Orascom serves Algerian government with arbitration notice

Egypt’s Orascom Telecom Holding has confirmed that due to “unlawful actions taken since 2008 by the Algerian government against Orascom Telecom Algerie (OTA)” it will take out a Notice of Arbitration against the relevant Algerian authorities.

Although the legal action has aggressive overtones, Orascom has affirmed its commitment to “finding an amicable resolution with the Algerian government that is mutually beneficial to both parties”, and that it “would fully support any initiative by its majority shareholder VimpelCom to seek an amicable resolution with the Government.”

OTH is legally able to submit the notice due to a 2008 agreement which is aimed at safeguarding investments between Egypt and Algeria.  OTA recently incurred a US$1.3 billion fine, with a senior executive incurring a criminal charge for allegedly flaunting regulations over foreign transactions.

OTA, which is branded as Djezzy, has been the subject of a long-running dispute between OTH and the Algerian government; the former has tried to sell the Algerian operator to a foreign firm, while the country’s authorities believe it should be nationalised.

The Notice of Arbitration is somewhat surprising, as earlier this year OTH’s majority owner VimpelCom appeared to have resolved the argument over OTA, outlining a proposal to sell the operator with the Algerian Ministry of Finance. The Russian firm stated that it would “consider selling a majority stake in OTA, subject to an acceptable price and satisfaction of other conditions.”

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