Petrochemical Industries Co of Kuwait (PIC), a unit of Kuwait Petroleum Corp, was yesterday ordered by the International Court of Arbitration to pay $2.48 billion to Dow Chemical Co for cancelling a planned equal joint venture in 2008.

In May 2012, the arbitrator had awarded Dow Chemical a partial payment of $2.16 billion, but added another $318 million as interest and costs yesterday, increasing the full and final payment to $2.48 billion.

In late 2008, Michigan-based Dow Chemical and PIC agreed to set up a $17.4 billion joint venture to be known as K-Dow. Under the deal, Dow Chemical was to transfer its basics plastics business and other assets into the venture, in exchange for about $9 billion in cash.

The JV would have manufactured polyethylene (PE), polypropylene (PP), and polycarbonate and related licensing and catalyst technologies. PE and PP comprise more than half of global polymer demand.

PE is the most widely used of all plastics and can be found in everyday products from food packaging, milk jugs and plastic containers to pipes and liners, while PP is a versatile plastic used in fibres, packaging films, durable goods, automotive parts, and consumer applications.

The deal had not gone down too well with some Kuwaiti lawmakers who said the project was not economically viable in view of the global financial crisis and slumping petrochemical sales.

Criticism of the deal also increased after officials disclosed that commissions worth $850 million were assigned to certain groups that supported the deal.

In December 2008, the Kuwait Supreme Petroleum Council (SPC) ordered PIC to pull out of the JV, which came as a rude shock to then cash-strapped Dow Chemical since it had planned to use the $9 billion from the planned deal to fund its $15.4 billion acquisition of specialty chemicals company Rohm & Haas. (See: Kuwait scraps $17-billion Dow deal)

In one of the several international deals that were aborted during the global recession, the Dow-PIC JV was scrapped less than a week before the deal was to become effective.

Kuwait was then reeling under slump in oil prices  which had had plunged to less than $40 a barrel in November 2008 compared to the record $147 in July that year.

Dow Chemical said it would sue Kuwait for over $2.5 billion for pulling out of the agreed JV, but later agreed to allow the International Court of Arbitration adjudicate the issue.

Andrew Liveris, Dow Chemical's chairman and chief executive officer, said, ''Payment of these damages of nearly $2.5 billion will allow Dow to accelerate its priority uses for cash by further strengthening our balance sheet.

''Dow and Kuwait share a long history and strong partnership, and this award ruling brings suitable closure to the arbitration process. The Dow team fully expects, and we are resolved to ensure, that PIC honors its contractual commitments in a timely manner.''

Dow has been in Kuwait for 40 years and still has three other operating joint ventures with PIC, including ME Global, EQUATE and Kuwait Olefins Co.