SANDLINE INTERNATIONAL INC.

VS
PAPUA NEW GUINEA
112SIS77
Kim, Yoonmee (Jennifer)

Table of Contents

Intro: Brief overview of the case

PNG / Sandline
Fact - The 1997 Agreement
Fact - Agreement Analysis
Dispute
IRAC
Discussion Question

PNG / Sandline
Papua New
Guinea (PNG)
Located in the
Southwestern Pacific
Ocean.
Had internal conflict
with the panguna
copper mine located on
the island of
Bougainville, one of the
independent state of
PNG. Hence, hired
Sandline under an
Agreement.

Sandline
International
Inc.
One of the Private
Military Contractor
from the U.K.
Hired by the country
of PNG under an
Agreement and
performed with its
personnel and
equipment with initial
payment of $18
million (USD).

The 1997 Agreement

January, 31, 1997
Sandlines inclusive fee for provision of
personnel, equipment and services under the
Agreement was specified $36milion (USD)
The initial payment of $18 million was paid by
PNG.
Required command, administration and training
team was deployed, equipment were duly
delivered. The remaining $18 million were not
paid. ($18 million was payable within 30 days of
the deployment by Sandline.)

Agreement Analysis
March, 16, 1997 Evening
Insurrection by member of PNG Defense
Force called Operation Rausim Kwik.
Sandline personnel were placed under
arrest.
Outbreaks of rioting & looting continues.
March, 21, 1997
Sandline member were allowed to leave.
Prime minister of PNG suspended the
Agreement and announced a judicial

Agreement Analysis
May, 29, 1997
A commission of Inquiry reported
without questioning Sandlines effective
engagement under the Agreement.
June, 3, 1997
PNG alleged, the Agreement had
been frustrated on the ground that its
performance was impossible.

Dispute
PNG (plaintiff)

Sandline (defendant)

The Contract was

unlawful under
internal law and,
those who known
to entered into it
on behalf of PNG
lacked the
capacity to do so.

PNG should pay the

remaining $18
million referred to
the Agreement.
Under international
law and that under
such law, PNG could
not rely upon
internal law.

IRAC - ISSUE
Whether, PNG should pay Sandline
International Inc. remaining $18million
for its performance as written on the
original contract?

IRAC - Rule
The general rule is that a state is
responsible to its contractual liability
which involves with an International
relationship, even if it is contravene the
internal law of a state, in accordance
with the Report of the UN's
International Law Commission.

IRAC Analysis / Application

PNG affirmed that the performing of
contact was frustrated by later events
(Insurrection) and counterclaiming on
that basis. PNG did not denied the
existence of the contract.
Hence, the contract is valid.
This means, PNG is responsible for its
contractual liability between Sandline.

IRAC Conclusion
YES
The contract between PNG and Sandline
remain valid under international law.
PNG should pay remaining $18million to
Sandline, since PNG is liable for its failure
to perform the terms of the contract.

Discussion Question
If you were a lawyer hired by PNG, what
is your counter arguments against the
conclusion?