocal only paid $6.3 million. Peanuts, really."
In 2007, encouraged by the success of Shell-Cairn, US oil and gas company Chevron launched a law suit at the International Centre for Settlement of Investment Disputes (ICSID), claiming that Bangladesh should refund $240 million deducted as transportation tariff from gas sales invoices. ICSID is an autonomous international institution established under the Convention on the Settlement of Investment Disputes between States and Nationals of Other States with over one hundred and forty member states.
The government hired a law firm named "Legal Remedy" to defend the lawsuit. Enquiries by UNB/Dhaka Courier revealed that the firm, with offices in Ispahani Building, Motijheel, is headed by Barrister Azharul Haque, a lawyer with ties to the four-party alliance. The firm's letterhead contains, among other things, the words: Tax advisors, patent and trademark attorneys. In its submission to ICSID, the Bangladeshi lawyers advanced the argument that the panel did not have jurisdiction in the case since it only judged disputes between states and nationals of other states.
In a bizarre submission dated April 12, 2007, Legal Remedy argued: "Bangladesh is not a State, it is a Republic." It also claimed that the case was not an investment dispute, since Chevron was "not an investor but a contractor."
"It was a disaster, and we would certainly have lost the case just as we had lost the Shell-Cairn case," said a senior Petrobangla official. "But before the judgment was delivered, the caretaker government decided to make a last ditch effort by changing the lawyers."
The new law firm hired by the caretaker government was Dr Kamal Hossain and Associates. Kamal Hossain, an internationally known lawyer, had won a landmark judgment against another oil company Scimitar in 1994, following which Bangladesh won control of Jalalabad and Surma-1 gas fields.
Taking over the Chevron case in late 2008, Dr Kamal Hossain argued convincingly that Bangladesh was entitled to a 4 per cent tariff from Chevron in exchange for the privilege of using Bangladesh's pipeline under the Production Sharing Contract. Chevron was using Bangladesh's transmission system to get its gas to market, he submitted. In 2010, ICSID delivered a verdict in favour of Bangladesh, saving the state $240 million in disputed tariffs, and opening the door to substantial earnings during the lifetime of the Chevron wells.
"It was a significant victory," said Dr M Tamim, professor of petroleum engineering at the Bangladesh University of Engineering and Technology, who was Special Advisor for Power and Energy Ministry at the time. "It showed that with determination, we could take on global corporations in highly technical cases."
But shortly after the parliamentary election, the situation changed. "The politics of rewarding your friends and punishing your enemies continued," said Advocate Asaduzzaman, a senior attorney with law firm Barrister Ishtiaque Ahmed and Associates.
In April 2010, the Canadian company Niko Resources took Bangladesh to ICSID, contesting its liability in the Tengratila gas explosion of 2005. Two months later, the company filed another arbitration suit challenging Bangladesh's decision to withhold payment on gas produced from the Feni gas field until the claim for damages in Tengratila was settled.
Niko obtained permission to develop the Tengratila (Chattak) and Feni gas fields after they were declared "abandoned". An enquiry in 2005 found that the framework of understanding, which was signed in 1999 and based on which the joint-venture agreement was signed, was against the interest of the country and mired in "corruption".
Experts say the company's negligence caused two blowouts in 2005, causing substantial loss of gas and damage to the environment. The government and the Bangladesh Environmental Lawyers' Association (Bela) filed two separate lawsuits in Bangladeshi courts after a probe committee determined that Niko should pay Bangladesh $106 million in compensation. The High Court ordered the government to withhold payment for gas from the Feni field until the Tengratila dispute was settled. Documents obtained by UNB show that Petrobangla and Bangladesh Petroleum Exploration & Production Company Limited (Bapex), the joint defendants in the ICSID suit, initially instructed Dr Kamal Hossain and Associates to represent Bangladesh.
