A long-running international dispute over Tunisia’s first ever failed bank has ended in dramatic fashion, after four decades of clashes in international courts.
And even the most optimistic observers this epic case did not expect it to produce what looked like victory for the country, in a ruling that saved Tunisian state coffers billions of dollars. This is the story of Banque Franco-Tunisienne (BFT), founded over 150 years ago, its equally historic demise and the international implications of series of events that ended on Friday, 22 December 2023.
That was when the World Bank Group’s International Centre for Settlement of Investment Disputes (ICSID) issued a final arbitration award obliging the Tunisian State to pay compensation of just $350,000 – or 1.1mn Tunisian dinars – to ABCI Investment, which had taken the Tunisian State to international arbitration for expropriating its shares in BFT.
The size of the award contrasted sharply with the amount of compensation being sought: $12bn, or about half of the state’s budget for 2024.
And before the ruling, ABCI had obtained an arbitration award in 2019 in its favour, saying it was eligible to a $1bn penalty and a freeze of BFT’s assets in France, led by Tunisian Foreign Bank.
The Tunisian minister of state property and land affairs, Mohamed Rekik, told a local radio that the State was also obligated to pay ABCI Investment an amount of $705,693, which it incurred in fees and expenses of ICSID arbitrators and administrators.
He said the award represents a judicial victory for the Tunisian State. He stressed that this award is final and that it isn’t subject to appeal.
The ruling is indeed a resounding victory that saved the country from a long-feared financial predicament, as a multibillion-dollar compensation would be a fatal blow considering the country’s current financial situation.
Known in the media throughout the case as “the State’s opponent”, it was the famous Tunisian businessman Abdelmajid Bouden who was demanding billions in compensation. A source close to the matter told Al Majalla that Bouden was seeking payment equivalent to the market value of the Banque de Tunisie and the Arab Tunisian Bank, which are the leading private commercial banks in Tunisia.
The roots of a multi-billion dollar dispute
The dispute is one of the oldest proceedings of its kind at the World Bank Group’s arbitration body. Its roots go back to 1982. Since then, the country has known six presidents – from late leader Habib Bourguiba to the current president, Kais Saied – and at least 15 prime ministers.
BFT was not just any bank, it has deep symbolic resonance in Tunisia. It was the oldest bank in the country, founded in 1879 by the Frenchman Raoul Daninos. It was the first bank to be nationalised, in the early 1960s, as part of the process as the “Tunisianisation of the economy,” which was launched alongside the process of building the national state after independence from France.
