The Kuwaiti government launched on Monday a probe into a ruling by an international arbitration ordering the Gulf state to pay $2.16 billion in compensation to U.S. Dow Chemical for a scrapped project.
The ruling was issued Thursday by the International Court of Arbitration of the International Chamber of Commerce (ICC) to whom Dow and Kuwait's state-owned Petrochemicals Industries Co (PIC) agreed to refer the dispute.
Following days of high-level meetings, the Kuwaiti government formed a ministerial committee to “study legal and practical ways to deal with the ruling with the aim at minimizing losses and damages,” said a statement after the cabinet weekly meeting.
In December 2008, the Kuwaiti government scrapped a $17.4-billion deal between PIC and Dow to create a petrochemicals joint venture due to pressure from opposition MPs citing the global financial crisis.
Under the deal, PIC was to pay $7.5 billion to form a petrochemicals firm known as K-Dow in which the two companies would have equal stakes.
The Kuwaiti government also formed a committee to investigate all aspects of the joint venture from the start to the end, especially the clause imposing the huge cost of compensation on the oil-rich emirate the huge compensation.
The committee will review the negotiations, deal signing stages, and the legal procedures taken during the arbitration to establish why Kuwait lost the case, the cabinet statement said.