Africard v. Niger, Final Award, 6 Dec 2014

1.

As to the presentation of facts, the Arbitration Court intends to refer to the statements of its Interim Procedural Award dated on June 09, 2014; as to the actual proceedings, it especially recalls that:

- 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.

2.

By virtue of this award, the Arbitration Court has in particular:

• 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.

3.

After this award, a meeting was held on June 24, 2014 in the CCJA premises, between the parties, the Arbitration Court and Deloitte Cote d'Ivoire, pursuant to Article 15-5 of the CCJA Arbitration Rules; this meeting, recognized by the minutes duly approved and signed by the participants, included two sections, i.e. the appointment of an expert and the presentation of the new provisional timetable:

- 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.

4.

By virtue of decisions No. 137 and 144/2014/CCJA/ADM/ARB issued by the Presiding Judge of the Common Court of Justice and Arbitration on September 03 and October 30, 2014, this date of September 08, 2014 was extended to November 08 and then to December 08, 2014.

5.

It is worth mentioning that the expert submitted his expert report to the CCJA Arbitration Center General Secretariat on August 05, 2014, forwarding on the same day a copy to each party and to the Presiding Judge of the Arbitration Court; the parties were invited by the latter to submit to the Arbitration Court their written comments on this report, but only the Claimant complied.

6.

It is necessary to point out that in the preparatory phase of said report, the expert organized on July 25, 2014 a "conference call" with all the parties in order to report on the progress of his mission and collect any comments on the assumptions and methods for assessing the damages, shortfall and incurred losses (See: Expert Report, pages 53 to 57). For this purpose, he prepared an inventory of the documents submitted, or not, by the parties to the expert: thus, particularly with regard to the Claimant, the expert noted firstly that "he didn't receive the entirety of the accounting documents allowing him to verify the validity and relevance of the expenses noticed on the company's account opened with ECOBANK Niger..."; and secondly, concerning the submission of the materials delivery slips, Mr. Dany Chaccour (General Manager of Africard Co LTD and Africard Niger) declared that he does not claim "any refund from the State of Niger for the equipment acquired then returned to the manufacturer".

7.

With regard to the Respondent, in this case the State of Niger, the latter undertook through Mr. Ibro ZABAYE, Head of the Civil Litigation Department of the State, to provide the expert with the statistical data on the current production of passports in Niger, but this promise has not been kept.

8.

During this conference call, "the assumptions and methods of assessment" of the shortfall were presented to the parties, and three estimations for the composition of the turnover were elaborated by the expert (See page 54 of the Expert Report); they are respectively:

- 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).

9.

Finally, the parties discussed with the expert some technical attributions and implications of the framework agreement, mainly those related to the "implementation of a discount for the risk of the agreement non-renewal" and agreed on the estimation of the "central discount rate and capitalization", applicable in this case which was set at 14,60%.

10.

Based on the abovementioned estimations, the expert ultimately formulated his report around six scenarios based on which the amount of the shortfall damage in particular may be evaluated according to him.

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.

11.

Scenario 1: it is based on the estimation of number of passports produced compared with the production of a similar operator in another country of the Economic Community of West African States - which is in this particular case, Cote d'Ivoire - and the estimation of the amount of the operating expenses compared with that of an operator, including subcontracting.

12.

In Scenario 1, the expert estimated the shortfall of the Claimant at 15,440,533,316 (fifteen billion four hundred forty million five hundred thirty three thousand and three hundred sixteen) CFA Francs, the capitalized value on the 1st of August 2014 -date of his report.

13.

Scenario 3: it is based on the estimation of number of passports produced on the basis of 1,000,000 (one million) units over 12 years, including a renewal rate and with subcontracting as in Scenario 1.

14.

In Scenario 3, the expert estimated the shortfall of the Claimant at 10,384,955,727 (ten billion three hundred eighty four million nine hundred fifty five thousand and seven hundred twenty seven) CFA Francs, the capitalized value on the 1st of August 2014.

