Government rejects move to seek international arbitration of NAIA-3 deal

The government will oppose the request for international arbitration filed by the Philippine International Air Terminals Co. (Piatco) to resolve the dispute over the Ninoy Aquino International Airport Terminal 3 (NAIA 3) project, the Department of Justice (DOJ) disclosed yesterday.

Justice Undersecretary Manuel Teehankee said the case is pending before the Supreme Court and thus the request for arbitration is "subjudice."

"The government will object to this arbitration request, to the jurisdiction of the tribunal, given the fact that this is currently an issue pending with the SC," he said.

"We believe that the SC should act on this matter first," Teehankee stressed, adding that if the High Court will find the Piatco contracts void, then the arbitration clause will also be rendered void.

In seeking arbitration, Piatco wants to have the International Court of Arbitration (ICA) declare its 25-year concession contract with the government to build and operate NAIA 3 valid and binding; and order the government to allow, facilitate and support Piatco’s operation of the new passenger terminal.

The ICA has already asked the government, through the Manila International Airport Authority (MIAA) and the Department of Transportation and Communications (DOTC), to respond to Piatco’s request within 30 days from March 6.

The international court warned the government that under ICA rules "it has the power to set the procedure in motion even in the absence of the answer."

Teehankee, however, said that the government position is that the whole contract is illegal, so it must be canceled, including the amended provisions.

Meanwhile, MIAA general manager Edgardo Manda said that Piatco’s move does not affect the government’s position. He pointed out that the new passenger terminal is far from complete and a quality inspection report as of Dec. 3 has listed 43 outstanding defects.

Manda said that to date, no action has been taken by Piatco to address these defects. He also pointed out that NAIA 3’s main contractor, the Takenaka company of Japan, has also suspended work due to Piatco’s non-payment of its obligations amounting to $70 million.

Piatco was awarded the contract to build and operate the state-of-the-art passenger terminal in 1997 but the Senate has nullified its contract with the government, which it had found tainted with anomalies, when the airport facility was almost complete.

In its Dec. 10 ruling, the SC ordered the parties to resolve the conflict and settle the issues within 30 days.

Earlier, reports quoted Teehankee as saying the government was ready to discuss possible renegotiation and arbitration to end the Piatco controversy. But he admitted later that no such discussions took place as the 30-day period lapsed.