- After the cancellation of the Agreement of October 13, 2011 by the Respondent, the State of Niger, according to which the latter has awarded the production of biometric and electronic passports in the State of Niger to Africard Co LTD, the Claimant, which, after making vainly many amiable settlement attempts and after introducing various unsuccessful amiable and judicial appeals against the Respondent, has referred to the CCJA Arbitration Center General Secretariat a "request for arbitration" dated on April 08, 2013 which was registered under No. 003/2013/ARB on April 15, 2013;
- After the submission of said request by the Legal Counsel of Africard Co LTD, Maitre Souleymane YANKORI, Attorney-at-Law in Niamey, a notification of it was served by the CCJA Arbitration Center General Secretary to the State of Niger;
- By virtue of Decision No. 0083/2013/CCJA/ADM/ARB, dated on the 1st of August 2013, the CCJA nominated Mr. BOUBACAR DICKO, Magistrate and Former Judge at the CCJA/OHADA as sole arbitrator and Presiding Judge of the Arbitration Court;
- On September 26, 2013, the meeting provided for in Article 15 of the CCJA Arbitration Rules was held and the minutes of the meeting drawn: it shows in particular that:
• The parties accept that they are bound by an arbitration agreement under Article 25 of the Agreement for the Production of Biometric and Electronic Passports in the State of Niger, mutually signed by them on October 13, 2011;
• The Claimant, Africard Co LTD, seeks an order to oblige the State of Niger to pay it primarily the amount of 19,747,000,000 (nineteen billion seven hundred forty seven million) and 5,000,000,000 (five billion) CFA francs, or a total of 24,747,000,000 CFA Francs, as compensation for the shortfall (loss of profits) and for non-pecuniary and commercial damages it has suffered as a result of the termination by the State of Niger of the aforementioned framework agreement; it further requests the provisional execution of the award to be rendered;
• The Respondent, the State of Niger, represented by Mr. IBRO ZABAYE, Head of the Civil Litigation Department of the State, declares that he accepts to sign the minutes but reserves the right to make all objections and challenges including those related to the jurisdiction of the Arbitration Court. He also pointed out the following issues:
a) The inappropriateness of the project with respect to the requirements of the international standards in this field;
b) Violation of the Order of September 16, 2011 establishing the public-private partnership, in that the agreement was signed hastily on the same day that the order was adopted;
c) The exorbitant claims of Africard Co LTD indicating that the project does not take into account the interests of the State of Niger;
d) The requested provisional enforcement, which is not necessary in the case of a State;
• The parties recognize that:
- The Arbitration Court is located in the premises of CCJA in Abidjan and may, in accordance with Article 13, clause 3, of the CCJA Rules of Procedure, decide to hold hearings in any other place after consulting the parties;
- The language of this arbitration is French
- The law applicable to the merits of the dispute is the Nigerien law;
- The arbitration is governed firstly by the CCJA Rules of Procedure and where they are silent, by the OHADA Uniform Act of March 11, 1999 concerning arbitration law;
• The parties declare that they do not intend to grant the Arbitration Court the powers of amiable compositor;
• In agreement with the parties, the Arbitration Court has set, pursuant to Article 15-1-d of the CCJA Arbitration Rules, the provisional timetable as follows:
- October 28, 2013 at the latest: submission of the reply of the State of Niger to the CCJA Arbitration Center General Secretariat, with a copy to Maitre Souleymane Yankori;
- November 26, 2013 at the latest: submission of the response of Maitre Souleymane Yankorion on behalf of the Claimant;
- December 26, 2013 at the latest: rejoinder of the State of Niger, if appropriate/applicable;
- January 16, 2014 at the latest: hearings and deliberations;
- April 16, 2014 at the latest: drafting, signature and handover of the award to the CCJA Arbitration Center General Secretariat;
- According to the abovementioned forecasted timetable, the parties exchanged and submitted to the Arbitration Court the following documents:
- The reply of the State of Niger to the Request for Arbitration in the defenses, undated but received by the CCJA Arbitration Center General Secretariat on October 29, 2013;
- The response of Africard Co LTD, undated, but subject of the letter of transmittal to the Presiding Judge of the Arbitration Court and to the Respondent on November 21, 2013 from its Counsel Souleymane Yankori, Attorney-at-Law in Niamey.
