Standard Chartered Bank flops in 5.2tr/- compensation and tariff recalculation case challenged by IPTL

THE Tanzania High Court has dismissed the objections filed by Standard Chartered Bank (Hong Kong) Limited to oppose the suit challenging enforcement of a foreign decision involving recalculation of power tariffs in IPTL and for payments of about 5.3tr/- damages.

Judge Fauz Twaib decided in favour of Independent Power Tanzania Limited (IPTL) and Pan African Power Solution Limited (PAP) after concurring with counter submissions presented by advocate Joseph Makendege, for the two companies.

The judge ruled that all five grounds of objections presented by the Bank, through its counsel Gasper Nyika, were devoid of merits. In its objections, the Bank had alleged that the suit in question was filed without a board resolution from the Tanzanian companies.

Secondly, the Bank had alleged that the suit was time barred in that, it was filed beyond the required time, which is three years from 2005 when the alleged caused of action on the matter arose and that the two companies had no locus standi to institute the proceedings.

The Bank had alleged further that IPTL and PAP were barred from instituting the proceedings in Tanzania since there were others of similar nature that were pending in London. In his ruling, however, Judge Twaib rejected one by one the grounds raised by the Bank.

On board resolution, the judge ruled that the matter was a question of fact which needed to be proved and, thus it could not constitute as a ground of objection as alleged by the Bank. On the time limit, Judge Twaib resolved that the suit was filed within the required time.

Going by the plaint, he noted, there was no delay in filing the suit and that the course of action was renewed following the decision given by the London Court, the International Centre for Settlement of Investment Disputes (ICSID).

Regarding the question on locus standi by PAP to take part in the proceedings, the judge ruled that the company has rights to defend following a decision given by the Court under Judge John Utamwa on September 5, 2013, for IPTL affaires to be handed over to PAP.

On whether the two companies were barred from filing the case in Tanzania and that the English Court was proper forum, Judge Twaib ruled that the presence of foreign proceedings does not preclude a party from filing a case of similar nature in the country.

Following the court’s decision, Judge Twaib will now proceed with the next stage in the case, including holding the first pre-trial conference on July 16. The decision which is being challenged in the case was issued by ICSID in February last year.

It is alleged in the suit that SCBH had been falsely representing being a creditor of IPTL and fraudulently procured a decision before the ICSID for, among others orders, recalculation of tariffs payable by Tanzania Electric Supply Company (TANESCO).

In the suit, the two plaintiffs (IPTL and PAP), through legal services of Bulwark Associates Advocates and ASYLA Attorneys, have also sued a Tanzanian advocate Martha Kaveni Renju, as the second defendant for allegedly presenting herself as administrator receiver of IPTL.

Furthermore, the plaintiffs have joined Tanesco in the suit for the purpose of preventing the state owned company from enforcing the ICSID decision or any decision the ICSID may subsequently render in the matter.

The two companies are vehemently opposing the enforcement of the decision in question, which also seeks to recover the bonus amount paid to the provisional liquidator of IPTL when the company was placed under him, on grounds that SCBH procured the same fraudulently.

“Plaintiffs are suing the defendants for declaration that (they) are barred by the Tanzanian law to enforce or domesticate a foreign decision that expressly or effectually unlawfully supersedes, circumvents or varies a validly existing decision of a Tanzanian Court,” reads part of the plaint.

They claim that the impugned ICSID decision was null and void and could not be enforced as it was obtained by the  Bank fraudulently: and that it is excessive, or abusive of jurisdiction of the Tribunal for deciding on matters beyond the scope of the agreement for arbitration giving rise to it.

Such enforcement, the plaintiffs further allege, “Is abuse of the Sovereignty and Territorial Integrity of United Republic of Tanzania as well as the process, independence, powers and integrity of the Tanzanian courts.”

According to the plaint of the suit, the alleged misrepresentation by SCBH and Ms Renju have caused abortion of transactions by the plaintiffs, notably its ambitious mission of converting the Tegeta-Salasala IPTL power plant from using heavy fuel (HoF) fired to duo heavy fuel and gas fired.

In the suit, apart from the monetary damages demanded, the plaintiffs are also asking the court to declare SCHB and Ms Renju are not a creditor and administrator receiver of IPTL, respectively and have, therefore, no claim whatsoever against the plaintiffs.