The arbitration between Urbajet Sarlau (“Urbajet”) and the Republic of Equatorial Guinea (“Equatorial Guinea”), administered by the International Chamber of Commerce (“ICC”), illustrates both the strength of a State’s agreement to arbitrate and the evidentiary limits of contractual compensation. In its final arbitral award dated 21 November 2025 (“Award”), the three-member arbitral tribunal (“Tribunal”) upheld its jurisdiction and found that Equatorial Guinea’s breaches justified termination of a social housing construction contract. In rejecting Equatorial Guinea’s jurisdictional objections, the Tribunal relied on French international arbitration law before examining Urbajet’s contractual claims under Equatorial Guinea law.[1]
The Award attracted wider attention following Urbajet’s filing of a petition for its recognition and enforcement (the “Petition”) before the United States District Court for the District of Columbia on 20 October 2026. According to the Petition, the ICC notified the Award on 25 November 2025, and Urbajet calculated the damages and accrued interest as of that date at EUR 109,829,160.26, excluding arbitration costs and further interest. While the Petition provides context for the subsequent enforcement proceedings, this case note examines the Tribunal’s findings and legal reasoning in the Award.[2]
Facts
On 29 March 2006, Urbajet and Equatorial Guinea signed Contract No. 66/05 (the “Contract”) for the construction of 2,000 social housing units, with 1,000 units to be built in Malabo and the remaining 1,000 in Bata. Article 41 provided that the Contract would be governed by Equatorial Guinea law and that any dispute that could not be resolved amicably would be referred to ICC arbitration. Paris was later designated as the seat of arbitration. Although the Contract was governed by Equatorial Guinea law, the Tribunal applied French international arbitration principles when examining its jurisdiction.[3]
The project encountered several difficulties, including the continued occupation of construction sites by third parties, substantial changes to the scope of the works, and delays and defaults in payments for certified work. Although certain modifications and additional prices had been approved, the Parties never signed the additional agreement required to formalise all the changes. Equatorial Guinea also failed to apply the contractual price adjustments and pay interest on overdue amounts. The Tribunal found that these failures constituted breaches of the Contract, while distinguishing the occupation of the sites from other construction difficulties, such as deforestation and challenging terrain conditions.[4]
The Contract also required Urbajet to provide a bank guarantee securing repayment of the mobilisation advance (the “Guarantee”). The Guarantee was issued by Crédit Immobilier et Hôtelier (“CIH Bank”), which required Urbajet to place half of the advance in escrow. As the project dragged on, Urbajet incurred additional fees to maintain the Guarantee, while the funds held in escrow remained inaccessible. The Tribunal later considered whether the advance had been fully absorbed by the works already completed and, consequently, whether Equatorial Guinea was required to release the Guarantee.[5]
After repeated unsuccessful attempts to resolve the outstanding payment issues and resume construction, Urbajet formally notified Equatorial Guinea on 14 September 2022 that it was terminating the Contract and demanded payment of the outstanding amounts within 15 days. Equatorial Guinea failed to respond within the prescribed 15-day period, prompting Urbajet to commence ICC arbitration on 28 October 2022. Although Equatorial Guinea participated in the proceedings, including the hearing, it confined its defence to challenging the Tribunal’s jurisdiction, without addressing the merits of Urbajet’s claims or pursuing any counterclaims.[6]
Legal Issues: ICC Jurisdiction, State Consent, and Contract Damages
The Tribunal was called upon to determine five main issues:
- Jurisdictional Objections: Had Equatorial Guinea raised its jurisdictional objections in time, and had it waived its right to challenge jurisdiction by participating in the proceedings?
- State Consent to Arbitration: Could Equatorial Guinea rely on the administrative nature of the Contract and its domestic legislation to challenge the validity of the arbitration agreement under Article 41?
- Termination of the Contract: Did Equatorial Guinea’s breaches of the Contract justify Urbajet’s decision to terminate it?
