1st Nov 2024 10:09
(Alliance News) - Emmerson PLC on Friday said it has entered into a formal investment dispute with the Moroccan government, with the intention to escalate to arbitration if discussions are unsuccessful.
Shares in the developer of the Khemisset potash mine in Morocco were up 57% at 0.65 pence each in London on Friday morning. The remain down 61% over the past 12 months, however.
Emmerson said the dispute arose from "various breaches" to the bilateral investment treaty signed in 1990 between the UK and Morocco for the promotion and protection of investments, which came into force in 2002.
The treaty allows Emmerson to submit the dispute for settlement by arbitration to the International Centre for the Settlement of Investment Disputes. However, as a show of "good faith", Emmerson has first invited the Moroccan government to discuss potential cash compensation.
If discussions are unsuccessful, Emmerson will submit a claim for arbitration, including for damages incurred from the treat breaches, plus interest, costs and other relief deemed appropriate by the tribunal. The company has engaged Boies Schiller Flexner LLP as its litigation counsel.
The action comes shortly after progress at the company's Khemisset project was halted in late October, following an unfavourable recommendation by a government commission in Morocco regarding the approval of Emmerson's updated environmental & social impact assessment for Khemisset.
The company's shares had tumbled 38% to 0.35p each on Monday afternoon, as Emmerson looked to "significantly reduce" its cash burn rate amid pressure on its balance sheet, and Chief Executive Officer Graham Clarke reduced his pay by 40%.
Emmerson maintained that it has always conducted its business in Morocco to "the highest environmental and ethical standards, often well in excess of the local regulatory requirements".
Emmerson said: "The company remains hopeful that its dispute with the government can be resolved amicably. The company will consider any and all other actions necessary to ensure its rights are preserved."
By Emily Parsons, Alliance News reporter
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