Letters signed by Dr Hussain Monsur, Chairman of Petrobangla, Mortuza Ahmad Faruque, Managing Director of Bapex, and Mohammad Mejbahbuddin, Secretary of the Ministry of Power Energy and Mineral Resources, were sent to ICSID in July 2010, declaring that Dr Kamal Hossain would represent the country.
But in the space of a month, the decision was reversed, and Dr Kamal Hossain and Associates were replaced with the law firm Juris Counsel, headed by Advocate Tawfique Nawaz. Nawaz is the husband of foreign minister, Dipu Moni. When contacted about the change of counsel, Mortuza Ahmad Faruque, Managing Director of Bapex, declined to give reasons, saying "it was a government decision."
Many analysts have questioned the decision to remove Dr Kamal Hossain, who has a proven track record in such lawsuits, from the Niko case. They say Juris Counsel and Advocate Tawfique Nawaz do not have the necessary qualifications to replace Dr Kamal Hossain. Enquiries in legal circles did not reveal any high profile case of a technical nature which Juris Counsel had successfully handled.
"They (Tawfique Nawaz and associates) are relatively inexperienced. How many notable cases or international tribunal suits have they handled in the past decades? None that I know of," said former Attorney General Barrister Fida M Kamal.
Dr M Tamim said that the Niko case is technical in nature, and will require astute handling. "I hope the national interest will not be sacrificed," he said.
Senior Petrobangla sources say out of two law suits filed by Niko, the Bangladeshi lawyers have agreed to start arbitration on the withheld gas bills (case ARB/10/18) first. "This may go against our interest since according to the PSC we are obliged to pay bills," suggested a senior official. "Unless the blowout compensation case is heard first, Niko may leave Bangladesh through a dubious deal."
President of the Supreme Court Bar Association, Advocate Khandoker Mahbub Hossain, admitted that legal appointments are often handed out as a reward for political loyalty or through personal connections.
"There should be clear guidelines for appointing lawyers who will represent Bangladesh in such vital cases," Mahbub Hossain said. "There should also be a ceiling on fees. I heard Dr Kamal Hossain was representing the state without a fee. Maybe he is not in the good books of the government any more."
Advocate Tawfique Nawaz is known in court circles for launching a lawsuit in 2001, to stop Brac, the world's largest NGO, from operating Brac Bank and Aarong. The petitioners argued that a non-profit NGO should not launch a for-profit affiliate.
Court documents show that Prof Monowar Uddin Ahmed, head of the Grameen Bank probe committee that recently submitted its report, was one of the petitioners. Committee member Advocate Mohsen Rashid was on the panel as Tawfique Nawaz's junior.
On June 4, 2001, according to court records, the Supreme Court struck down the petitioners' contention, saying that as long as the earnings helped strengthen the financial base of the non-profit, it would be allowed.
Ten years later, Monowar Uddin, Mohsen Rashid and Tawfique Nawaz came together again to take on another large non-profit: Grameen Bank. While Monowar Uddin Ahmed and Mohsen Rashid led the Grameen Review, Advocate Nawaz was lead counsel for Bangladesh Bank in the case against Dr Muhammad Yunus and Grameen Board of Directors.
Many have asked whether the Foreign Minister's spouse providing legal services in such cases represents a conflict of interest. "In lawsuits involving international parties and tribunals, diplomatic missions abroad are often supposed to observe the case," said one analyst. "For example, in ICSID cases copies are given to the Ambassador in Washington DC. How keen will the diplomats be to supervise the lawyer if he is the husband of the foreign minister?"
Foreign Minister Dipu Moni could not be reached for comment at the time of writing this report, but Advocate Tawfique Nawaz said his firm was fully qualified to fight such a case. "I have been practicing law since 1975," he said.
Tawfique Nawaz refused to discuss the merits of the Niko case, claiming lawyer-client confidentiality prevented him from doing so. Said Nawaz: "Some of us still have ethics."
http://unheardvoice.net/blog/2011/05/16/incompetent-lawyers-costing-country-dear/
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