- On January 16, 2014 a hearing of the oral arguments of the parties and their counsels was held in the premises of the CCJA;
- At the end of this hearing, the Presiding Judge of the Court notified the parties of the closure of the hearings this January 16, 2014, the final award to be rendered on April 16, 2014;
- By virtue of Decision No. 49/2014/CCJA/ADM/ARB dated on April 14, 2014 issued by the Presiding Judge of the Common Court of Justice and Arbitration, the deadline for the issuance of the award was extended for 02 months, from April 16, 2014 to June 16, 2014;
- On June 09, 2014, the Arbitration Court rendered the Interim Procedural Award.
• Ordered an expert report, to be prepared by a sole expert responsible for carrying out investigations and audits allowing said Court to assess and calculate in particular the amount of damages related to the shortfall and losses incurred by Africard Co LTD;
• Appointed Deloitte Cote d'Ivoire to carry out this mission thus defined;
• Declared that the expert appointed by said firm should perform his mission in compliance with the Audi Alteram Partem principle between parties and shall submit his report forty five days after the matter was referred to him;
• Decided that the fees and expenses of the expert will be paid by Africard Co LTD and will be added to the total expenditures.
- With regard to the first section, the representative of Deloitte Cote d'Ivoire, Ms Jocelyne LEGRE, Legal Manager, revealed that said firm has appointed Mr. Marc WABI, Managing Partner, as sole expert in order to carry out the investigations and audits designated in the abovementioned award under the financial and professional conditions and within the prescribed period;
- With regard to the second section, the new provisional timetable was mutually set as follows:
• July 28, 2014: submission by Deloitte Cote d'Ivoire of the expert report to the CCJA Arbitration Center General Secretariat;
• July 31, 2014: transmission of the report to the parties;
• August 07, 2014: submission of the written comments of the parties and deliberations;
• September 08, 2014: final award.
- Estimation of the turnover compared with that of a provider working in the field of biometric passports production in West Africa;
- Estimation of the turnover based on the Agreement for the Production of Biometric Passports signed between the State of Niger and Africard Co LTD;
- Estimation of the turnover based on the real data of passports production by the current dealer; for this estimation, the State of Niger was required to provide statistics on the biometric and electronic passports production by the current provider of the State of Niger (Contec Global).
Out of these six scenarios, the expert rejected four, for non-compliance with the requirements of the framework agreement and on the grounds that said scenarios did not provide for subcontracting and finally kept two scenarios only, which are scenarios 1 and 3 (See pages 10, 25 and 26 of the Expert Report), and which will be briefly exposed below.
