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The Tanesco/Dowans saga: Dar to pay on not to pay...

Written by Admin Friday, 07 January 2011 04:48

MAKUMBA MWEMEZI

AS the Tanesco/Dowans saga takes new twists and turns down the line, some legal experts and politicians have warned that there is no valid reason why Tanesco should honour an arbitration 'Award' that requires the company to pay Tsh185 billion to Dowans when the performance of the firm was not only poor, but its owners are unknown for certain. The Award is contained in rulings by the International Court of Arbitration of the Paris-based International Chamber of Commerce (ICC) delivered on November 15, 2010 by the Court's co-arbitrators Swithin Munyantwali and Sir Jonathan Parker. They held Tanesco responsible for breach of a power purchase agreement (PPA), and ordered the company to pay the claimants (Dowans) US$24,168,343.83 plus simple interest of 7.5 per cent per year from June 15, 2010 to the day of payment. The co-arbitrators also ordered Tanesco to pay US$39,935,765.50 plus 7.5 per cent interest on aggregate principal sum of $36,705,013.94 from the same date to the day of payment...

The decisions drew strong, but mixed reactions from the public in general, and assorted experts in particular, from different quarters. Among the earliest notables to comment on the matter was the attorney-general, Frederick Werema, who categorically stated that that Tanesco cannot avoid paying Dowans and, as such, the country must accept the consequences of its actions and decisions. According to the AG who is the chief legal advisor of the Government there was no hidden agenda or malice in the verdict reached by the ICC! The Award was final and conclusive, and there is no room for any appeal from any quarter to the courts in Tanzania, he stressed! Contrary to the AGs views, a report by Tanescos defence team says a party may accept the tribunals Award or reject it. In that regard, there are post-Award rules to be followed which are influenced by what the parties agree would be the law governing the Agreement for emergency power supply (PPA) dated June 2006.

The law governing post-Award actions would be the Tanzanian Arbitration Act (CAP 15 R.E 2002), which requires the Award to be registered with the High Court for it to have the power of a decree as a decree issued by the High Court of Tanzania. In the event, Tanzanian taxpayers could still avoid the bitter arbitration pill that, if taken, would set them back by a whopping Tsh185 billion in these times of severe adversity.

The Tanescos defense team, spearheaded by Rex Attorneys, has come out with a special report on assessment of the Award in respect of ICC Arbitration Matter No. 15947/VRO-1. Part

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The Tanesco/Dowans saga: Dar to pay on not to pay...


Written by Admin Friday, 07 January 2011 04:48

of the report a copy of which Business Times has accessed says the Award could still be challenged in Tanzanian courts on the grounds that it is against public policy and interest. According to Rex Attorneys, the only hurdle that could be in the way is the rather limited ground upon which an aggrieved party may apply to the courts in Tanzania to set aside an arbitration Award under the Arbitration Act (CAP 15 R.E. 2002). This is limited to misconduct on the part of the arbitrator, and/or an Award which is improperly obtained...

Still, the court has a mandate to extend its jurisdiction over public interest... The Act has no provision for public policy or interest we know; but that is why the courts are clothed with inherent jurisdiction that enables them to ensure that Justice is done. This depends on the willingness of the Judge to develop the Law like what Lord Denning of England and many others did to allow an application to set aside the Award on the ground of public policy and public interest, the report reads in part. In any case, if a party is not satisfied with an Award, there are two options available: either to apply for the Tanzania High Court to remit the Award for reconsideration, or to apply to set aside the Award on the aforementioned grounds. An interesting point then arises...

Investigations made by Business Times have revealed that, although the Awards were made in the names of Dowans Holding-SA and Dowans-Tanzania being damages against Tanesco for breach of contract with these two, some of the properties referred to in the contract belong to a third party, Richmond Development Company (RDEVCO) LLC. Could paying Dowans on that account alone not be tantamount to paying Richmond which had grossly underperformed and had its services lawfully terminated by Tanesco?

A letter written on October 18, 2008 by Kilpatrick Stockton, LLP, Attorneys to the Tanesco managing director of the day, Idris Rashid, stated that the purpose of this letter is to put Tanesco on notice of the fact that Dowans does not own one of the turbines on that site: GE TM2500 S/N 481 -364 7LM 2500 PE MDW GE UNIT LD W/O 601178. That turbine is owned by RDEVCO, L.L.C (Richmond)! There may yet be more flak falling from the Tanesco/Dowans sky... A senior University of Dar es Salaam lecturer, Dr. Benson Bana, asked the Government to appeal against the ruling made by the ICC in favour of Dowans to save the country from financial embarrassment. The ChaDeMa political party secretary-general, Dr Wilbrod Slaa, has gone further than that calling for the resignation or sacking of the attorney-general...

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