THE Commission on Audit has approved the request of the National Transmission Corporation (Transco) and the Power Sector Assets and Liabilities Management Corporation (PSALM) for authority to hire a foreign counsel and expert witnesses in arbitration proceedings before the Singapore International Arbitration Centre.
In a decision released last November 24, COA chairperson Michael G. Aguinaldo and commissioner Roland C. Pondoc granted the motion for reconsideration filed by Transco-PSALM and set aside the June 17, 2019 ruling of the COA Legal Retainer Review which denied the request for the commission’s concurrence.
“Accordingly, this Commission gives its written concurrence to the engagement of Clifford Chance LLP as foreign counsel in connection with the arbitration case filed by the National Grid Corporation (NGCP) against Power Sector Assets and Liabilities Management (PSALM) and the National Transmission Corporation (TransCo) before the Singapore International Arbitration Centre (SIAC),” the COA said.
However, the commission set the maximum engagement fees at $1.59 million, which is lower by $100,000 than the requested sum. The difference was supposed to cover the contingent fees for “another expert witness on Philippine and International Law.”
The NGCP filed the petition for arbitration on February 14, 2018 over a disagreement with Transco and PSALM on the applicability of its P57.883 billion prepayment of concession fees to other obligations.
In its Statement of Claim, the NGCP alleged violations by the two government-owned and controlled corporations (GOCCs) of their concession agreement.
The disagreement started after Transco and PSALM, in a notification dated May 15, 2017, informed the NGCP that based on their concession agreement, the sum cannot be applied wholly as prepayment of its concession fee because there were other amounts due to them, including non-current receivables, balance of Transco’s share in the Performance Incentive Scheme, and Third Regulatory revenue claims.
On December 24, 2018, Transco-PSALM engaged the services of Romulo Mabanta Buenaventura Sayoc & De Los Angeles (Romulo law firm) as their external counsel with the concurrence of COA.
“Romulo law firm recommended the engagement of a foreign counsel and expert witnesses, noting that the NGCP engaged the services of a foreign counsel and intends to present an expert witness,” the COA noted.
The GOCCs picked UK-based Clifford Chance LLP to “provide legal advice and representation to PSALM and Transco in connection with the arbitration proceeding” to include “drafting pleadings, reviewing and presenting evidence, instructing, reviewing, and setting expert opinions, conducting and attending witness interviews, drafting statements, and issuing legal advice.”
On March 26, 2019, the Office of the Government Corporate Counsel (OGCC) gave its conformity to the engagement of a foreign counsel and the Brattle Group as expert witness.
The COA had originally raised questions on the ground that it was of the impression that the Romulo law firm would be the one representing the GOCCs for the “entire arbitration proceedings.”
However, it granted the appeal saying it recognizes that the legal strategy may have changed and that bringing in a foreign co-counsel to collaborate and assist in representing government interest is reasonable.
“This Commission views the hiring of a foreign counsel and expert witness on accounting and economics as not extravagant or unconscionable. As the lead counsel, Romulo law firm is duty-bound to employ the best legal strategies to champion the case of its clients. As regards the hiring of an expert witness, the same may be considered as part of the legal strategies to strengthen the case for the client and increase the probability of obtaining a favorable ruling,” the COA said.
A breakdown of expenses attached to the ruling showed the Romulo law firm will be paid $1 million, Clifford Chance LLP $990,000, and the Brattle Group $600,000.
“Considering the significant amount involved and the complexity of the arbitration case that necessitated the collaboration between two law firms and the participation of an expert witness, this Commission finds the above engagement fees reasonable,” the commission said.
