For Italian investments, what to do in Libya

Finding a solution to the uncertainty of war. Provide elements of clarity to companies that see contracts, orders and investments at risk. Understanding what could be the fate of the numerous Libyan assets present in our country: all of this was discussed at the workshop held on Wednesday at the Hogan Lovells law firm, in its headquarters in Piazza Venezia, in Rome. Where specific cases have been addressed. And possible concrete solutions have been provided.
At the meeting, entitled "Businesses and the Libyan crisis: scenarios and solutions in law", the speakers were Natalino Ronzitti, scientific adviser of the Institute for International Affairs and full professor of international law at the Luiss University in Rome, Stefano Soliman, adviser of legation of the Ministry of Foreign Affairs, Francesca Rolla, partner of Hogan Lovells, and Andrea Atteritano, associate of the same law firm.
The amount of business between Italy and the countries of North Africa, affected by popular revolts since the beginning of this year, is enormous: we are talking about 26 billion euros. In Egypt and Tunisia, where the situation is returning to normal at least on a political level, there is the possibility of finding legitimate interlocutors with whom to deal, even if even these countries have not been exempt from the drop in investments recorded by Istat in the first quarter of 2011. The Libyan situation, however, is more complex and uncertain. The state of civil war, the NATO intervention, the possibility of the establishment of two different sovereign states raise doubts and fears for the Italian companies that have invested in loco. The very close relations between the Italian and Libyan economies are based above all on historical reasons and have been strengthened over time by diplomatic activity which has taken the form of various treaties, among which the "Friendship Treaty" signed by the Government is of particular importance Berlusconi in 2008 and the Agreement on the promotion and protection of investments which came into force in 2000. Libya is the leading supplier of oil (Eni extracts around 100 tonnes of crude oil) and the fourth of gas, a sector in which a great deal has been invested recent years, which have seen the inauguration of the green stream pipeline controlled by a joint venture between Eni and the National Oil Corporation of Libya (NOCL). To date, Libyan gas covers 12% of our national needs. The 2008 treaty, in addition to extending energy relations for another 25 years, provides for further investments by Eni which has been authorized to start exploration to find new deposits and an infrastructure plan for 5 billion in which the construction stands out. of the coastal highway, entrusted to the Saipem consortium, a deal worth around 850 million dollars. Add to these bilateral agreements the enormous number of medium and large companies operating in Libya: only among those registered with the Italian-Libyan chamber of commerce there are between 400 and 500. Furthermore, Libya boasts numerous shareholdings in Italian companies , to name a few: Unicredit, Fin.part, Juventus, Finmeccanica, Enel, Eni, Tamoil.
So what will be the future of these contracts and these investments? The UN resolutions concerning sanctions against Libya (1970-1973) prohibit the supply of arms and all materials that could harm the civilian population. This provision was interpreted very broadly by NATO which blocked ships loaded with fuel bound for Tripoli (remember that there are no refineries in Libya) to avoid the risk of it being used for war purposes. All the new contracts that arose in contrast with the sanctions, which provide, among others, the impossibility of making payments to subjects with frozen assets (including Nocl), are to be considered void because they pursue an illicit purpose. As regards the contracts that had previously arisen, there are two solutions: extinction due to supervening impossibility or suspension, a solution towards which the Italian Government is pushing. With regard to the possibility of compensation, it must be said that many contracts provide for clauses that act as a guarantee, but, if nothing is provided for in the title, compensation would be very difficult, falling within the case of extinction due to impossibility occurred without liability. The only solution for the previous contracts seems to be their suspension which would guarantee the possibility of them being re-discussed later, a scenario which, in any case, risks prolonging the times considerably, given that it is very risky to enter into immediate agreements with the insurgents. In the event of their victory, the newly stipulated contracts would undoubtedly be valid, while the suspended ones, assuming that the suspension is accepted, could be put back into force or renegotiated, resolving them with a novation. In the event of the division of Libya into two territorial entities, not only would the new agreements stipulated with the insurgents also be at risk, but, for the old contracts, a long-standing succession process would begin, which would have to be concluded (according to practice) in a agreement between the two new states. In the unlikely and undesirable event of Gaddafi's victory, new and old agreements would be greatly jeopardized. On the other hand, the UN resolutions exclude the possibility that Libyan companies can claim damages for non-compliance with Italian companies.
As regards the companies that are part of the Italian portfolio of sanctioned Libyan institutions with a consequent freezing of assets (for example the Libyan Central Bank, the Libyan Investment Authority or Libyan National Oil), they will be able to continue to carry out ordinary administration. On the other hand, extraordinary expenses will have to be submitted to an authorization by the UN Sanctions Committee, while, for expenses already established before the intervention of the sanctions, as long as they are lawful, there are no problems. In terms of credits claimed by Italian companies against Libyan private law subjects with frozen assets, the situation is rather complex. In fact, if these were ascertained by a sentence prior to the sanctions, even if not final or without enforceable effect (for example an arbitration award), it can be obtained, by requesting the Financial Security Committee at the Ministry of the Economy and simple notification to the Sanctions Committee, the unfreezing of the assets in question and the fulfillment of debts. As regards credits not substantiated by a previous sentence, however, if there is the consent of the counterparty, the ok of the UN Sanctions Committee must be awaited. In fact, if consent were lacking, one would have to turn to the competent judicial authority envisaged by the Italian-Libyan treaties: either the Libyan court or the ICSID arbitration. Assuming that the second hypothesis is much more desirable, the award would not have executive effectiveness in this case, since Libya has not adhered to the Washington Convention. The judicial ruling, however, could be invaluable in a subsequent phase, when, once normality has been re-established, the creditor company will be able to avail itself of a sentence in its favour. Once the possibility of foreclosure has been obtained, however, the problem of what to foreclose would arise, given that some of the frozen assets, for example those belonging to the Libyan central bank, cannot be attached.
The picture that emerges from this study is intricate and uncertain: to date the only sure thing is that Italian investments in Libya will suffer damage, perhaps irreparable.