- The State of Niger does not deny having unilaterally terminated the aforementioned framework agreement: it presented here many supporting causes including the agreement inappropriateness (See No. 73 to 74 of the Interim Procedural Award), its double fraudulent nature (See No. 75 to 78 of the Interim Procedural Award), its discretionary right to terminate as a sovereign State (See defenses, page 9), and the fact that the agreement didn't not reach a start of implementation according to it (See defenses, page 8);
- Examining the supporting causes based on the provisions of the abovementioned framework agreement and the Nigerien legal mechanisms for the termination of public procurement contracts, the Arbitration Court considered that:
• Concerning the alleged inappropriateness of the agreement, the same reasons that have been presented by the State of Niger to exclude Africard Co LTD, namely, the compliance with the ICAO (International Civil Aviation Organization) recommendations concerning the adoption of biometric passports for all the Member States (See No. 73 of the Interim Procedural Award), are paradoxically the same as those which led to the nomination of the competitor Contec Global for the manufacturing and production of the same contested biometric and electronic passports;
• Concerning the fraudulent nature of the agreement in terms of both the suspicious morality of "some Administration officials" in its establishment and the breach by said agreement of Order No. 2011-17 dated on September 16, 2011 concerning the general system of Public Private Partnership (PPP) contracts in the Republic of Niger, it should be noted for the first point that the ethics, or rather the lack of ethics of certain officials of the Nigerien Public Administration cannot be enforceable on a private commercial company which participated with others in an international tender process and against which no evidence on any breach was provided; for the second point, Decision No. 13-04 on January 23, 2013 of the State Court gave the suitable judicial reply, recalling that it is assumed that "regulatory instruments of general scope shall not produce any effect until being duly published, usually in the official gazette": in accordance with this principle, based on Article 1 of Order No. 60-10 of January 15, 1960 defining the conditions of publication of legislative, governmental and administrative instruments in the Republic of Niger and on Article 106 of the Constitution of Niger, "Order No. 2011-17 dated on September 16, 2011 concerning the general system of Public Private Partnership (PPP) contracts in the Republic of Niger, published in the official gazette on December 05, 2011, only entered into force starting on this date and therefore, was not applicable at the time of the signature of the abovementioned agreement on October 13, 2011"; this argument of the highest administrative court in Niger will be reinforced according to the Arbitration Court by the exorbitant nature - under administrative law - of the stability clause stipulated in Article 26 of the framework agreement that "The STATE OF NIGER shall ensure that the implementation of this agreement is not affected by any disruption arising from any modifications made to laws and regulations in the legal, administrative, fiscal or custom fields";
• Concerning the discretionary right to termination vested in the State of Niger as a sovereign State, it is certainly recognized by case law and doctrine that the contracting Administration shall have the power to terminate some defined contracts, provided that this power is exercised with caution and "for the public interest" and is accompanied by a compensation for the contractual partner (See: the Major Decisions of Case Law -Administrative Law - Jean-Francois LACHAUME - Themis Library - PUF - 2nd edition - pages 333 to 338 - note under decision of May 02, 1958 of the Council of State, Distillerie de Magnac - Laval); in this case, the State of Niger has not shown any reason related to the public interest, judged exclusively by it, but refers instead in its decision to terminate the abovementioned agreement to the issuance of the new order that is not applicable to the agreement as mentioned above;
• Finally, concerning the fact that the aforementioned agreement did not begin implementation according to the State of Niger, this claim is contradicted by objective elements mentioned in the file of the proceedings and indicating that said agreement had begun implementation, including among others: the establishment of a Nigerien subsidiary of Africard Co LTD, fund flows between this subsidiary and the parent company, the evidenced issuance of the materials orders (see instrument No. 20 of the Request for Arbitration, letter of the General Director of Resources of the Ministry of Interior to the General Director of Africard Co LTD), the manufacturing of passport specimens and their delivery to the competent Nigerien authorities for approval; to close this topic, it should be noted that the Minister of the Interior in his letter dated on December 30, 2011 sent to the Prime Minister (see instrument No. 21 of the Request for Arbitration), notes that since the notification of "the duly drafted, concluded and signed agreement" sent to Africard Co LTD, the latter "has since then strived to meet its contractual commitments";
