|Arbitration Rules or ICSID Arbitration Rules||ICSID Rules of Procedure for Arbitration Proceedings 2006|
|BoT||Bank of Tanzania|
|BRELA||Business Registrations and Licensing Agency of Tanzania|
|Charge of Shares||The Charge of Shares dated 28 June 1997, executed by Mechmar and VIP over of their shares in IPTL to the Security Agent as security for the Loan|
|Claimant or SCB HK||Standard Chartered Bank (Hong Kong) Limited|
|Danaharta||Danaharta Managers (L) Ltd|
|Escrow Agreement||Escrow Agreement dated 5 July 2006 between the Government of Tanzania, IPTL and Bank of Tanzania|
|Escrow Account||An account established by GoT pursuant to the Escrow Agreement|
|Hearing||Hearing on Jurisdiction and Merits held on 16-23 July 2018|
|Facility Agreement||"Loan Facility Agreement relating to the 100 MW Tegeta Power Project" dated 28 June 1997 between IPTL and a consortium of lenders (several Malaysian banks)|
|ICSID Convention||Convention on the Settlement of Investment Disputes Between States and Nationals of Other States dated 18 March, 1965|
|ICSID or the Centre||International Centre for Settlement of Investment Disputes|
|ICSID 1 Award||Final Award in ICSID Case No. ARB/98/8 dated 12 July 2001 between TANESCO and IPTL|
|Implementation Agreement/IMA||Implementation Agreement dated 8 June 1995 between IPTL and GoT|
|IPTL||Independent Power Tanzania Limited|
|LCIA Award||Award in LCIA Arbitration No. 2353 dated 26 August 2003 between Mechmar and VIP|
|Mechmar||Mechmar Corporation (Malaysia) Berhad|
|Mechmar Shares||The 70% shares held by Mechmar in IPTL|
|PAP||Pan Africa Power Solutions (T) Limited|
|PPA||Power Purchase Agreement dated 26 May 1995, between IPTL and TANESCO|
|PPA Award||Final Award of the Tribunal in ICSID Case No ARB/10/20 dated 12 September 2016 between SCB (HK) and GoT|
|Respondent, Tanzania or GoT||The Government of the United Republic of Tanzania|
|Security Deed||Security Deed executed by IPTL as borrower dated 28 June 1997 in favour of SIME Berhad (Singapore office) as Security Agent|
|TANESCO||Tanzania Electric Supply Company Limited|
|VIP||VIP Engineering and Marketing Limited|
|VIP Shares||The 30% shares held by VIP in IPTL|
|18 September 2015||ICSID received a request for arbitration dated 15 September 2015 from SCB HK against the United Republic of Tanzania together with exhibits C-001 through C-046 and legal authority CL-001 ("Request").|
|30 September 2015||The Secretary-General of ICSID registered the Request in accordance with Article 36(3) of the ICSID Convention and notified the Parties of the registration, wherein the Parties were invited to constitute an arbitral tribunal as soon as possible pursuant to Rule 7 of ICSID’s Rules of Procedure for the Institution of Conciliation and Arbitration Proceedings ("Institution Rules").|
|19 May 2016||The Secretary-General, in accordance with Rule 6(1) of the ICSID Rules of Procedure for Arbitration Proceedings ("ICSID Arbitration Rules"), notified the Parties that the Tribunal was constituted pursuant to Article 37(2)(a) of the ICSID Convention. The Tribunal was composed of Prof Lawrence Boo Geok Seng, a national of Singapore, President, appointed by the Chairman of the ICSID Administrative Council in accordance with Article 38 of the ICSID Convention; Sir Stanley Burton, a national of the United Kingdom, appointed by the Claimant; and Dr Kamal Hossain, a national of Bangladesh, appointed by the Respondent. On the same date, Ms Aurélia Antonietti, Legal Counsel, ICSID, was designated to serve as Secretary of the Tribunal.|
|27 June 2016||The Tribunal issued Procedural Order No. 1 ("PO 1") pursuant to the Parties’ agreement in their letters of 14 and 27 June 2016. PO 1 provides, inter alia, that the applicable Arbitration Rules would be those in effect from 10 April 2006; the procedural language is English; and the place of proceeding would be London, England.|
|29 June 2016||The Respondent filed its proposal for the disqualification of Sir Stanley Burnton, along with Annexes 1 through 11, pursuant to Article 57 of the ICSID Convention and ICSID Arbitration Rule 9, on the grounds that his appointment was inconsistent with the arbitration clause contained in Article 21.2 of the Implementation Agreement.|
|30 June 2016||The Parties were informed that the proposal to disqualify Sir Stanley Burnton would be decided according to Article 58 of the ICSID Convention, and the proceeding was suspended until such decision was made, in accordance with ICSID Arbitration Rule 9(6).|
|5 July 2016||The Claimant filed observations on the proposal for disqualification.|
|7 July 2016||The Tribunal consented to the resignation of Sir Stanley Burnton, in accordance with ICSID Arbitration Rule 8(2) and the SecretaryGeneral notified the Parties of the vacancy on the Tribunal and invited the Claimant to appoint the missing arbitrator.|