15.

The expert has ultimately set the amount of the capitalized value on the 1st of August 2014 (or the value of the shortfall to be paid on the 1st of August 2014) at 12,912,000,000 (twelve billion nine hundred twelve million) CFA Francs resulting according to him from the average of the amounts used in scenarios 1 and 3 above (See letter of August 13, 2014 sent by the expert to the Presiding Judge of the Arbitration Court in response to the latter's request of information upon receipt of the Expert Report).

16.

With regard to the evaluation of the damage relative to the losses incurred by the Claimant, the expert estimated that on the banking and financial flows amounting to 544,000,000 CFA Francs and received by Africard Niger, only the expenses amounting to 44,740,781 (forty four million seven hundred forty thousand and seven hundred eighty one) CFA Francs, corresponding to the settlement of the different banking fees and operating costs of this subsidiary are justified; he therefore fixed the value of the loss incurred by the Claimant at this amount.

17.

Communicated by the letter of August 13, 2014 sent by Maítre Souleymane Yankori, Counsel of the Claimant, said comments mentioned primarily that the State of Niger merely asked the Court to order an expert report, but unfortunately, has not submitted, after obtaining it, any paper, statistics or document to the expert." and that this is most probably the reason why the expert developed and used four scenarios for the assessment of the shortfall damage: the Claimant considers that, among these four scenarios, Scenario 1 is the closest to the reality of the parties' agreement since it provides in particular for the implementation of this agreement through a subcontract in favor of ZETES, a Belgian company. However, the Claimant regrets in this scenario that the expert has unduly taken into account, in the amount of his assessment of the shortfall equal to 15,440,533,316 CFA Francs, 16% taxes, which according to the Claimant should be deducted in its favor, pursuant to the provisions of the framework agreement granting it fiscal and customs exemptions.

18.

Therefore, the Claimant considers that "if the 16% taxes were not taken into consideration", its shortfall would "come close to" the amount of 19,700,000,000 CFA Francs that it had also originally claimed in its Request for Arbitration with regard to the expert report it had itself commissioned and produced and the maximum amount used by the expert in his Scenario 1.

19.

The Claimant considers that for this section, the expert conducted a review of the validity and materiality of the transactions performed during the period from the launch of the tender to the termination of the framework agreement, which allowed him to highlight the presence of transfers of more than 544,000,000 CFA Francs, made between October 15, 2010 and March 30, 2012.

20.

Therefore, the Claimant estimates that, the existence of these transfers having been confirmed by the bank, the aforementioned amount of the assessment of the incurred losses should be used and payment should be attributed to the Respondent.

21.

During its previous legal explanations and analyses enunciated in paragraphs 86 to 97 of the Interim Procedural Award dated on June 09, 2014, considered as a necessary adjunct and integral part of this final award, the Arbitration Court acknowledges the presence of a contractual breach by the Respondent, consisting of the sudden termination of the framework agreement of October 13, 2011 binding the two parties, the violation of a legitimate and legally protected interest, namely the right to practice and implement the purpose of said agreement by the Claimant and the presence of a directly resulting damage the compensation of which was acknowledged by the Arbitration Court.

22.

To recall these explanations, it is worth noting that the Arbitration Court stated that:

- 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".

23.

Based on the abovementioned reasons and grounds, the Arbitration Court declared admissible in form and substance the Claimant's claims for compensation; since, the faults and breaches attributable to the Respondent have resulted in the cancellation of an investment project whose implementation had started and led to significant financial and non-pecuniary damages.

24.

The Arbitration Court notes in this regard that in the Claimant's response, the damage claimed by it is double-sided: a directly incurred loss - damnum emergens - corresponding to the amounts already spent during the start-up operations and economic damage in the form of a shortfall -lucrum cessans - corresponding to the amount that would have been earned by the Claimant if the investment was carried out for its whole contractual term.

25.

