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Chinese Insurer Ping An Loses International Arbitration

Wednesday, May, 13, 2015


 

Ping An, a Chinese insurance company that was one of the largest shareholders in defunct financial company Fortis, has failed in its €1 billion arbitration bid against the government of Belgium, where Fortis was based.

 

Ping An lost all of its investment in the company during the 2008 economic crisis, amounting to nearly $4 billion, all of which had to be written down as a loss when Fortis was nationalized and sold to cover its debts in 2008. After years of attempted negotiations over the debt with the Belgian government, Ping An sought arbitration to recoup that loss under a treaty signed between the Chinese and Belgian governments.

 

The two countries have had a treaty relationship providing protections for investors since 1986. However, Ping An was found by the arbitration panel to have filed under the newer agreement between Belgium and China that went into effect in 2009, a year after the losses. As a result, they were found to have no standing and the arbitration tribunal declared it had no jurisdiction because of the lack of treaty coverage.

 

Ping An and the Belgian government have had a contentious relationship since the crisis, as the insurer also complained when Belgium chose to sell the banking operation formerly controlled by Fortis to another company without giving Ping An an opportunity to bid. The arbitration decision will hurt the