- Recovery of Damages: Which losses was Urbajet entitled to recover, and were those losses sufficiently established, particularly given Equatorial Guinea’s decision not to defend the claims on the merits?
- Interest and Additional Relief: What interest, costs, and other relief could the Tribunal award, including the release of the Guarantee and protection against potential liabilities arising from future domestic proceedings?[7]
Holding: ICC Jurisdiction Upheld and Construction Damages Awarded
The Tribunal found Equatorial Guinea’s jurisdictional objections admissible but ultimately rejected them. Applying French international arbitration law, it held that the arbitration agreement was independent of the Contract and that its existence and validity depended on the Parties’ common intention, subject to mandatory French rules and international public policy. Equatorial Guinea could therefore not rely on its domestic administrative legislation to avoid an arbitration agreement to which it had expressly consented.[8]
On the merits, the Tribunal found that Equatorial Guinea’s contractual breaches justified Urbajet’s decision to terminate the Contract. Under Equatorial Guinea law, Urbajet was entitled to compensation for losses suffered and profits lost as a result of those breaches. However, the Tribunal emphasised that Equatorial Guinea’s decision not to defend the claims on the merits did not relieve Urbajet of its obligation to establish the legal basis for its claims and provide sufficient evidence to support them.[9]
The Tribunal awarded Urbajet a total of EUR 102,700,867 under five heads of recovery, including interest calculated up to the dates specified in the Award:
| Head of recovery | Amount specified |
| Unpaid or late-paid interim statements | EUR 31,379,000 |
| Contractual price adjustment | EUR 8,142,000 |
| Lost profit | EUR 53,135,000 |
| Losses associated with maintaining the Guarantee | EUR 7,579,000 |
| Additional operating costs | EUR 2,465,867 |
| Aggregate before further ordered updates | EUR 102,700,867 |
These amounts included accrued interest but remained subject to further adjustments, as the Tribunal ordered interest to be calculated through the date of notification of the Award.[10]
In addition to monetary compensation, the Tribunal ordered Equatorial Guinea to release the Guarantee within 14 days of notification of the Award. It also awarded arbitration costs and ordered provisional enforcement of the Award. The Tribunal further held that, from the fifteenth day following notification until full payment, the amounts awarded, including accrued interest, would bear additional interest at the 12-month Euro Interbank Offered Rate (“EURIBOR”) plus two percentage points, compounded annually. However, the Tribunal rejected certain claims for additional expenses, as well as Urbajet’s request for protection against potential liabilities arising from future domestic proceedings.[11]
Tribunal’s Reasoning: State Consent, Contract Breach, and Compensation
Admissibility of Equatorial Guinea’s Jurisdictional Objections
The Tribunal found that Equatorial Guinea’s jurisdictional objection had been raised in time. The Terms of Reference expressly reserved the Parties’ right to challenge jurisdiction and admissibility, and Equatorial Guinea raised its objection in its first defence following their adoption. Since Urbajet had not opposed that reservation, the Tribunal considered the objection admissible, notwithstanding its earlier refusal to bifurcate the proceedings.[12]
The Tribunal also found that Equatorial Guinea had not waived its right to challenge jurisdiction by requesting a site visit or indicating that it might bring counterclaims, which it ultimately did not pursue. In reaching this conclusion, the Tribunal took into account the express reservation in the Terms of Reference and Equatorial Guinea’s conduct throughout the proceedings. Its finding was therefore based on the particular circumstances of the case, rather than on any general right to raise jurisdictional objections at a later stage.[13]
French International Arbitration Law and State Consent to Arbitration