|8 July 2016||The Claimant appointed Justice David Unterhalter SC, a national of South Africa.|
|11 July 2016||Following Justice David Unterhalter's acceptance of his appointment as arbitrator, the Tribunal was reconstituted.|
|July - August 2016||Correspondence was exchanged between the Parties and the Tribunal regarding a date for the first session, which was set for 5 August 2016.|
|3 August 2016||The Respondent's request for adjournment, based on the Attorney General of Tanzania not being available, was rejected by the Tribunal on 3 August 2016.|
|4 August 2016||The Respondent informed the Tribunal that the Attorney General of Tanzania had instructed counsel to not attend the first session in his absence.|
|5 August 2016||The Tribunal held the first session at the IDRC in London and the participants were the Members of the Tribunal, Mr Francisco Abriani, ICSID Legal Counsel, and counsel for the Claimant.|
|15 August 2016||The Respondent filed a request to address the Respondent's objections to jurisdiction and admissibility as preliminary questions ("Respondent's Application for Bifurcation") with legal authorities RL-001 through RL-010.|
|2 September 2016||The Claimant submitted its Response to the Respondent's Application for Bifurcation ("Claimant's Response to the Application for Bifurcation") with exhibits C-047 through C-075 and legal authorities CL-002 through CL-004.|
|15 and 20 September 2016||On 15 and 20 September 2016, the Claimant submitted additional exhibits, C-076 and C-077.|
|23 September 2016|
The Tribunal held the Hearing on Bifurcation in London at the IDRC. The following persons participated to the hearing:
Members of the Tribunal:
On behalf of the Claimant:
On behalf of the Respondent:
|26 September 2016||The Claimant submitted an additional legal authority, CL-005, and several additional exhibits, C-078 and C-079.|
|11 October 2016||The Tribunal issued Procedural Order No. 2 ("PO 2") concerning procedural matters. On the same date, the Tribunal issued Procedural Order No. 3 ("PO 3") setting forth its decision not to bifurcate the proceedings.|
|16 December 2016||The Claimant filed its Memorial on the Merits ("Claimant's Memorial") with the witness statement of Mr Gaspar Asheri Nyika, dated 16 December 2016, the expert reports of Mr Colin Johnson and Mr Nicholas Zervos, dated 16 December 2016, exhibits C-080 through C-218 and legal authorities CL-006 through CL-055.|
|26 June 2017||The Respondent filed its Memorial on Objections to Jurisdiction and Counter-Memorial on the Merits ("Respondent's CounterMemorial") together with exhibits R-001 through R-071 and legal authorities RL-011 and RL-094.|
|17 July 2017||The Tribunal issued Procedural Order No. 4 ("PO 4") concerning the procedural calendar, ordering that the Claimant's Rejoinder on Jurisdiction would be due on 2 March 2018.|
|11 September 2017||The Tribunal issued Procedural Orders 5a ("PO 5a") and 5b ("PO 5b") on production of documents by the Respondent and the Claimant respectively.|
|10 November 2017||The Claimant filed its Counter-Memorial on Jurisdiction and Reply on the Merits ("Claimant's Reply"), along with the second witness statement of Mr Gaspar Asheri Nyika, dated 9 November 2017, the witness statement of Mr Kieran Day, dated 10 November 2017, the witness statement of Mr Joseph Wesley Casson dated 15 November 2017, the expert report of Mr David Chivers QC, dated 8 November 2017, the second expert report of Mr Nicholas Zervos, dated 10 November 2017, exhibits C-219 through C-399 and legal authorities CL-056 through CL-189.|
|7 December 2017||The Respondent requested an extension of "at least three months" to file its Rejoinder on the Merits and Reply on Jurisdiction due on 29 January 2018.|
|12 December 2017||The Claimant objected to this extension request.|
|4 January 2018||The Tribunal granted the Respondent's requested time extension for filing its Rejoinder on Merits and Reply on Jurisdiction.|
|11 January 2018||The Tribunal confirmed that the April hearing dates were vacated and that the Hearing on Jurisdiction and Merits would take place in London from 16-27 July 2018.|
|16 January 2018||The Tribunal issued Procedural Orders 6a ("PO 6a") and 6b ("PO 6b") concerning production of documents.|
|30 January 2018||The Tribunal issued Procedural Order No. 7 ("PO 7") concerning the procedural calendar.|
|1 March 2018||Curtis, Mallet-Prevost, Colt & Mosle LLP informed the Tribunal that they were no longer representing the Respondent.|
|2 May 2018||The Tribunal granted the Parties' April 2018 requests for an extension of time to file their submissions and informed the Parties that it would have an organizational conference call.|
