ICSID Ruling: Moroccan State Prevails in SAMIR Oil Refinery Dispute

Tuesday 16 July 2024 - 10:10

In a landmark decision on Monday, the International Centre for Settlement of Investment Disputes (ICSID) dismissed the majority of claims brought by Corral Morocco Holding against the Moroccan state concerning the SAMIR oil refinery case.

The ICSID awarded Corral a modest $150 million in compensation, a mere 6% of the $2.7 billion the company had sought. The announcement, made by the Ministry of Economy and Finance, marks a significant legal victory for Morocco.

Mohammed Al Amoudi, a Saudi businessman, initiated the $2.7 billion claim following the financial collapse and subsequent liquidation of SAMIR, Morocco’s sole oil refinery, in 2015. The refinery's downfall was attributed to severe mismanagement and crippling debt.

In an official statement, Nadia Fettah, Morocco's Minister of Economy and Finance, confirmed the ruling and indicated that Morocco is exploring all possible legal avenues, including the potential annulment of the decision.

Throughout the ICSID proceedings, Morocco staunchly defended its actions regarding the SAMIR refinery. Minister Fettah emphasized that since 2002, Morocco had implemented extensive measures to support and develop the refinery’s operations.

Despite these efforts, Corral Morocco Holdings, the primary shareholder, could not stabilize the refinery's financial condition.

“Morocco remains committed to upholding its responsibilities and rights towards international partners and organizations, in full compliance with international and bilateral agreements,” Fettah stated.

The minister expressed confidence in Morocco’s stance throughout the dispute. “We believe that Morocco has always maintained a fair position vis-à-vis the Corral group,” she noted, asserting that Morocco has met all its contractual obligations to the refinery's main shareholder.

SAMIR’s financial troubles have spanned nearly a decade, with the refinery accumulating approximately MAD 40 billion ($4 billion) in debt. Of this, 40% is owed to the state via the Customs Administration, while the remainder is divided among Moroccan and international banks.

Fettah further explained that chronic financial and management issues, stemming from the main shareholder’s failure to fulfill its contractual duties, prevented a turnaround of the refinery.

Highlighting the strategic importance of the refinery, the minister also noted that Morocco has consistently allocated the necessary resources to ensure its operation and development.

An official from the Ministry of Energy Transition and Sustainable Development, currently in Washington, disclosed that a new project is under consideration to revitalize the SAMIR site in Mohammedia.

Minister Fettah also underscored Morocco’s commitment to fostering a secure environment for investors. “Morocco offers a business climate that provides undeniable economic opportunities at the crossroads of high-potential markets,” she said.

She further added that Morocco is dedicated to advancing its energy and petrochemical sectors while strengthening its role in renewable and emerging energies, such as hydrogen.

The ICSID ruling underscores Morocco’s diligent adherence to international agreements and its persistent efforts to maintain a stable and conducive investment climate. As the country continues to navigate the complexities of global energy markets, the SAMIR refinery case serves as a testament to its resilience and strategic foresight.