As the arbitration was seated in Paris, the Tribunal examined its jurisdiction under French international arbitration law. Relying on the French Court of Cassation’s decision in Dalico, it considered whether the Parties had agreed to arbitrate independently of the law governing the Contract. The Tribunal found that their consent was established by the signed arbitration clause, their subsequent performance of the Contract, and the fact that neither Party disputed having agreed to arbitration.[14]
The Tribunal also rejected Equatorial Guinea’s argument that the administrative nature of the Contract made arbitration incompatible with French international public policy. It found that the French administrative-law decisions relied upon by Equatorial Guinea concerned contracts subject to mandatory French public-law rules and did not apply to the construction project in Equatorial Guinea. Those authorities therefore provided no basis for excluding arbitration.[15]
The Tribunal further noted the international nature of the project, which involved a Moroccan contractor, cross-border banking and financing arrangements, transactions in different currencies, and equipment imported from abroad. In light of these circumstances, it concluded that Equatorial Guinea could not rely on its domestic law to avoid an international arbitration agreement it had freely entered into.[16]
Why Equatorial Guinea’s Administrative Law Did Not Override Consent to ICC Arbitration
The Tribunal examined the substance of the 1965 and 1967 decrees on which Equatorial Guinea relied. It expressly declined to treat their age as sufficient to determine their applicability. Article 17 of the 1965 decree concerned a competent administrative body and subsequent review by the administrative courts; it did not confer exclusive jurisdiction on domestic courts over every State-contract dispute or prohibit arbitration by agreement. The corresponding provision of the 1967 decree added no such prohibition.[17]
The Tribunal also noted that Equatorial Guinea had neither requested nor obtained the tender-related declaration submitting the contractor to domestic courts. Instead, it had expressly signed Article 41. That contractual choice, together with the wording and context of the decrees, undermined the argument that domestic administrative jurisdiction necessarily excluded arbitration.[18]
Regional arbitration legislation provided further support. The Tribunal considered the Uniform Act on Arbitration (“Uniform Act”) of the Organisation for the Harmonisation of Business Law in Africa (“OHADA”), which permits public entities to arbitrate. It expressly acknowledged that the Uniform Act did not govern this Paris-seated arbitration because of its territorial scope. Nevertheless, the permission in Article 2 supported the conclusion that Equatorial Guinea’s participation in arbitration was compatible with its own legal order.[19]
Construction Contract Breaches Justifying Termination of the Housing Project
The Tribunal found that Equatorial Guinea had breached several of its contractual obligations. Under Article 18 of the Contract, Equatorial Guinea was required to provide land free of occupants, an obligation it failed to fulfil because third parties continued to occupy the construction sites. The Tribunal distinguished this breach from other difficulties encountered during construction, such as challenging terrain conditions. It also found that Equatorial Guinea had failed to formalise certain modifications to the works, pay certified interim statements, apply the agreed price adjustments, and pay interest on overdue amounts.[20]
Under Article 34 of the Contract, Urbajet was entitled to terminate the Contract if the works were suspended for more than 90 days for reasons attributable to Equatorial Guinea. The Tribunal considered the prolonged interruptions to construction, repeated payment defaults, and Equatorial Guinea’s failure to respond to Urbajet’s correspondence, including its formal notice of termination. In light of these circumstances, the Tribunal concluded that Urbajet had validly terminated the Contract in accordance with Article 34.[21]
Proof of Loss and Contract Damages Without a Merits Defence
Although Equatorial Guinea chose to challenge only the Tribunal’s jurisdiction, this did not mean that Urbajet’s claims would automatically succeed. The Tribunal examined each claim individually to determine whether it had a sufficient legal basis and was supported by the evidence. As a result, while Urbajet was awarded substantial damages, certain expenses were rejected because they had not been adequately substantiated.[22]
