Section 3(e.1) of Article IX of the ArcelorMittal MDA provides that if excess capacity exists on the railroad or the Buchanan Iron Ore Port, the Government on notice to AML (the "CONCESSIONAIRE") may "authorize third parties' use of that excess capacity provided that the CONCESSIONAIRE confirms that excess capacity exists and third party use of such excess capacity does not unreasonably interfere with the efficient and economic conduct of the Operations.
Section 3(e.2) further provides that the "technical and commercial terms for such third-party use of the excess capacity of the Railroad and/or the Buchanan Iron Ore Port shall be mutually agreed to, in good faith, among the GOVERNMENT, the CONCESSIONAIRE and such third parties in accordance with accepted international industrial standards."
Section 3(f) also permits the expansion and modernization of the Railroad and the Buchanan Iron Ore Port and associated Infrastructure either by Arcelor Mittal (if it agrees to do so) or by the Government (or its designee) to create additional capacity for third party access and use of these assets. In that event, the Section (3e.2) provision for a good faith agreement on "the technical and commercial terms" for third party access and use also applies.
If the Government and Arcelor Mittal are unable to agree on technical and commercial terms for third party access, then Section 3(e.5) further provides that a committee of five persons, 2 appointed by each of the Government and Arcelor Mittal, and one appointed jointly by them, shall review any "complaints" relating to third party access among other things. The committee will then forward its recommendations to the parties.
However, the MDA does not state that the parties are bound by these recommendations. Thus, any disagreement between them, including any failure to agree in good faith under Section 3(e.2) with respect to technical and commercial terms for such third-party use of the excess capacity will not be resolved through that process.
It is reasonable to assume that the parties intended that any such failure to agree would not paralyze their respective rights but would be subject to resolution. Indeed, the parties agreed at Section 1 of Article XXXI to submit any "dispute...arising out of, in relation to or in connection with this Agreement" either to binding arbitration or, with some exceptions not applicable here, to decision by a Referee which shall be appealable to the arbitrators. Clearly a failure to agree on terms for the use of excess capacity by third parties constitutes a "dispute" which may thus be subject to resolution either by a Referee or by arbitrators.
The question arises as to whether the Government may grant a third-party access to any excess capacity of the Railroad and the Buchanan Iron Ore Port if for any reason the Government, any third party to which it intends to provide such access and Arcelor Mittal are unable to reach an agreement as to these technical and commercial terms for third party access.
The answer must be that the Government has that power and is not prevented from exercising it by the Arcelor Mittal MDA. Otherwise, Arcelor Mittal in effect will have a veto power over the Government's right to use its own assets, the Railroad and the Buchanan Iron Ore Port because of a failure to agree to "commercial and technical" terms for which no guidelines or standards are provided aside from a vague requirement that the agreement be reached in good faith using undefined "accepted international industrial standards."
Frankly, the same conclusion applies to the issue of whether any expansion plans approved by the Government under Section 3(f) must not "unreasonably interfere with the efficient and economic conduct" of Arcelor Mittal's operations.
These provisions were not intended to provide Arcelor Mittal with a de facto veto over use by the Government of its own assets or undermine its sovereign ability to allow others such use for the benefit of the nation and its economy. Even to require that such use or access be put on hold until the long and arduous multi-year process of arbitration (or appeal to arbitrators from a Referee's decision) can be completed is unnecessary and would as a practical matter discourage any investment in projects dependent on access and use of this Government infrastructure.
In each case, should the Government grant such access, and be shown to have done so wrongly either because the commercial and technical terms sought by Arcelor Mittal were appropriate, or that Arcelor Mittal suffered damages because rail or port expansion caused interference with the efficient and economic conduct of its operations that was "unreasonable", then under Liberian law Arcelor Mittal will be entitled to compensation in money damages for any losses suffered and proved.
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There is thus no reason to prejudice the Government by subjecting the use of its valuable assets to the agreement of a single private company. The Government takes the risk that its decision may be incorrect, and that it may suffer a loss in arbitration if that is the case and incur liability for damages suffered by Arcelor Mittal. That is what the Arcelor Mittal MDA provides for.
Moreover, the Government clearly has options to reduce or eliminate that risk, not least by making its own determination that the basis and terms for such third-party use and access are in fact fair and reasonable. Additionally, it has other options to deal with that risk and it is the Government's sole prerogative to make those decisions in the national interest.
Otherwise, as frankly as been the case for over 20 years, valuable national assets will continue to be underused at the whim of a single company and that underuse damages the Liberian people and the economy of the nation as a whole.