|17 May 2018||The President held an organizational conference call with the Parties to receive updates and clarifications regarding the|
|Respondent’s representation in these proceedings and to discuss procedural issues related to this matter.|
|23 May 2018||The Respondent filed its Rejoinder on the Merits and Reply on Jurisdiction ("Respondent's Rejoinder"), along with exhibits R-072 through R-097 and legal authorities RL-095 through RL-142.|
|1 June 2018||Further to the Parties’ respective letters of 25 and 31 May 2018, the Tribunal informed the Parties that further evidence shall only be permitted if and when the Tribunal so directs.|
|14 June 2018||The Parties were invited to consider the appointment of Ms Elizabeth Wu as assistant to the President, as well as the appointment of Mr Moin Ghani, as assistant to Dr Kamal Hossain. The Parties were also invited to provide their position on the attendance of the above-mentioned individuals and Ms Chloe Terrapon Chassot, as observer, to the Hearing on Jurisdiction and Merits.|
|20 and 27 June 2018||The Parties confirmed that they did not object to the appointment of Ms Elizabeth Wu and Mr Moin Ghani as assistants nor to the attendance of Ms Chloe Terrapon Chassot at the hearing.|
|2 July 2018||The Claimant filed its Rejoinder on Jurisdiction ("Claimant's Rejoinder on Jurisdiction") with exhibits C-403 through C-408 and legal authorities CL-190 through CL-208.|
|4 July 2018||The President held a pre-hearing organizational meeting with the Parties by telephone conference.|
|5 July 2018||The Parties were requested to clarify their positions regarding how the Claimant’s witness statements ought to be evidentiarily treated, given that the Respondent did not intend on cross-examining any of the Claimant’s witnesses or experts.|
|6 and 8 July 2018||The Parties submitted their positions regarding the issue of the Claimant’s witnesses.|
|10 July 2018||The Respondent confirmed that Curtis, Mallet-Prevost, Colt & Mosle LLP was retained to represent it. On the same date, the Tribunal decided that the Hearing on Jurisdiction and Merits would take|
|place from 16-24 July 2018 and decided on the issue of the Claimant’s witnesses.|
|12 July 2018||A letter said to be from Mr Harbinder Singh Sethi on IPTL letterhead addressed to the Secretary of the Tribunal, was sent by email through the Ukonga Central Prison at Dar Es Salaam seeking the Tribunal’s permission to "join IPTL/PAP or alternatively for IPTL/PAP to be called as witnesses in the pending proceedings. Upon the confirmation from the Parties during the Hearing, the Tribunal declined to accede to the request.1|
|16 July 2018||At the Hearing on Jurisdiction and Merits, Ms Elizabeth Wu, Mr Moin Ghani and Ms Chloe Terrapon Chassot provided the Parties with their respective signed terms of reference and declarations of their independence and impartiality. On the same date, the Tribunal granted the Parties’ requests, of 12 and 13 July 2018, to admit RL-143 and RL-144 and C-409 onto the record.|
|16-23 July 2018|
A Hearing on Jurisdiction and Merits was held, at the IDRC in London. The following persons participated at the hearing:
Members of the Tribunal :
Tribunal Assistants / Observer :
ICSID Secretariat :
On behalf of the Claimant :
On behalf of the Respondent :
|23 July 2018||The Tribunal granted the Claimant’s request to admit exhibits C- 410 through C-414, and legal authorities, CL-209 through CL-212.|
|8 August 2018||The Parties were informed that Ms Geraldine Fischer, ICSID Legal Counsel, had been assigned to serve as Secretary of the Tribunal.|
|7 September 2018||The Parties filed simultaneous Post-Hearing Briefs ("PHB") with the accompanying exhibits and legal authorities. The Claimant also filed an updated expert report of Mr Colin Johnson.|
|21 September 2018||The Parties filed simultaneous Reply Post-Hearing Briefs ("Reply PHB") with the accompanying exhibits and legal authorities together with their submissions on costs.|
|27 September 2018||The Parties were invited to consider the appointment of Ms Sukriti Slehria to replace Ms Wu as assistant to the President. By correspondence of 27 and 28 September 2018, the Parties confirmed that they did not object to the appointment, and Ms Slehria provided the Parties with her signed terms of reference and declaration of her independence and impartiality.|
|28 August 2019||The proceeding was declared closed.|
Tr. Day 6 [1304:8-15].
subscribe to the shareholders' funds of IPTL and bound themselves not to sell, transfer or otherwise dispose the Shareholders' Funds and undertook, inter alia, not to take any action in furtherance of the winding up, liquidation or dissolution of IPTL.