In assessing compensation, the Tribunal relied on Article 1106 of Equatorial Guinea’s Civil Code, which allows recovery of both losses suffered and profits that would otherwise have been earned. It also considered legislation governing public contracts, which provided for payment for completed works and, in certain circumstances involving suspension, profits on works that remained unperformed. To calculate Urbajet’s losses, the Tribunal relied on the analysis prepared by its quantum expert, FTI Consulting (“FTI”), which compared the project’s actual financial results with those that would have been achieved had the Contract been properly performed.[23]
For the unpaid works, the Tribunal examined the interim statements certified by the project engineer, taking into account payments already made by Equatorial Guinea. The claim for price adjustments required a different approach. Although the Contract provided for price revisions, the indices specified for calculating those adjustments were unavailable. FTI therefore used private-sector minimum-wage data and a World Bank consumer price index as alternatives. Having reviewed the methodology and supporting evidence, the Tribunal considered the calculations sufficiently reliable and conservative.[24]
The Tribunal also accepted FTI’s calculation of lost profits, which applied a profit margin of 19.81% to the revenues that Urbajet would have earned had the remaining works been completed. FTI had calculated a historical project margin of 19.18% and compared its proposed approach with the higher margins reflected in the project’s business plans and other calculations. The Tribunal considered the 19.81% margin reasonable and conservative and, after examining the supporting evidence, adopted FTI’s assessment in the absence of an alternative calculation from Equatorial Guinea.[25]
However, the Tribunal did not accept all the additional costs claimed by Urbajet. In particular, although Urbajet provided evidence of payments made to employees under redundancy settlements, it failed to establish which of those expenses resulted from Equatorial Guinea’s breaches, rather than costs that would have arisen upon normal completion of the project. The Tribunal also rejected certain storage and security expenses incurred after termination because Urbajet had not sufficiently demonstrated their connection to Equatorial Guinea’s breaches. These findings show that, despite the absence of a defence on the merits, Urbajet was still required to prove that its claimed losses resulted from the contractual breaches.[26]
Limits on Arbitral Relief: Bank Guarantees and Hypothetical Domestic Proceedings
The Tribunal found that the mobilisation advance secured by the Guarantee had been fully repaid through the value of the works already completed and certified. As the obligation secured by the Guarantee had therefore been extinguished, Equatorial Guinea was required to release it. However, since CIH Bank was not a party to the Contract or the arbitration proceedings, the Tribunal could not determine the Guarantee’s legal status in relation to the bank. Its order was therefore directed solely at Equatorial Guinea.[27]
The Tribunal also rejected Urbajet’s request for protection against any amounts it might be ordered to pay in future court or administrative proceedings in Equatorial Guinea. As Urbajet acknowledged that no such proceedings had been initiated, the Tribunal considered the request premature. In its view, the claim concerned a possible future breach of the arbitration agreement rather than an existing dispute on which it could rule.[28]
Pre-Award Interest, Post-Award Interest, and Arbitration Costs
The Tribunal considered the currency of the Award and the applicable interest rate in light of the need to ensure full compensation. It accepted that Urbajet would not have retained all payments in the local currency and therefore awarded compensation in euros. For post-award interest, the Tribunal adopted the 12-month EURIBOR rate, consistent with annual compounding, and added two percentage points to reflect a reasonable approximation of commercial borrowing costs. Post-award interest would begin to accrue on the fifteenth day following notification of the Award, allowing Equatorial Guinea 14 days to make payment.[29]
