THE Tanzania Electric Supply Company (TANESCO) has decided to seek annulment of the award issued by International Centre for Settlement of Investment Disputes (ICSID) over payments of 148.4 million US dollars to a bank despite emerging victorious on power tariffs dispute.
Speaking during an interview with the
‘Daily News’ yesterday, TANESCO Managing Director, Engineer Felchesmi
Mramba, said the power utility, through its lawyers, R.K Rweyongeza and
Advocates, will file the appeal within the 90-day timeframe provided by
the tribunal.
The World Bank-affiliated International
Centre for Settlement of Investment Disputes (ICSID) recently made a
ruling in favour SCB-HK but Tanesco is against the award, noting that
the decision is contrary to an initial declaration made by the tribunal
in 2014.
“There were serious legal flaws in the
hearing and determining the case and we believe the court overstepped
its jurisdiction; it is on this backdrop that we want the award to be
revisited,” Eng Mramba explained.
Among others, the court pegged the award
based on 22.31 per cent of the internal rate of returns (IRR) as
opposed to the previous decision where the rate was pegged on between
zero and 22.31 per cent.
“As if that was not enough, the court
entertained fresh demands contrary to procedures which require the
tribunal to only consider the main case which was opened in 2010,” he
stated.
On his part, Advocate Richard
Rweyongeza, for TANESCO, told the ‘Daily News’ yesterday that the award,
appearing to be in favour of Standard Chartered Bank (Hong Kong)
Limited (SCBHK), contained serious errors of law in respect of both
jurisdiction and tariffs payable to Independent Power Tanzania Limited
(IPTL).
“The Tribunal (ICSID) has manifestly
exceeded its powers, there has been a serious departure from a
fundamental rule of procedure and
the award has failed to state the
reasons on which it is based,” the seasoned advocate said. He pointed
out that TANESCO has 120 days from the date of the award within which to
submit the application for annulment before the same Tribunal.
The ICSID issued its award on September
12, this year. This means that the deadline for submission of the
application would be January 9, next year. Mr Rweyongeza was, however,
quick to point out that the sooner this is done the better as SCBHK was
likely to move fast for enforcement of the ward, which could result in
other legal battle and costs.
“The possibility exists to request a
stay of enforcement with the application for annulment, whereupon
enforcement shall be stayed provisionally until the committee rules on
such request,” he said.
Expounding further on the matter, Mr
Rweyongeza explained that the award by the Tribunal was defective,
alleging that SCBHK was not an investor within the Tanzanian laws,
notably the Tanzania Investment Centre Act.
He pointed out that in the jurisdiction
and liability decision issued in February 2014, the Tribunal had said
that Internal Rate Return (IRR) over power tariffs could not be 22.3 per
cent but could not be zero.
On the basis of that, he said, it had
directed the parties to seat together and recalculate the tariffs.
“Surprisingly, in this award, the Tribunal has used the rate which it
had disputed before.
We think this is wrong. For that matter
we expected the rate could be below, which has not been the case here,”
the advocate said.
Pointing another defect on the award, Mr
Rweyongeza said that the Tribunal has ordered direct payments to SCBHK
contrary to the previous decision where it was stated that the Tribunal
had no jurisdiction to give such an order in the absence of IPTL.
“The Tribunal ruled so because TANESCO did not disclose matters relating to the release of money from the escrow account.
We think there is irregularity. We have
sufficient evidence to show that SCBHK was aware of everything,
including an e-mail saying they had no interest on escrow account,” he
said.
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