Emmerson PLC (AIM:EML) said it is starting legal action against the Moroccan government after its application for an environmental permit for the Khemisset potash project was rejected.
In a statement, the company said it had "formally notified the Government of the Kingdom of Morocco that there is an investment dispute between Emmerson and the Government".
Boies Schiller Flexner has been appointed as its litigation counsel and it is examining various funding avenues for an investment dispute.
Emmerson added the dispute arises out of various breaches by the Moroccan Government and its Agents, of the Agreement with the UK for the Promotion and Protection of Investments (the BIT), which was signed on 30 October 1990 and entered into force on 14 February 2002.
The BIT provides that Emmerson may submit its dispute for settlement by arbitration to the International Centre for the Settlement of Investment Disputes (ICSID).
Emmerson said that before proceeding to arbitration it has “In good faith and in the spirit of cooperation, invited Morocco to engage in discussions regarding cash compensation for the damages incurred because of Morocco's breaches of the BIT, with a view to achieving an amicable resolution of the dispute”.
If this is unsuccessful, Emmerson intends to submit a claim for arbitration under the BIT, seeking damages for the harm described above, plus interest, costs, and any such further relief as the Tribunal may deem appropriate in the circumstances.
The company added that it remains hopeful that the dispute can be resolved amicably, adding it has always conducted its business in Morocco to the highest environmental and ethical standards, often well in excess of the local regulatory requirements, adhering strictly to local laws.
“The Khemisset Potash Project is one of the most strategically valuable fertiliser assets on the African Continent, especially for Morocco, which currently imports significant quantities of potash to its global fertiliser company, OCP,” said the statement.
Emmerson announced last week that the environmental permit application for Khemisset had received an unfavourable recommendation and it was not allowed to appeal.