The Tribunal also ordered Equatorial Guinea to reimburse Urbajet’s reasonable arbitration costs, given that Urbajet had succeeded on nearly all its claims. In reaching this decision, the Tribunal noted that both Parties had conducted the proceedings in a courteous and cooperative manner and found no procedural conduct that justified a different allocation of costs.[30]
Conclusion
The Award is particularly relevant for its treatment of a State’s ability to challenge an arbitration agreement by relying on its domestic law. Applying French international arbitration principles, the Tribunal distinguished between the law governing the Contract and the rules applicable to the arbitration agreement. It found that Equatorial Guinea could not rely on its domestic administrative legislation to avoid an arbitration agreement to which it had expressly consented. The Tribunal’s consideration of OHADA law further supported this conclusion, even though the OHADA Uniform Act did not govern the Paris-seated arbitration.[31]
The decision is also significant for its approach to damages. Although Equatorial Guinea chose not to defend the claims on the merits, Urbajet was still required to establish its losses and demonstrate their connection to the contractual breaches. The Tribunal’s rejection of certain employment, storage, and security expenses illustrates that a respondent’s failure to contest the merits does not automatically entitle a claimant to recover every amount sought. The Tribunal also recognised the limits of its authority by directing the order concerning the Guarantee solely at Equatorial Guinea and declining to grant relief in respect of hypothetical future proceedings.[32]
The Award has also attracted attention in the international arbitration community, particularly in connection with Urbajet’s efforts to secure its enforcement. Investment Arbitration Reporter reported that the previously undisclosed Award came to light following Urbajet’s enforcement proceedings in the United States. Global Arbitration Review also covered the dispute, highlighting the approximately EUR 110 million sought in connection with the delayed and unpaid social housing project.[33]
According to the Petition, the Award was granted exequatur in France on 26 February 2026, and Urbajet was also pursuing recognition and enforcement in Spain and the United Kingdom. Urbajet further stated that Equatorial Guinea had not made any payment as of the filing of the Petition in the United States. Beyond the Tribunal’s findings on jurisdiction and contractual liability, the case therefore highlights the practical challenges of enforcing arbitral awards against States, particularly where recognition and enforcement must be pursued across several jurisdictions.[34]
[1] Urbajet v. Republic of Equatorial Guinea, ICC Case No. 27340/SP/AJP/SP/ETT/SVE, Final Arbitral Award, 25 November 2025 (notification date; dated 21 November 2025), ¶¶ 195-209, 238-248, 323-335.
[2] Petition to Recognize and Enforce a Foreign Arbitral Award, Urbajet Sarlau v. Republic of Equatorial Guinea, No. 1:26-cv-03663 (D.D.C. 20 October 2026), ECF No. 1, ¶¶ 1, 26-30.
[3] Urbajet, Award, ¶¶ 2, 21-25, 195-197.
[4] Id. ¶¶ 263-277, 287-311.
[5] Id. ¶¶ 33-34, 403-419, 473-479.
[6] Id. ¶¶ 47, 129-130, 250-252, 319-322.
[7] Id. ¶¶ 183-248, 250-253, 318-335, 440-487, 499-542.
[8] Id. ¶¶ 183-209, 217-248.
[9] Id. ¶¶ 252-253, 318-335.
[10] Id. ¶ 542(ii)-(iii).
[11] Id. ¶¶ 440-447, 458-461, 481-487, 510-513, 542(iv)-(viii).
[12] Id. ¶¶ 184-189.
[13] Id. ¶¶ 189–194.
[14] Id. ¶¶ 195-209.
[15] Id. ¶¶ 210-217.
[16] Id. ¶¶ 238-248.
[17] Id. ¶¶ 218-228.
[18] Id. ¶¶ 229-231.
[19] Id. ¶¶ 232-237.
[20] Id. ¶¶ 263-277, 287-311.
[21] Id. ¶¶ 318-323.
[22] Id. ¶¶ 250-253, 440-447, 458-461.
[23] Id. ¶¶ 325-335; Petition, ¶ 27.
[24] Urbajet, Award, ¶¶ 348-350, 370-379.
[25] Id. ¶¶ 390-400.
[26] Id. ¶¶ 440-447, 458-461.
[27] Id. ¶¶ 473-480, 542(v).
[28] Id. ¶¶ 481-487.
[29] Id. ¶¶ 499-513.
[30] Id. ¶¶ 536-542.
[31] Id. ¶¶ 195-248.
[32] Id. ¶¶ 250-253, 440-447, 458-487.
[33] Investment Arbitration Reporter, Under-the-radar 110-million-EUR ICC award against Equatorial Guinea surfaces in US courts, 21 October 2026 (last accessed 5 November 2026); Global Arbitration Review, Equatorial Guinea liable over social housing projects, 22 October 2026 (last accessed 5 November 2026).
[34] Petition, ¶¶ 31-33.