(1) A declaration that the United Republic of Tanzania has breached Articles 16.1 and 16.2 of the Implementation Agreement.
(2) An order that the United Republic of Tanzania shall pay SCB HK compensation for its breaches of the Implementation Agreement in an amount to be determined by the Tribunal.
(3) An order that the United Republic of Tanzania pay the cost of these arbitration proceedings, including the fees and expenses of the Tribunal and costs of legal representation and interest thereon.
i. a declaration that the United Republic of Tanzania has breached Articles 15.3, 16.1 and 16.2 of the Implementation Agreement;
ii. a declaration that, as a result of the United Republic of Tanzania's breaches of the Implementation Agreement, SCB HK is entitled to damages of US$352,514,258, or such other amount as shall be determined by the Tribunal;
iii. a declaration that the Implementation Agreement terminated on 6 July 2018 pursuant to SCB HK's Termination Notice;
iv. a declaration that, as a consequence of that termination, SCB HK is entitled to compensation calculated pursuant to Row 2 of Schedule 2 of the Implementation Agreement, together with a declaration of the amount of compensation thereby due to SCB HK;
v. in the alternative to the relief claimed at points ii and iv above, a declaration that the damages and/or compensation due to SCB HK is greater than the amount outstanding under the Facility Agreement;
vi. an order that, out of the sums declared due under points ii, iv, and/or
v above, the United Republic of Tanzania shall pay SCB HK the sum calculated by SCB HK as necessary to pay off the amount due under the Facility Agreement, which as at the date of these Post-Hearing Submissions is US$187,269,605; and
vii. an order that, to the extent not covered by the relief granted under point vi above, the United Republic of Tanzania pay the cost of these arbitration proceedings, including the fees and expenses of the Tribunal and costs of the parties' legal representation and interest thereon.
(i) decline to exercise jurisdiction in the present case;
(ii) to the extent that the Tribunal proceeds to examine the merits of the case, dismiss Claimant's claims in their entirety;
(iii) declare that Respondent owes no damages or compensation to Claimant; and
(iv) order Claimant to pay the totality of costs relating to this Arbitration.
No assignment or transfer by a Party of this Agreement or such Party's rights or obligations hereunder shall be effective without the prior written consent of the other Party.
15.2 Creation of Security
(a) Notwithstanding the provisions of Article 15.1, for the purpose of financing the construction and operation of the Facility, the Company may, upon prior written approval of the GOT, whose consent shall not be unreasonably withheld, assign or create a security interest to the Lenders pursuant to the Financing Documents in, its rights and interests under or pursuant to:
(i) this Agreement;
(ii) any agreement included within the Security Package;
(iii) the Facility;
(iv) the Site;
(v) the movable property and intellectual property of the Company;
(vi) the revenues or any of the rights or assets of the Company.
i. On 11 January 1999, the Sime International underwent a name change to Danaharta Managers (L) Ltd.146
ii. On 30 June 1999, pursuant to the Order of the High Court of Malaya at Kuala Lumpur, Malaysia,147 the entire banking business of Sime Bank Berhard, in Malaysia, Brunei, Thailand, Singapore and other countries, pursuant to a merger agreement between Sime Bank Berhad and RHB Bank Berhad ("RHB Bank"), was transferred to RHB Bank. The order has the effect of transferring the rights under the Implementation Agreement, and the office of Security Agent (then Sime Singapore), to RHB Bank.
iii. On 3 September 1999, pursuant to the Order of the High Court of Malaya at Kuala Lumpur, Malaysia,148 the court approved a scheme of transfer, under which certain assets and liabilities of BBMB, its shares in subsidiaries and associated companies (other than its Islamic banking business) were transferred to the Bank of Commerce (M) Berhad ("BOC") such that any BBMB instrument shall be construed as and have effect as if for any reference therein to BBMB there was substituted with a reference to BOC.
