Tanzania: VIP Engineering, 2 others halt $168.8m pay order

Dar es Salaam, Tanzania.

The High Court (Commercial Division) has given the Standard Chartered Bank Hong Kong Limited and Standard Chartered Bank Malaysia Berhard three weeks (21 days) to respond to proceedings, seeking to set aside registration of a foreign summary judgment for payments of $168, 800,063 (about 400bn/-).

The proceedings relate to two applications lodged by three local companies – the Independent Power Tanzania Limited (IPTL) Pan African Power Solutions (T) Limited (PAP) and VIP Engineering and Marketing Limited (VIP) -- who are opposing the UK judgment dated November 16, 2016.

In a scheduling order given on April 3, 2017 following their oral application, the High Court Registrar, A K Rwizile, gave the two foreign banks until April 24, 2017 to file their counter-affidavit, the proceedings, Miscellaneous Commercial Causes No. 67 and 75 of 2017, lodged by the companies, respectively.

In their respective Affidavits deposed in support of the applications, Advocates Joseph Makandege for IPTL /PAP and Respicius Didace for VIP, have advanced several grounds for seeking to have the registration of the judgment set aside by the High Court, one being that the foreign judgment was obtained by fraud, thus, its enforcement would be contrary to Public Policy in Tanzania.

According to Mr Makandege, Standard Chartered Bank Hong Kong Limited, is said to have ‘masqueraded’ as a secured creditor of IPTL and assignee of the Power Purchase Agreement (PPA) receivables, thereby fraudulently commencing and obtaining the judgment on that footing –which, in fact, they are not.

In their applications, IPTL, PAP and VIP are requesting the High Court to set aside the Ex-Parte Order given by Judge Barke Sehel of the High Court (Commercial Division) at Dar es Salaam on February 9, 2017, registering the foreign judgment given in favour of the two foreign Banks.

Justice Flux of the High Court of Justice of England, Queen’s Bench Division, Commercial Court, had given such judgment after VIP, PAP and IPTL had defaulted to submit to the jurisdiction of the London based English Court.

IPTL, PAP and VIP charge that Judge Sahel surprisingly issued the order registering such judgment in question without summoning them while they are all based within the vicinity of the High Court in Dar es Salaam, which they view as being at odds with the law and practice of the land.

Contacted, the IPTL/ PAP’s Company Secretary and Chief Counsel, Mr Joseph Makandege (Advocate), was reluctant to give further comment on the matter, simply pointing out that, “under the Imperial Rules on the enforcement of foreign judgment (the Reciprocal Enforcement of Judgment Rules, 1936), the application for registration of the Judgment could be made ex-parte to a judge in Chambers.

He added: “It was not mandatory that the applica-tion had to be heard and granted ex-parte as presented, considering the colossal sums and vital wider public interests at stake in the matter. Even the very Rules do not state that the application once made ex-parte has to be granted ex-parte without summoning the respondents and all other wouldbe affected parties.” The Judgment is highly contested on a number of grounds and fronts.

The three companies, the applicants in the matter, canvases for a declaration that the foreign judgment registered following ex-parte order given by Judge Sahel, is unregistrable and unenforceable in Tanzania.

The three companies are also applying for an order invalidating the Ex-Parte Ruling and Order by Judge Sahel, registering the said Foreign Summary English judgment; and an order invalidating and vacating the registration of the foreign judgment in question.

According to Mr Makandege, the enforcement of the judgment would circumvent, supersede and abrogates the ongoing court proceedings in Tanzania, including Civil Case No. 229 of 2013 and Civil Case No. 60 of 2014, in which the applicants are questioning the bank’s locus stand in litigating in the English proceedings culminating to the impugned Foreign Summary English Judgment. On his part, Mr Didace, for VIP states that the rights under the judgment are not vested in the person by whom the application for registration was made and VIP has the right to call all relevant Institutions in Tanzania to protect it against illegal conversion of its property rights by Standard Chartered Bank (SCB).

“That the application to have the English Judgment registered was heard in contravention of VIP’s Constitutional right to be heard and in breach of the Provisions of the Reciprocal Enforcement of Foreign Judgment Act, Cap 8 (R.E. 2002),” the Learned advocate states.

He added that the London Court had no jurisdiction to enter the judgment under circumstances within the meaning of Reciprocal enforcement of Foreign Judgment Act since September 5, 2013, the High Court of Tanzania under Judge John Utamwa appointed PAP to become the Statutory Manager of IPTL.

Judge Utamwa had ordered PAP to restructure IPTL and the High Court, at the instance of VIP and by implicit constructive consent of all interested parties, including SCB, also ordered that PAP should as soon as possible pay off all legitimate debts of IPTL, expand the power plant capacity to about 500MW.

“While SCB have not yet exhausted the remedies ordered by the High Court of Tanzania, the ex-parte judgment given by the English Court is not recognizable or enforceable under Tanzanian Law and was registered contrary to the Reciprocal Enforcement of Foreign Judgments Act,” the advocate stated.

Counsel Didace stated in the affidavit that the fact that Standard Chartered Bank (Hong Kong) obtained the ex-parte order that IPTL shall pay to SCB $168,800,063.87 was further evidence of illegal conversion of VIP and IPTL’s interests, being protected in the pending Civil Case No. 229 of 2013.

Source: Daily News.