- It is thus clear, according to the Arbitration Court, that if the abovementioned reasons for the termination of the agreement by the State of Niger are irrelevant, they intrinsically breach the provisions of said agreement which defined its own termination mechanism: in fact, Clause 1 of Article 24 provides that "In the event one of the parties fails to comply with one of the material obligations arising from the implementation of this agreement, the other party shall be entitled to terminate the agreement at the first party's expense after sending the first party a written notice to this effect. The agreement may be then terminated thirty (30) days after the date on which the offending party receives said notice, and unless the offending party has rectified the breach of which it is accused"; Clauses 2 and 3 of the same article respectively provided for "the event of termination by the State of Niger without fault or negligence by the contractual partner" and the event where the latter wishes to terminate the agreement without fault or negligence by the State of Niger: the Arbitration Court considered that based on the combined and restrictive reading of the abovementioned 3 clauses, it appears that the only breach - to be certainly defined - likely to lead to the termination of the agreement should only result from the breach by one of the parties of a material obligation of this agreement; failing such a breach in this specific case and whereas it is assumed that the agreements should be implemented in good faith and in compliance with the mutual commitments taken between the parties with regard to the same investment project, the discretionary termination of the agreement by the State of Niger is, according to the Arbitration Court, a contractual breach giving entitlement to compensation;
- The Arbitration Court further noted, while strictly abstaining to examine the reasons that determined the decision of the State party, whether political, economic, financial or related to the public interest, that the State of Niger terminated the abovementioned agreement without accusing the contractor of any fault or breach; thereby, it breached the national and communal provisions governing public procurement contracts, and mainly in this case Article 88 of Instruction No 4/005/CM/UEMOA concerning the Procedures of the Award, Execution and Regulation of Public Procurements and Public Service Delegations in the West African Economic and Monetary Union (UEMOA) entered into force between the member States on January 1, 2006 and Article 144 of Decree No 2011-686/PRN/PM of December 29, 2011 concerning the Code of Public Procurement and Public Service Delegations in the Republic of Niger, both articles have the same formulation and stipulate that "Public procurement contracts may be terminated under the conditions stipulated in the specifications, in the following cases: a) either at the initiative of the contracting officer due to a fault by the contractor or the liquidation of its company;
With the exception of cases where the termination is decided pursuant to clause (a) of this article, the contractor shall be entitled to termination compensation calculated on a flat rate based on the remaining services to be executed. This percentage is defined in the General Administrative Provisions for each market segment".
Therefore, the claimed damage concerning the aforementioned complaints was not proved and could not be compensated.
Therefore, the Arbitration Court, approving the request for compensation with regard to these complaints, orders the State of Niger to pay Africard Co LTD the amount of 1,000,000,000 (one billion) CFA Francs for the damages and dismisses it of the remainder.
- Arbitration fees: 55,224,700 CFA Francs
- Administrative fees: 200,000 CFA Francs
- Fees related to the counterclaim: 3,125,000 CFA Francs
- Lawyer fees and remunerations: 150,000,000 CFA Francs
- Expert fees: 39,500,000 CFA Francs
Totaling 248,056,580 CFA Francs
- Declares the requests for compensation of damages pleaded by Africard Co LTD, the Claimant, admissible and well-founded;
- Orders therefore the State of Niger, Respondent, to pay the Claimant the following amounts:
• 44,740,781 (forty four million, seven hundred forty thousand and seven hundred eighty one) CFA Francs, as compensation for the incurred losses
• 15,440,533,316 (fifteen billion four hundred forty million five hundred thirty three thousand and three hundred sixteen) CFA Francs, as compensation for the shortfall;
- Decides that each of the above-mentioned amounts will generate interest starting April 15, 2013, the date of the submission of the Request for Arbitration and until full settlement, according to the annual interest rate of the Central Bank of West African States specified by the Claimant, i.e. 13%;
- 156,747,299 (one hundred fifty six million seven hundred forty seven thousand and two hundred ninety nine) CFA Francs, for the reimbursement of the fees of the proceedings paid by it;
- 1,000,000,000 (one billion) CFA Francs, for the compensation of non-pecuniary damages; this sum will generate interest as of the date of the issuance of the award according to the annual interest rate of the Central Bank of West African States specified by the Claimant, i.e. 13%;
- Decides that it is not founded to convert into Euro the amount of abovementioned sentences;
- Decides that it is not founded to order the provisional enforcement of this award;
- Accepts in form the counterclaim of the State of Niger and dismisses it as to the merits
- Rejects all other requests, claims, or conclusions.
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