THE Georgian unit of global port operator International Container Terminal Services, Inc. (ICTSI) has initiated arbitration proceedings to settle a dispute with the lessor of its concession at the Black Sea Port of Batumi.
The dispute came as container volume at the port has increased 8% year to date over the same period 2012 and the US$20 million investment to expand its capacity by 50% is in the pipeline.
Batumi International Container Terminal LLC (BICT), a wholly-owned indirect subsidiary of ICTSI, has taken the dispute with Batumi Sea Port Ltd. (BSP) to the London Court of International Arbitration.
In a reent disclosure to the Philippine Stock Exchange, ICTSI manager for corporate legal affairs Atty. Benjamin Gorospe III said the dispute arose when BSP sent BICT a notice accusing the latter of violating the terms and conditions of the lease agreement.
In an email to PortCalls, ICTSI senior vice president-Europe and Middle East Hans-Ole Madsen said BSP sent the notice on June 12 and BICT filed for arbitration on July 2.
“The issue relates to the maintenance of certain infrastructure,” Madsen said.
BICT has formally responded disputing the alleged violations, Gorospe said. BICT filed a request for arbitration with the London arbitration court to settle the row in accordance with the dispute resolution mechanism under the lease agreement.
Gorospe said BICT will also apply for an injunction against BSP in the local courts of Georgia.
Madsen said he is confident “that this disagreement will be resolved to the benefit of both parties.”
As of the first quarter of 2013, BICT had contributed 1.3% and 1.0% to the global volume and revenues, respectively, of the ICTSI Group.
“Year to date, our container volumes have increased 8% over 2012. ICTSI/BICT are committed to Georgia, and we have lined up a US$20 million investment project, which will increase our current capacity by 50%,” Madsen said.
BICT has been operating the multipurpose container terminal and the dry cargo and ferry terminal in Batumi under a lease agreement signed with BSP back on September 20, 2007.
The lease agreement was issued by virtue of a concession agreement ICTSI entered into with Batumi Port Holdings Ltd, which had the management rights over BSP.
In 2011, BSP came under the control of JSC KazTransOil, which also controls the nearby oil terminals in the Port of Batumi, when the Kazakhstan-based group bought out BPHL.
Photo from www.ictsi.com