iv. By Novation Notice,149 signed by Danaharta and BBMB International on 1 September 1999, and by BBMB as Facility Agent on 15 September 1999, BBMB International’s interest in the Facility Agreement was novated to Danaharta.150
v. On 30 September 1999, BOC was renamed as Bumiputra-Commerce Bank Berhad ("Bumiputra-Commerce").151
vi. By Novation Notice signed by Danaharta (as New Bank) on 11 July 2001, and by RHB Bank (Singapore Branch) as existing bank and by Bumiputra-Commerce as Facility Agent on 16 July 2001,152 the interest of RHB Bank in the Facility Agreement was confirmed as having been novated to Danaharta. RHB Bank (Singapore Branch) (Sime Singapore, renamed following the 29 June 1999 Order153) remained the Security Agent.154
i. Notice of Assignment dated 3 October 1997164 given by IPTL and Sime Bank Berhard
Singapore which was signed by the Ministry of Water, Energy and Minerals. In it GoT
"acknowledge[d] the receipt of the Notice of Assignment" and agreed -
"not [to] terminate the IMA [i.e. Implementation Agreement] except as provided in Article 19.4 of the IMA;"
"send to the Security Agent, a copy of any notice required to be given to IPTL pursuant to Articles 19.1 and 19.2 of the IMA."
ii. Letter from the Minister of Finance dated 13 October 1997165 addressed to IPTL and copied to the Prime Minister, Minister of Energy and Minerals, Minister-Planning, Attorney-General, Chief Secretary, and MD TANESCO expressing that -
a) "In accordance with Article 15.2 of the Implementation Agreement, all relevant authorities will agree to the execution of the assignments of the Implementation Agreement, the Power Purchase Agreement, the Licence and consents relating to the Project."
b) "Unless you have been notified in writing by us to the contrary, all Project agreements, approvals, licences and consents executed between the Government and IPTL or granted to IPTL remain in full force and effect."
iii. Diplomatic Note dated 28 October 1997166 from the Tanzanian Ministry of Foreign Affairs to the Malaysian Ministry of Foreign Affairs re-affirming GoT’s position set out in (ii)(a) and (b) above.
(A) Each Bank may at any time and from time to time assign all or any part of its rights and benefits in respect of the Facility to any one or more banks or other financial institutions (an "Assignee"), provided that any such assignment may only be effected if [...] the prior written consent thereto of the Borrower shall have been obtained (such consent not to be unreasonably withheld and to be deemed to have been given if no reply is received from the Borrower wi thin fifteen days after the giving of a request for consent by a Bank) [...].171
i. the purpose for which an assignment is to be allowed as - "financing the construction and operation of the Facility";
ii. the permissible assignees: the "Lenders pursuant to the Financing Documents"; and
iii. the party required to seek consent: "the Company" (viz. IPTL was to be the borrower under the Financing Documents).
3.2 Assignments: The Borrower [IPTL] with full title guarantee and as continuing security for the payment and discharge of all Liabilities hereby assigns to the Security Agent [now SCB HK] for the benefit of the Secured Creditors:
3.2.1 all its present and future right, title and interest in and to the Assigned Contracts, including all moneys which at any time may be or become payable to the Borrower pursuant thereto and the net proceeds of any claims, awards and judgements which may at any time be receivable or received by the Borrower pursuant thereto; [...]
Any absolute assignment, by writing under the hand of the assignor (not purporting to be by way of charge only), of any debt or other legal chose in action, of which express notice in writing shall have been given to the debtor, trustee, or other person from whom the assignor would have been entitled to receive or claim such debt or chose in action, shall be, and be deemed to have been effectual in law (subject to all equities which would have been entitled to priority over the right of the assignee if this Act had not passed,) to pass and transfer the legal right to such debt or chose in action from the date of such notice, and all legal and other remedies for the same, and the power to give a good discharge for the same, without the concurrence of the assignor: Provided always, that if the debtor, trustee, or other person liable in respect of such debt or chose in action shall have had notice that such assignment is disputed by the assignor or any one claiming under him, or of any other opposing or conflicting claims to such debt or chose in action, he shall be entitled, if he think fit, to call upon the several persons making claim thereto to interplead concerning the same, or he may, if he think fit, pay the same into the High Court of Justice under and in conformity with the provisions of the Acts for the relief of trustees.
1.1 "Assigned Contracts" means the EPC Contract, the EPC Performance Bond, the O&M Contract, the O&M (Sub) Guarantee, the FSA, the FSA Performance Bond, the IMA, the PPA and all Consents and the Licence.
3.1 Charging Provision: The Borrower with full title guarantee and as continuing security for the payment and discharge of all Liabilities hereby charges in favour of the Security Agent for the benefit of the Secured Creditors:
3.1.1 by way of mortgage of the right of occupancy [...] the Real Property in Tanzania now belonging to it;
3.1.2 by way of first fixed equitable charge, all Real Property now belonging to it [...] and all Real Property acquired by it after the date of this Security Deed.
