SGS vows to act vs RP if case is delayed

The Switzerland-based Societe Generale de Surveillance (SGS) said yesterday that it was willing to renegotiate with the Philippine government but it would go back to international arbitration if the case was not resolved expeditiously.

In a statement released in Geneva, SGS said the international arbitration court remanded its case before the Philippine court but it also ordered the Philippine government to pay what it owed the company.

After almost four years of dispute, SGS said the Philippine government now owed it 202 million in Swiss Francs for services rendered including accrued interest, up from the original assessment of 192 million Swiss Francs.

SGS said the International Center for Settlement of Investment Disputes (ICSID) said the local courts had jurisdiction on the determination of the amount that the Philippine government owed SGS.

SGS said it was willing to negotiate with the Philippine government but it reserved the right to "revert to the ICSID arbitral tribunal in the event that an expeditious solution to this matter is not found."

"The findings of the tribunal are that SGS made an investment in the Philippines and it also affirmed that the Republic of the Philippines is required to observe the obligation to pay sums properly due and owing," SGS said.

According to SGS, the three-man ICSID tribunal also recognized that SGS had made "substantial efforts to settle the claims through negotiations."

SGS said that at the time, a recommendation had been made by the Bureau of Customs to then Secretary of Finance Jose Trinidad Pardo who "appeared to accept" the assessed amount of 192-million Swiss Francs (equivalent at the time to P6 billion).

When Finance Secretary Jose Isidro Camacho took over, however, payment became uncertain as the Arroyo administration struggled to contain its runaway deficit.

According to finance officials, payment was never the argument, saying that the government had every intention of paying the amount that would be determined by Philippine courts.

The only problem at the time was simple lack of funds since the Arroyo administration had just taken over the government and its budget deficit was careening out of control.

After the ICSID ruling, SGS said it would pursue its efforts until full payment was made.

"SGS remains open to enter into bona fide negotiations with the government of the Philippines to resolve the matter as quickly as possible," SGS said.

According to ICSID, it could not take precedence over a clause in SGS’ Comprehensive Import Supervision Service (CISS) contract which stated that gave exclusive jurisdiction to the Makati or Manila courts in case of disputes arising from the agreement.

The panel also said that SGS was not able to sustain its claim that the Philippine government had expropriated SGS‚ property nor acted indiscriminately against it. "No claims for breach can be sustained on the facts presented by SGS," the panel said.

Finance Secretary Juanita Amatong said the government was "pleased with the outcome" of the ICSID arbitration. "We will treat SGS fairly and we trust that they will maintain the same attitude towards us," she said.

After SGS filed for arbitration before ICSID, the Philippine government initiated moves to ask the international arbitration court to dismiss the petition, saying that the government and the company had earlier agreed to resolve the dispute in the Philippines.

The government has been insisting that it had every intention of honoring its contract with SGS but the Switzerland-based company still filed a petition asking ICSID to intervene and help settle the conflict.