It is with the aim of defining this compensation that the Arbitration Court ordered in its Interim Procedural Award of June 09, 2014, an expert report in order to evaluate and calculate the amount of these damages.

26.

The expert having accomplished his mission under the above-mentioned circumstances and conditions, the Arbitration Court finds the following:

27.

It was verified and established by the expert in the presence of both parties that the financial and banking flow received by Africard Co LTD is equal to 544,000,000 FA Francs, and it was found that, in the absence of consistent accounting and convincing supporting documents, only the expenses totaling 44,740,781 CFA Francs are justified by expenses representing the banking and operating fees of said subsidiary: the Arbitration Court, after adopting the conclusions of the expert in this regard, fixes the amount of the incurred losses at 44,740,781 (forty four million, seven hundred forty thousand and seven hundred eighty one) CFA Francs and orders the State of Niger to pay said amount to Africard Co LTD.

28.

The Arbitration Court considers that the request of said company concerning the ordering of the Respondent to pay the total amount of the abovementioned financial flow has no legitimate basis, especially since in a letter dated on July 27, 2014 sent to the expert by Mr. Dany Chaccour, Mr. Moussa Bassirou, Deputy Director General of Africard Niger, certifies that all the amounts received on the account of Africard with ECOBANK, Niamey Branch, were cash withdrawals used to pay remunerations to people who helped Africard Co LTD win the restricted tender for the production of at least 1,000,000 passports over 12 years. The Bassirou family, me personally, my father, my uncles, my brothers and my cousins were involved in this process; being members of a highly politically active family, we were paid for our services up to 500,000,000 CFA Francs" (See page 65 of the Expert report).

29.

Moreover, this large payment does not show in the Claimant's accounting - like some expenses of lesser value and for which the Claimant provided the expert with supporting documents - it is appropriate, after granting the amount of 44,740,781 (forty four million, seven hundred forty thousand and seven hundred eighty one) CFA Francs for the incurred losses, to dismiss the remainder of the Claimant's requests.

30.

The Arbitration Court considers that the method used by the expert to determine the damage resulting from the shortfall of the Claimant is relevant to the extent that the main instruments and methods for assessing this damage were presented and discussed between the expert and the disputing parties.

31.

Under these conditions, the use of Scenarios 1 and 3 which the expert ultimately adopted to determine the amount of the shortfall, is rational and must be approved since, according to the expert, these scenarios correspond the most to the text and spirit of the framework agreement dated on October 13, 2011.

32.

Moreover, the expert has rightly eluded in his estimations, the fiscal advantages raised and claimed by the Claimant in its above comments, in the sense that if Article 5 of the framework agreement grants the Claimant many fiscal and customs exemptions, it imposes on the latter the correlative obligation to "perform the usual exemption formalities with the competent departments of the General Directorates of Taxes and Customs.".

33.

Given the suspension or the premature termination of said agreement, it is not certain and proved that the Claimant has fulfilled this essential formality in order to be entitled to claim this percentage which could have or should have been granted to it and which, in any case, was not taken into consideration by the expert.

34.

For all these reasons, and considering that the two scenarios described above cannot be applied together and simultaneously since they are mutually exclusive given their characteristics specific to them, the Arbitration Court considers that Scenario 1 is the most consistent with said agreement since it not only includes the possibility for subcontracting but above all, unlike scenario 3, excludes the risk of non-renewal of the agreement, not stipulated in any of the provisions of this agreement: in fact, it is clear from the combination of articles 1, 2 and 6 of the framework agreement that the Claimant was required to produce at least one million biometric and electronic passports during the agreement term of five years, renewable for one time, with an extension of two additional years at the end of the second of five year period; i.e. 12 years in total.

35.

For the Claimant, this an imputation by the agreement of a performance objective and obligation to finish the term of the agreement; the only and ultimate reason to stop the implementation of said agreement being its termination by one of the parties under the conditions stipulated in Article 24 thereof and not its eventual non-renewal by the Respondent.

36.