3.1.3 by way of first fixed charge:
(i) all Book Debts;
(ii) all its present and future Permitted Investments, Rights attaching or relating to Permitted Investments and all Assets hereafter belonging to the Borrower and deriving from Permitted Investments or such Rights;
(iii) all its present and future goodwill and uncalled capital for the time being;
(iv) all its present and future Intellectual Property and the benefit of all present and future licences and sub-licences of Intellectual Property granted either by or to it;
3.1.4 by way of first floating charge, its undertaking and all its Assets, both present and future (including Assets expressed to be charged by paragraphs 3.1.1 to 3.1.3 above).
3.2 Assignments: The Borrower with full title guarantee and as continuing security for the payment and discharge of all Liabilities hereby assigns to the Security Agent for the benefit of the Secured Creditors:
3.2.1 all its present and future right, title and interest in and to the Assigned Contracts, including all moneys which at any time may be or become payable to the Borrower pursuant thereto and the net proceeds of any claims, awards and judgements which may at any time be receivable or received by the Borrower pursuant thereto;
3.2.2. all its present and future right, title and interest in and to all insurances and all proceeds in respect of Insurances and all benefits thereof (including all claims of whatsoever nature relating thereto and returns of premiums in respect thereof);
3.2.3. all its present and future Rights in relation to its Real Property (except those charged by Clauses 3.1.1), including all Rights against all past, present and future undertenants of its Real Property and their respective guarantors and/or sureties; and
3.2.4. all its present and future Right, title and interest in and to the Bank Accounts.
3.3 Ranking: The floating Charge created by Clause 3.1.4 shall rank behind all the fixed Charges created by or pursuant to this Security Deed but shall rank in priority to any other security hereafter created by the Borrower except for security permitted by Clause 4.2 and except for security ranking in priority in accordance with Clause 9.3.5.
4.1(3) Notwithstanding any other provision hereof the Security Agent shall not by virtue of the Security created by or pursuant to this Security Deed be or become obliged or liable under or in respect of the Secured Property or any part thereof:
(a) to perform or observe any of the obligations of the Borrower hereunder;
(b) to make any payment or any enquiry in connection therewith; or
(c) to present or file any claim or take any other action to collect or enforce any payment due to the Borrower or, by virtue, of the Security created by or pursuant to this Security Deed, to the Security Agent.
[T]he notice in writing of the assignment is an essential part of the transfer of title to the debt, and, as such, the requirements of [Section 136 of] the [Law of Property] Act  must be strictly complied with, and the notice itself, I think, must be strictly accurate - accurate in particular in regard to the date which is given for the assignment; and even though it is only one day out, as in this case, the notice of assignment is bad.
SCB HK has also been assigned the Implementation Agreement dated 8 June 1995 (the "Implementation Agreement") entered into between IPTL and the Government of Tanzania ("GOT").
By a Security Deed dated 28 June 1997, IPTL assigned all of its present and future right, title and interest in and to the Implementation Agreement to the Security Agent in connection with a US$ 105,000,000 Loan Facility Agreement provided to IPTL by a consortium of foreign lenders. The GoT was given notice of the assignment on 3 October 1997, which the GoT acknowledged. Standard Chartered Bank (Hong Kong) Limited ("SCB HK") is now the Security Agent, having acquired the loan (and related security) from the previous lenders in 2005. SCB HK is therefore entitled (as assignee) to exercise all rights and remedies granted to IPTL under the Implementation Agreement.
[...] in its capacity as Security Agent under the Facility Agreement (the "Security Agen t") which expression includes any successor appointed as Security Agent.209
i. the Notice of Assignment of 3 October 1997213 was sufficient notice to GoT of the assignment by IPTL of the Implementation Agreement to the lenders and the Security Agent;
ii. the subsequent notices of SCB HK on 17 December 2009214 and 3 December 2013215 to GoT were sufficient to inform GoT of the Claimant's interest as sole lender and Security Agent referred to under the Implementation Agreement; and
iii. the assignment made under Clause 3.2.1 of the Security Deed is in the nature of an absolute assignment and not by way of a charge, compliant with the Section 25(6) of the Judicature Act 1873.
(1) Subject to the provisions of this Part of this Act, every charge created after the fixed date by a company registered in Tanzania and being a charge to which this section applies shall, so far as any security on the company's property or undertaking is conferred thereby, be void against the liquidator and any creditor of the company, unless the prescribed particulars of the charge, together with the instrument, if any, by which the charge is created or evidenced, or a copy thereof verified in the prescribed manner are delivered to or received by the Registrar for registration in manner required by this Act within forty two days after date of its creation, but without prejudice to any contract or obligation for repayment of the money thereby secured, and when a charge becomes void under this section the money secured thereby shall immediately become payable.
