GBS Disputes secures landmark victory for Sonangol in return of embezzled assets

Gaillard Banifatemi Shelbaya Disputes has achieved a landmark victory for its client, Sonangol, in the company’s efforts to repatriate assets embezzled under the regime of the former President of Angola, José Eduardo dos Santos.

On Friday, 23 July 2021, an international arbitral tribunal sitting under the auspices of the Netherlands Arbitration Institute rendered an award upholding Sonangol’s counterclaims against Exem Energy B.V., an overseas shell company beneficially owned and controlled by Isabel dos Santos and (formerly) her late husband, Sindika Dokolo.  The dispute concerned Sonangol’s shareholding in Esperaza Holding B.V., the vehicle through which Sonangol made in 2006 a large and very successful investment in the Portuguese oil and gas company, Galp S.A.  As a result of the Arbitral Tribunal’s decision, Sonangol will be restored to its position as 100% shareholder of Esperaza Holding B.V.

After reviewing extensive legal submissions and documentary evidence submitted by Sonangol and having conducted a seven-day evidentiary hearing, the Arbitral Tribunal concluded that the transaction by which Exem Energy B.V. purported to acquire its interest in Esperaza Holding B.V. was “tainted by illegality, enabling Ms Isabel dos Santos directly or through her husband Mr. Dokolo, while using her position as daughter of the Angolan President who had direct control over the State owned oil and gas company Sonangol, to reap an extraordinary financial gain to the detriment of Sonangol and, consequently, of the State of Angola.”  Elsewhere, the Tribunal observed that “the nature and size of Exem’s part of the Esperaza transaction […] cannot be explained but for grand corruption by the daughter of a head of state and her husband”.

Based on its factual findings, the Tribunal concluded that there “can be no doubt that kleptocratic transactions by the ruling elite or establishment – in particular of this type and on this scale – is contrary to [Dutch] public order/public policy”. Consequently, the Tribunal declared the transaction to be null and void and that Sonangol has remained at all times the rightful owner of 100% of Esperaza Holding B.V.  The latest valuation of the disputed 40% of the shares in Esperaza Holding B.V. is in excess of EUR 650 million.  Exem Energy B.V. was also ordered to bear Sonangol’s full costs in relation to the arbitration proceedings.

Sonangol has been facing an aggressive campaign of legal harassment by entities beneficially owned and controlled by Isabel dos Santos, and this is understood to be the first merits decision in civil proceedings directed to the legality of Isabel dos Santos’ business dealings in Angola.  As such, the Tribunal’s decision represents a major step forward not only in Sonangol’s fight to obtain the return of assets embezzled by the former ruling elite, but also for the consecration of the rule of law on the African continent.  In recent years, Angola and Sonangol have made extensive efforts to rid themselves of their legacy of corruption under the former regime.  This award represents an enduring milestone in those efforts and stands as a tribute to those who have fought to achieve this remarkable and swift transition.  Sonangol remains committed to the implementation of modern and ethical business practices and will continue to pursue the return of Angolan State wealth.

Sonangol was represented in the arbitration by a legal team led by Dr. Yas Banifatemi, a founding partner of Gaillard Banifatemi Shelbaya Disputes, one of the world’s leading international arbitration practices.  Members of the team representing Sonangol also include James Herbert, Anders Junker-Nilsson, Peter Frilay and Ashish Mitter, as well as the late Professor Emmanuel Gaillard, a totem of the international arbitration world and a prolific author having written extensively on the fight against corruption: see e.g, Emmanuel Gaillard, “The emergence of transnational responses to corruption in international arbitration”, Arbitration International (2019), 35, 1-19.

Using the same legal team, Sonangol has previously enjoyed success against Exem Energy B.V. in the context of summary proceedings commenced before the Netherlands Arbitration Institute in early 2020.  Exem Energy B.V.’s claims against Sonangol in the summary proceedings were injuncted, withdrawn and rejected in four separate stages.  Notably, Sonangol managed to secure only the second known anti-arbitration injunction issued by one arbitral tribunal against a parallel arbitration proceedings.