Therefore, the agreement is the law binding the parties and the characteristic of the civil - and even administrative - liability (See the extensive case law of the French administrative courts reported by the Claimant in its response)--, within the framework of the compensation of damage caused by third parties according to a known case law formula (see Interim Procedural Award, June 9, 2014, n° 58, page 20) to "restore as accurately as possible the balance destroyed by the damage and replace the victim, at the expense of the party responsible for the damage, in the situation where it would have been if the damage had not occurred", the Arbitration Court adopts in this case the criteria and parameters of Scenario 1 mentioned above, not only because it best includes the technical and legal provisions of the framework agreement, but also and above all, because, applying the abovementioned case law formula, is the most able to remedy as accurately as possible the damage of the Claimant's shortfall given its amount.

37.

In this respect, the expert fixed at 15,440,533,316 (fifteen billion four hundred forty million five hundred thirty three thousand and three hundred sixteen) CFA Francs the capitalized value on August 1, 2014 - date of his report - of the shortfall of the Claimant and the Arbitration Court, by adopting the conclusions of said expert in this regard and after making its own conclusions and analyses mentioned specifically in aforementioned paragraphs 86 to 97 of the Interim Procedural Award dated on June 09, 2014, orders the State of Niger to pay the aforementioned amount to the Claimant as compensation for the shortfall and dismisses the remainder of the Claimant's requests.

38.

The Arbitration Court recalls that in both its response and pleadings, the Claimant regrets the about-face of the State of Niger which had abusively and unilaterally terminated, by virtue of the letter of March 24, 2012 and without any breach by it, the framework agreement of October 13, 2011 and re-awarded the contract to its direct competitor which in this case is the current operator, under suspicious conditions with disregard for the Nigerien legislation in this field; furthermore, the Claimant notes that despite its numerous inquiries, petitions and proposals of amiable renegotiations and conciliation toward the competent Authorities, the State of Niger remained attached to its arbitrary decision to terminate the agreement that no amiable or judicial appeal could change: therefore, with regard to the amiable appeal, the Claimant reveals to have vainly exercised an hierarchical appeal to the Prime Minister, and with regard to the judicial appeal, it declares having successfully brought an appeal for the abuse of authority against the abovementioned ministerial decision.

39.

In fact, by virtue of Decision No. 13-04 of January 23, 2013, the State Court cancelled the abovementioned decision, which had the direct consequence, according to the Claimant - of the putting the parties back in the position they were in before the decision deemed irregular had been taken and as if it never existed (See summary of the Claimant titled: "Pleadings of January 16, 2014, Chapter C - The Litigation / Dispute").

40.

This was not the opinion of the Respondent which refused to comply with said decision after receiving notification even though pursuant to the provisions of Article 108 of Order 2010-16 of April 15, 2010 defining the organization, formation and powers of the State Court, "the decisions of the Administrative Chamber shall apply to all".

41.

The Claimant considers therefore that the behavior of its adversary caused it non-pecuniary damage which is divided into the loss of the contract for the biometric and electronic passports in Niger, firstly, and secondly, the loss of opportunities to acquire in Niger other equally substantial and imminent contracts, for the manufacturing and production of administrative documents, such as those in particular relating to election ballots and identity cards; and lastly, the Claimant regrets the damage caused to its image and reputation.

42.

For total compensation of the non-pecuniary damages, it considers that it should not be less than 5,000,000,000 CFA Francs, requesting the payment by the State of Niger of said amount.

43.

On the merits of the complaints expressed by the Claimant with regard to the compensation for non-pecuniary damage, the Arbitration Court reiterates and refers to its legal analyses and explanations mentioned in paragraphs 86 to 97 of the Interim Procedural Award dated on June 09, 2014 which is considered as mentioned above (paragraph 21) a necessary adjunct and integral part of this final award.

44.

