Tanesco loses again in the Dowans saga

By Bernard James, The Citizen Reporter

Dar es Salaam. Properties of the Tanzania Electric Supply Company (Tanesco) including buildings, cars and bank accounts are now at risk of being seized after attempts to block an order to pay $65.8 (about Sh102 billion) to Dowans over breach of contract failed. The High Court said yesterday it did not have powers to hear the application in which Tanesco was asking for temporary stoppage of the order.

The decision has opened the door for Dowans Tanzania Limited to recover the amount and is likely to render the notice of appeal Tanesco lodged last year at the Court of Appeal to challenge the High Court order worthless.

Counsel for Dowans Kennedy Fungamtama said he has already initiated moves to recover $65.8 million the International Chamber of Commerce (ICC) ordered Tanesco to pay Dowans in November 2010 for its “unlawful termination of emergence power generating contract.”

“I have been instructed by my client to start execution proceedings tomorrow (today) to recover the full amount. Beginning tomorrow (today) any Tanesco property at our sight is at risk,” said Mr Fungamtama.

The ICC Arbitral Tribunal in November 2010 ordered Tanesco to pay Dowans Holdings SA (Costa Rica) and Dowans Tanzania Ltd $65.8 million after it was satisfied the power company unlawfully and arbitrary terminated its power-generating contract with Dowans.

Following the decision, Tanesco went to the High Court to have the ICC award set aside. But in September last year, Justice Emilian Mushi dismissed the petition and ordered that the ICC Tribunal’s award be registered and enforced.

Tanesco was dissatisfied with the decision and moved to the Court of Appeal. There it filed a notice to challenge the decision.

Back in the High Court, Tanesco subsequently filed an application to halt implementation of court’s order until its intended appeal was heard and determined.

But yesterday, Justice Dr Fauz Twaib said he could no longer entertain the application because the court did not have jurisdiction to do so.

“I am constrained to hold and hereby do, that this court has no jurisdiction to entertain the application for stay of execution file by the applicant. The application stands dismissed,” he said. When the application came for hearing, Mr Fungamtama argued that it was only the Court of Appeal under the Court of Appeal Rules of 2009 which had powers to block execution and not the High Court as Tanesco argued.

But Tanesco’s lawyer Mr Mwandamba cited Rule 11 (2) (b) of the Court of Appeal Rules, 2009, which he said gave powers to the High Court as well as Tribunals from which appeals lie to the Court of Appeal to halt execution of court order.

Justice Twaib sided with Mr Fungamtama that the provisions of Rule 11 (2) (C) of the Court of Appeal Rules exclusively grants powers to order stay of execution to the Court of Appeal and set out terms on which the order may be granted.

Tanesco filed at the Court of Appeal a notice of intention to appeal last year. However, the appeal has not been filed to date.

Yesterday, Justice Twaib said not only the powers to grant stay of execution are exclusively conferred to the Court of Appeal but also can only be exercised before the filing of the notice of appeal.

His decision also comes as a big blow to the power company which was ordered in February to put down a deposit of Sh40 billion to get a London court to suspend an order that it pays Dowans a whopping $65.8 million (about Sh102 billion).

The London order came after Tanesco asked the court, for the second time, to postpone an application filed by Dowans late last year to enforce the ICC award, pending determination of its intended appeal.

The British commercial court said in February it was not ready to postpone Dowans application unless Tanesco deposited $25 million with the complainant as security.Dowans decided to go to the London court as an alternative to ease the process to attach or seize Tanesco’s properties in London.It has sought 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).

Tanesco then paid 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.

On February 16, the London court agreed to Tanesco’s plea for postponement on condition that the firm put up additional security of $25million in addition to the existing $5million.Tanesco has already deposited the money.

 

Source: The Citizen (06/09/2012): http://thecitizen.co.tz/component/content/article/37-tanzania-top-news-story/25539-tanesco-loses-again-in-the-dowans-saga.html