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The Citizen | |
Saturday, 25 February 2012 08:33 |
Dar es Salaam. Tanesco will have to put down a deposit of Sh40 billion to get a London court to suspend an order that it pays Dowans $65.8 million. The British commercial court said last week that it was not ready to postpone an application in which Dowans is seeking to enforce the award unless Tanesco lodges $25 million with the complainant as security. The order came after Tanesco asked the court, for the second time, to postpone an application filed by Dowans late last year in London to enforce the award given by the International Chamber of Commerce (ICC) in November 2010. Counsel for Dowans, Mr Kennedy Fungamtama, confirmed the development yesterday but refused to go into details. The reports you have are true, said the lawyer, but due to the nature of the case, I am not ready to discuss the matter at this moment. A lawyer who had been representing Tanesco in the matter, Dr Alex Nguluma of Rex Attorneys, said he was not aware of the development as his firm was not representing Tanesco in the London case. He advised The Citizen on Saturday to contact Tanesco directly. The company officials could not be reached. The London courts ruling is a big blow for Tanesco, which won a reprieve on Monday when the High Court in Dar es Salaam declared it was free to appeal the ICCs award. In November last year, the High Court rejected Tanescos plea to block enforcement of the award in which the ICC ordered the public firm to pay the amount for breach of a power generating contract. Tanesco promptly applied for permission to appeal the decision along with another application to block execution of the decree. But, in a move to make it easy to attach or seize Tanescos property in London, Dowans filed an application at the London court seeking recognition and enforcement of the ICC award. Tanesco then filed an application for adjournment of the recognition and enforcement of the award. Under international rules, Dowans is free to file such an application in any country where it believes it can execute the decree. The London court granted Tanesco an application for postponement of the matter on condition that it provides to Dowans $70.3 million (about Sh112 billion) as security, which is interest calculated as of May 6, 2011. According to court documents, the $70.3million amount is attracting interest at a daily rate of $11,642.59 (about Sh18 million). This means that Tanesco will have to pay an additional Sh4.8billion if the interest is calculated from May 6, last year. The first order to deposit security was issued last year, the sum being $5million. The London court ordered Tanesco to deposit the amount in the form of guarantee from a first class London bank. Dowans will, moreover, be at liberty to apply to restore its postponed application for recognition and enforcement of the ICC award, a condition that Tanesco complied with.Subsequently, Dowans filed another application in the same court to restore its previous application for recognition and enforcement of the ICC award. On February 16, the London court agreed to Tanescos plea for postponement on condition that the firm put up additional security of $25million in addition to the existing $5million.If Tanesco fails to deposit the amount, the London court can proceed to consider the Dowans application for enforcement of ICC award. The case springs from an ICC decision in November 2010 to award Dowans Holdings SA (Costa Rica) and Dowans Tanzania Limited $65.8 million for wrongful termination of a power generation contract in 2008. Tanesco has since been fighting to have the decision set aside. The public power utility firm alleged that public procurement rules were grossly flawed in 2006 when the government directed Tanesco to award the contract to Richmond Development Company, which later passed on the contract to Dowans. According to Tanesco, the ICC deliberately disregarded evidence that the procurement of the power agreement was carried out in the absence of a valid tender after Tanescos tender board cancelled the initial award. |