(2) This section applies to the following charges -
(a) a charge for the purpose of securing any issue of debentures;
(b) a charge on uncalled share capital of the company;
(c) a charge created or evidenced by an instrument which, if executed by an individual, would require registration as a bill of sale;
(d) a charge on immovable property wherever situate, or any interest therein;
(e) a charge on book debts of the company;
(f) a floating charge on the undertaking or property of the company;
(g) a charge on calls made but not paid;
(h) a charge on a ship or any share in a ship;
(i) a charge on goodwill, a patent or a licence under a pate nt, on a trademark or on a copyright or a licence under a copyright. [...]216
i. Article V : The "exclusive right to design, finance, insure, construct, complete, own, operate, and maintain the Facility in accordance with the terms and conditions contained in this Agreement and the Laws of Tanzania".
ii. Article VII : Support of GoT to:
a) obtain consents from regulatory agencies;
b) use its good offices to support IPTL’s performance of its obligations;
c) attach non-discriminatory terms and conditions to the issuance or renewal of any of the Consents as are in accordance with the Laws of Tanzania;
d) take actions as are reasonable and appropriate under the circumstances to ensure that IPTL receives the fiscal incentives, concessions, financial arrangements, and any other benefits provided under the "Policy Framework".
iii. Article IX (9.7) : Avoiding "Double Jeopardy" - "Settlement or waiver in writing by TANESCO of any dispute or breach under the Power Purchase Agreement shall be binding on the GOT with respect to the identical issue or claim."
iv. Article XI : Assistance with immigration controls.
v. Article XIII : Entitlement for imports and exports of items needed.
vi. Article XIV : Consent to open and operate Foreign Currency Accounts.
vii. Article XVI : Assurances against discriminatory actions, expropriation, compulsory acquisition and nationalisation of capital or assets of IPTL.
viii. Article XVII (17.7) : Special compensation for Force Majeure events.
ix. Article XVIII : Tax exemptions.
x. Article XXII and Schedule 1 : Undertaking to Guarantee.
xi. Article XXIV (24.10) : "Most Favoured Nation" treatment.
172. Avoidance of dispositions of property, etc., after commencement of winding up
In a winding up by the court, any disposition of the property of the company, including actionable claims, and any transfer of shares, or alteration in the status of the members of the company, made after the commencement of the winding up, shall, unless the court otherwise orders, be void.
174. Commencement of winding up by the court
(1) Where before the presentation of a petition for the winding up of a company by the court a resolution has been passed by the company for voluntary winding up, the winding up of the company shall be deemed to have commenced at the time of the passing of the resolution, and unless the court, on proof of fraud or mistake, thinks fit otherwise to direct, all proceedings taken in the voluntary winding up shall be deemed to have been validly taken.
(2) In any other case, the winding up of a company by the court shall be deemed to commence at the time of the presentation of the petition for the winding up.
66[...] an important element in determining whether a dispute qualifies as an investment under the Convention in any given case is the specific consent given by the Parties. The Parties' acceptance of the Centre's jurisdiction with respect to the rights and obligations arising out of their agreement therefore creates a strong presumption that they considered their transaction to be an investment within the meaning of the ICSID Convention.
67. The Tribunal must accordingly attach considerable significance to the reference made in Article 7 of the Consolidation Agreement to the BIT and thus to the ICSID arbitration clause contained therein (Article 8). The Parties' acceptance of the relevance and applicability of the BIT to the Consolidation Agreement expresses their view that the latter transaction relates to an investment within the meaning of the BIT. The contrary conclusion would deprive the reference to the BIT in Article 7 of the Consolidation Agreement of its meaning or effet utile.
25. While consent of the parties is an essential prerequisite for the jurisdiction of the Centre, consent alone will not suffice to bring a dispute within its jurisdiction. In keeping with the purpose of the Convention, the jurisdiction of the Centre is further limited by reference to the nature of the dispute and the parties thereto.
