The dispute between Unicon Ltd and the Afghan Ministry of Energy and Water arose from the World Bank-financed SMPL contract, under which Unicon was engaged to provide consultancy services in the gas-to-power sector. The core issue was the Afghan Government’s extortionate demand for bribes, manifesting as an unlawful requirement for tax payments that were not recognised by law, in direct contradiction to previous agreements confirming the inapplicability of such taxes. The imposition of this non-existent tax was part of a broader strategy by Ministry officials, reminiscent of the earlier corruption-driven CASA-1000 hostilities, aimed at soliciting corrupt payments by fabricating a dispute over tax obligations. When Unicon refused to comply with these demands, the Ministry retaliated by withholding all of Unicon’s funds and refusing to process payments for services already rendered.
To recover the debt and restore justice, Unicon initiated arbitration, leading to the formation of a tribunal under PCA Case No. 2020-33. The tribunal concluded that Unicon had been subjected to extortion and unlawful practices by the Afghan Government. It recognised that Unicon’s refusal to comply with the government’s improper demands resulted in the non-payment of its invoices and significant reputational damage. Consequently, the tribunal ruled in Unicon’s favour, ordering the full and immediate payment of all invoices for the services rendered under the contract.
This arbitration is directly connected to a parallel case that revealed the World Bank’s complicity in corruption in Afghanistan and its direct role in instigating a legal dispute between Afghanistan and Unicon. The irony is that even Afghanistan’s legal counsel, DLA Piper, advised against pursuing arbitration due to the absence of a legal basis. Nonetheless, Afghanistan proceeded, fully aware that it was likely to lose, with the intent of bankrupting Unicon through exorbitant legal costs associated with the arbitration. As part of the Afghan Government’s unlawful practices and failed extortion for bribes, it refused to process Unicon’s invoices and instead redirected the funds to the World Bank.
Shockingly, the World Bank has profited directly from this extortion, as it not only retained all of Unicon’s products essential for its subsequent USD 145 million financing of the larger AGASP project, but also kept all of Unicon’s funds for itself. This disgraceful theft by an institution like the World Bank has fuelled hostilities between Unicon and the World Bank since 2019, leading to the Bank’s ruthless determination to destroy Unicon at all costs – a conflict that endures to this day.
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Documents:
- Final Award – PCA Case No. 2020-33 (Unicon v. Afghanistan)
- Schematic of High-Level Corruption in Afghanistan Exposed by Unicon
- Afghan Gas Letter No.1
- Afghan Gas Letter No.2
- Afghan Gas Letter No.3
Media:
- Publication in Jus Mundi
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For further information, contact Rustam Davletkhan