Therefore, concerning specifically the compensation for the non-pecuniary damage relating to the complaints of damages caused to the image and reputation of the Claimant, the Arbitration Court considers that even though the Claimant was victim of misconduct by the Respondent, almost comparable to an assault, to the extent that it is cannot be accused of any fault or breach in its contractual relationships with the Respondent, its inherent image and reputation could not be deteriorated or impacted by the sudden termination of the agreement by the Respondent, particularly as it continues to work on other contracts, whether old or new, in the West and Central African sub-region, as shown by the advertising and photographic posters enclosed in the abovementioned "summary".

Therefore, the claimed damage concerning the aforementioned complaints was not proved and could not be compensated.

45.

However, the Arbitration Court considers that the non-pecuniary damage resulting from the complaints concerning the loss of the current contract is real, certain, current, direct and gives entitlement to compensation; that the same applies to the complaint of the loss of opportunities to acquire similar contract in Niger: said losses are analyzed in this case as a real loss of opportunity that can be remedied under the case law formula according to which "shall be only considered a repairable loss of opportunity, the current and certain disappearance of a favorable possibility" (CIV 1st, Nov. 21, 2006, No 05-15674; CIV 1st, June 04, 2007, No 05-20213, in Obligations Code. 2-Civil Responsibilities and Quasi-Contracts, page 157, Muriel Fabre - Magnan, PUF).

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.

46.

On pages 34 and 35 of its response, the Claimant claimed the reimbursement of the fees and expenses paid in these arbitration proceedings, pointing out that all payments were made out of its own funds, the State of Niger failing to do so or acting in bad faith in this regard, even for the payment of the fees relating to its counterclaim.

47.

The Claimant claims in this regard the reimbursement of the following fees:

- 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

48.

The Arbitration Court notes in fact that all payments made in these proceedings were paid by the Claimant, the Respondent having shown in this regard a dilatory, abstaining and malicious behavior with the demonstrated aim of delaying or frustrating said proceedings in violation of Article 11 (namely 11-2) of the Arbitration Rules.

49.

The Arbitration Court considers that under these circumstances, the request for reimbursement of fees and expenses of this arbitral proceeding is just and legitimate and will give entitlement to compensation.

50.

However, the Arbitration Court notes that for the lawyer fees fixed by the Claimant at 150,000,000 CFA Francs, only a part of this amount, equal to 58,697,599 CFA Francs was justified according to the expert (see page 64 of the Expert Report) by the "supporting documents;" the Arbitration Court fixes therefore in this case and for this specific point, the amount of the lawyer's fees at the amount specified and justified above.

51.

Subject to this sole reservation, the Arbitration Court therefore orders the State of Niger to pay Africard Co LTD the total amount of fees claimed and specified above, equal to 156,747,299 (one hundred fifty six million seven hundred forty seven thousand and two hundred ninety nine) CFA Francs.

52.

On page 37 of its response, Africard Co LTD sought an order to oblige the State of Niger to pay interest on the different amounts charged to the State of Niger respectively for the incurred losses, shortfall, non-pecuniary damage compensation and reimbursement of the arbitration and defense fees it paid, according to the annual interest rate of the Central Bank of West African States that is 13%, starting from April 15, 2013, the date of which the request for arbitration was submitted and until the actual settlement of the allocated sums.

53.

The Arbitration Court recalls that according to the established arbitration case law, "parties which succeed on the merits of the arbitration shall have the right to collect interest on the principal amount granted" (See Award CCI No. 7731 of 1994) and "... the compensation would not be considered integral, if the Claimants, (after determining the damages they incurred) were not granted the interest up to the complete fulfillment of the sentences declared by the Arbitration Court" (See Award CIRDI No. ARB/11/11-AHS Niger and Menzies Middle East and Africa SA c /Republic of Niger - No. 157 - Reply of the Claimant).

54.

The Arbitration Court, based on this case law, gives the Claimant entitlement to the aforementioned claim and decides therefore to increase the financial penalties defined in this case by the annual interest rate of the Central Bank of West African States applied in Niger i.e. 13%, specified by the Claimant and not contested by the Respondent.

