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French Version

Lebanon : Qordahi to challenge Francetelecom payment

Swiss court orders Lebanon to pay $266 million

Telecommunication Minister Jean Louis Qordahi said on Wednesday that he will challenge in a Swiss court an international arbitration decision calling on Lebanon to pay $266 million to Francetelecom for terminating its contract with mobile operators Cellis prematurely.

Cellis, which was owned by Francetelecom and the Lebanese Mikati group, was locked in a long legal dispute with the Telecommunications Ministry over alleged violations of the Build-Operate Transfer (BOT) contract signed with the government in 1993.

The international arbitration in Geneva rejected the claims of the government that Cellis must pay $300 million to the Treasury for allegedly violating 19 terms of the BOT contract.

Instead, the arbitrators demanded that the Lebanese government pay $266 million for revoking the contract single-handedly.

Francetelecom originally asked for nearly $1 billion from the government for breaching the terms of the contract and tarnishing the reputation of the company.

The former government of late Prime Minister Rafik Hariri revoked the contracts with mobile operators Cellis and LibanCell in 2002, two years before the official expiry of these contracts.

"We will appeal this decision in the Higher Swiss Federal Court because the government has legitimate rights," Qordahi told reporters, adding that the appeal may take one year at least.

The minister stressed that the arbitrators have no right to reject the government's demand for $300 million compensation from Cellis because this case falls under Lebanese laws.

"Cellis and LibanCell had two months to appeal the government's orders to pay $300 million each. But they failed to meet the official deadline," one of the lawyers of the government said in a statement.

The minister said that the dispute with Francetelecom will not affect the friendly relations with France.

However, a telecom expert said that the government is obliged to pay the $266 million to Francetelecom.

"The government knew that the decision of the arbitration is final and cannot be challenged. France, which owns most of Francetelecom, can seize the assets of the Lebanese government in Paris if Beirut refused to pay the money," the expert said.

He added that once the government officially receives the payment orders from a representative of the company, the ministry has to pay immediately.

Trying to downplay this decision, Qordahi said that the $266 million claim is still far less than the money earned since Cellis network was transferred to the government two years ago.

The ministry said that the net revenue from Cellis network, now known as Alfa, was $760 million from 2002 to the end of 2004.

The ministry said that the net revenues from both networks, that now has more than 900,000 subscribers, reached more than $1.4 billion intwo years.

Some analysts say that the arbitration decision came at a delicate time for the Lebanese government which is trying to weather a UN Security Council resolution calling for the withdrawal of Syrian forces from Lebanon and the disarmament of all Lebanese and non-Lebanese militias.

"What makes matters worse is the fact that France is one of the countries that are fully backing Resolution 1559," an analyst said.

The telecom sector is the third largest source of income for the government after value-added tax and customs.

The ministry transferred more than $860 million to the Finance Ministry in 2004 alone.

Beirut,02 28 2005
Osama Habib
The Daily Star
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