Arbitration Libya

Benghazi Court Voids Al-Kharafi Land Lease and Arbitration Award

By ADR Journal Editorial Desk Published 1 source Al Kharafi Group Arbitration Award Annulment Cross Border Disputes Libya Libya

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TL;DR

  • North Benghazi Court terminates 2006 land lease with Al-Kharafi.
  • 2013 international arbitration award in favor of Al-Kharafi voided.
  • Al-Kharafi ordered to pay 15 billion Libyan dinars compensation.
  • Court finds Al-Kharafi breached contractual obligations.

Overview

The North Benghazi Court in Libya has terminated a tourism project land lease with Kuwaiti Al-Kharafi, declared a related 2013 international arbitration award null and void, and ordered substantial compensation to the Libyan state.

What Happened

On a date published in August 2026, the North Benghazi Court ruled to terminate a land lease agreement dated 8 June 2006 between the Libyan state and Kuwaiti company Al-Kharafi intended for a tourism investment project.

The court found that Al-Kharafi had breached its contractual obligations by failing to finance, begin, or implement the project for many years after contract signing.

As a result, the court declared the 2013 international arbitration award that required Libya to pay Al-Kharafi over US$936 million in compensation to be null and void and inapplicable within or outside Libya.

The court ordered Al-Kharafi to pay the Libyan state 10 billion Libyan dinars in material compensation and 5 billion Libyan dinars in moral damages, as well as court costs.

Context

The dispute involves a 2006 agreement for a tourism project in Libya that was never implemented by Al-Kharafi, leading to a previous arbitration award in 2013 in the company's favor.

Previous enforcement actions related to this award have occurred in multiple jurisdictions, but the current ruling reflects a domestic legal response within Libya.

Why It Matters

  • The ruling nullifies a large international arbitration award and asserts local Libyan court jurisdiction over a high-value cross-border dispute.
  • It imposes significant financial liability on the Kuwaiti company, potentially influencing future dispute resolution and enforcement related to Libyan investment projects.
  • The decision may complicate efforts at recognizing or enforcing the earlier arbitration award elsewhere.

Sources

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