Foreign Contractors Resorting to Force Majeure under Libyan Law

Most importantly, an investment treaty restricts the acts of a contracting party to take any action to deprive and limit the ownership of investors from the other contracting party. For example, the treaty signed between Libya and Belgo-Luxembourg Economic Union states that:

“Investors of one Contracting Party whose investments suffer losses owing to war or other armed conflict, revolution, a state of national emergency or revolt in the territory of the other Contracting Party shall be granted by the latter Contracting Party a treatment, as regards restitution, indemnification, compensation or other settlement, at least equal to that which the latter Contracting Party grants to the investors of the most favoured nation.”

In summary, it is clear that the Gaddafi regime triggered the violent acts that rendered normal life impossible in Libya. This forced international contractors to cease their performance under contracts signed with the Libyan government. Therefore, international contractors are entitled to claim force majeure as a defense of nonperformance.

International contractors may claim compensation due to the fact that the Gaddafi regime was responsible for the force majeure event. The claim may be granted based on (i) the contract signed between the Libyan government and the international contractor, (ii) the Libyan Civil Code, and if applicable (iii) a bilateral investment treaty signed between Libya and the country of the international contractor.

Although, this is a general guide for seeking compensation as a result of the Libyan conflict, for confidential advice concerning a specific contracting claim please contact:

Dr. Mohamed Karbal

Attorney at Law/New York, Dubai, Libya

Managing Partner

KARBAL & CO

Tripoli/Dubai

Mobile: ++218-91-713 7002 email: [email protected] www.karbal.net

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