International Construction Law Review
LESSONS FROM LESOTHO: ARBITRATORS’ POWERS REVIEWED
ELLIS BAKER
Partner and Head of the Construction and Engineering Practice Group White & Case, London
AND
ANTHONY LAVERS
Professional Support Lawyer to the Construction and Engineering Practice Group White & Case, LondonVisiting Professor of Law, Oxford Brookes University *
Introduction
The English Court of Appeal’s decision on 31 July 2003 in Lesotho Highlands Development Agency
v. Impregilo SpA
1
contains interesting findings in relation to the currency of awards and the granting of interest. Together, they offer insights into the current position on the powers of an arbitrator. This article considers the implications of the decision on both points and particularly the wider question of the law governing the award of interest. (At the time of writing, leave to appeal to the House of Lords had just been granted.)
Background to the project
The Lesotho Highlands Water Project was first proposed in the 1930s. The concept was the generation of hydro-electric power through the harnessing of the heavy rainfalls of the mountainous Kingdom of Lesotho. This would provide a source of power for neighbouring South Africa and economic benefits for Lesotho, which possesses few natural resources.
Following a series of feasibility studies by international engineering consultants spanning the 1960s, 1970s and 1980s, the respective governments signed the Lesotho Highlands Water Project (LHWP) Treaty on 24 October 1986. The scheme, one of the largest infrastructure projects in Africa, was chiefly funded by the World Bank. The principal element of the first phase (Phase 1A) was the 1950 million m3
Katse Dam, construction of
* The London office of White & Case represented the Lesotho Highlands Development Authority in the arbitration and subsequent litigation referred to in this article.
1 [2003] EWCA Civ 1159; [2003] BLR 347.
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