55.

On page 35 of its reply, Africard Co LTD requested to denominate in Euro the amount of compensation decided in this award on the basis of an exchange rate of 1 Euro = 655,957 CFA F.

56.

The Arbitration Court recalls in this regard that the entire arbitration proceedings were conducted in CFA Franc, the relevant currency in OHADA in general and in the institutional arbitration of this organization specifically; that the fixed parity between said currency and the Euro is known and defined in Article 4 of the framework agreement, which makes it enforceable against the Respondent; therefore, it is the responsibility of the parties, and not the Arbitration Court, to proceed, if they so wish, with a conversion into Euro of the above-mentioned financial sentences. Therefore, it is appropriate to reject the Claimant's claim for conversion.

57.

On page 37 of its reply, Africard Co LTD also requested the provisional enforcement of this award notwithstanding any remedies.

58.

The Respondent concluded in this regard (See declarations of Mr. Ibro ZABAYE, Head of the Civil Litigation Department of the State, page 217 of the record, No. 754 and 755) that this request is undue since, according to him "as a State, Niger is solvent, has a guaranteed representation and will pay as long as it is legitimate (…)"; therefore, it is appropriate according to the Respondent to reject this request for provisional enforcement which explains therefore "the rush, seeking by any means to make money immediately at the expense of the State of Niger (…)".

59.

The Arbitration Court considers in this specific case that it is not appropriate to order the requested provisional enforcement, insofar as, taking into consideration mainly the capacity of the Respondent as a State, a public legal entity, and its permanent financial capacities and potentials, no current or even future danger is proven to exist against it that would be likely to threaten the eventual enforcement where applicable to occur.

60.

Therefore, the Arbitration Court dismisses the request of Africard Co LTD for provisional enforcement.

61.

In a short conclusion included in its defenses, page 9, the State of Niger initiated a counterclaim aiming at ordering Africard Co LTD to pay the amount of 100,000,000 (one hundred million) CFA Francs for "abusive proceedings based on an agreement itself obtained after a fraudulent process, which makes it null and void" and in which "fees were unjustly imposed on the State of Niger following a proceeding the prerequisites of which have not been met".

62.

For its part, the Claimant concluded with the outright rejection of this counterclaim considered inconsistent according to it, since its requestor did not even pay the amount of the associated allowance in accordance with Articles 11-2 and 11-3 of the Arbitration Rules, which forced the Claimant to financially compensate for this deliberate negligence in order to allow the proceedings to progress.

63.

The Arbitration Court considers the counterclaim of the State of Niger admissible in the form but should be dismissed as to the merits; in fact, it is legitimate and legal, through the enforcement of the arbitration clause inserted in Article 25 of the framework agreement of October 13, 2011 that Africard Co LTD pursues and defends its prejudiced rights and interests against the Respondent before this Arbitration Court which has and will always have, according to the aforementioned provisions, the exclusive jurisdiction over this dispute arising from the termination and nonimplementation of the abovementioned framework agreement.

64.

For the reasons set forth, the Arbitration Court:

- 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.

Africard v. Niger

Documents of the case

Lawyers, other representatives, expert(s), tribunal’s secretary

Final Award

I. Facts and Proceedings

II. Submission of the Expert Report and Subsequent Comments of the Parties

III. Structure of the Expert Report and Comments of the Claimant

a) Structure of the Expert Report

b) Comments of the Claimant on the Expert Report

1) Concerning the Evaluation of the Shortfall

2) Concerning the Evaluation of the Incurred Losses

IV. Determination by the Arbitration Court of the Amount of the Incurred Losses and Shortfall Pleaded by the Claimant

1) Concerning the Incurred Losses

2) Concerning the Shortfall

V. Non-pecuniary Damage

VI. Fees

VII. Interest Payments

VIII. Exchange Rate

IX. Provisional Enforcement

X. Counterclaim of the State of Niger

XI. Arrangements

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