- In Abaclat and others v Argentina, the tribunal declined to follow the Salini Test and suggested that it should "[...] not serve to create a limit, which the Convention itself nor the Contracting Parties to a specific BIT intended to create. "283
- In Biwater Gauff v Tanzania, the tribunal remarked that "These criteria are not fixed or mandatory as a matter of law. They do not appear in the ICSID Convention [...] it is doubtful that arbitral tribunals sitting in individual cases should impose one such definition [...]."284
- In Philip Morris Brand Sàrl and others v Oriental Republic of Uruguay, the tribunal said, "These criteria should not play a role in the Tribunal's analysis of whether an investment exists, much less to serve as a jurisdictional requirement. "285
- In MNSS B.V. and Recupero Credito Acciaio N.V. v Montenegro ("MNSS B.V. v Montenegro"), the tribunal more generously suggested that the "[...] elements of the Salini test need to be considered flexibly and as a whole in the context of the specific facts of an investment operation."286
Nature of Dispute
26. Article 25(1) requires that the dispute must be a "legal dispute arising directly out of an investment." The expression "legal dispute" has been used to make clear that while conflicts of rights are within the jurisdiction of the Centre, mere conflicts of interests are not. The dispute must concern the existence or scope of a legal right or obligation, or the nature or extent of the reparation to be made for breach of a legal obligation.
27. No attempt was made to define the term "investment" given the essential requirement of consent by the parties, and the mechanism through which Contracting States can make known in advance, if they so desire, the classes of disputes which th ey would or would not consider submitting to the Centre (Article 25(4)).289
i. IPTL’s investment in the Facility;
ii. the Claimant’s loan to IPTL to finance the construction of the Facility;
iii. IPTL’s shares, over which the Claimant has exercised its right under the Charge of Shares to appoint a receiver; and
iv. the contractual rights under the Implementation Agreement, the PPA and other agreements assigned by IPTL to its lenders as security for the loan.291
i. the Claimant was not the original Lender under the Financing Documents and the Implementation Agreement;
ii. the purchase of the Loan by the Claimant was not an investment; and therefore
iii. the assignment of any security created, including the rights under the Implementation Agreement could not be pursued by an ICSID arbitration.
229. All economic activity entails a certain degree of risk. As such, all contracts - including contracts that do not constitute an investment -carry the risk of non-performance. However, this kind of risk is pure commercial, counterparty risk, or, otherwise stated, the risk of doing business generally. It is therefore not an element that is useful for the purpose of distinguishing between an investment and a commercial transaction.
230. An "investment risk" entails a different kind of alea, a situation in which the investor cannot be sure of a return on his investment, and may not know the amount he will end up spending, even if all relevant counterparties discharge their contractual obligations. Where there is "risk" of this so rt, the investor simply cannot predict the outcome of the transaction.
5. Assumption of Obligations
To the extent that the Vendor shall have obligations remaining to be performed under the Asset Documentation after the Closing Date as disclosed in writing by the Vendor or as contained and disclosed in the Accounts Information relating to the Sale Asset and/or to the extent there are any claims against and/or liabilities on the part of the Vendor in respect of or in connection with the Sale Assets on or after the Closing Date, the Purchaser hereby agrees to perform all such obligations and will indemnify the Vendor and each of their officers, directors, employees and advisors ("a Vendor Party") and hold each of them harmless from and against any liability to or claim of liability by any third part y o n account of the failure of such obligations to be performed.332
20. During the negotiations for the Emergency Power Supply Project which were held with the World Bank in April-May, 2004, the Tanzania delegation to those negotiations formally requested the World Bank's assistance in buying out or otherwise dealing with IPTL's lenders and shareholders so that the burden of the project's capacity charges can be reduced. The World Bank ruled out the possibility of providing funds with which the Government could purchase the IPTL plant, but undertook to look into whether it could identify risk mitigation arrangements and funding sources which could help address the problem. The World Bank undertook to discuss w ith its affiliates MIGA and IFC to this end, and revert to the Government.337
19. Standard Bank has suggested that the Government allows the re-financing of IPTL's debt to proceed as a first step. After a few years, when (i) TANESCO's ability to pay both IPTL and Songas has been demonstrated and (ii) the IPTL shareholders' respective rights have been confirmed by the courts, perceived risks about IPTL will diminish and it may be possible to do another re-financing as a second step which would result in a more significant reduction in the capacity charge. It is evident that the perceived risks currently surrounding IPTL are a hindrance to negotiating a meaningful reduction in the capacity charge.
26. [...] (ii) The Ministry should respond positively to Standard Bank's proposals for re-financing IPTL in two phases (as described in paragraph 19 above) but (a) seek more time to contact the Malaysian government and (b) require the re-financing arrangements to anticipate a second phase which may involve the purchase of the IPTL plant and the possible par tici pation of other financiers including the World Bank or its affiliates.338
From the negotiation with Sethi, SCB has signed a Memorandum of Agreement (MOA) on 24 November, on a non-binding basis and subject to credit approval to pencil down a proposal for a one-off payment of US$75m for the Bank to exit the loan [...]. SCB will then withdraw international arbitrations against GOT and TANESCO. The Bank has been advised the MOA has shown to GOT and the Attorney General by Sethi to request time for finalizing settlement, instead of liquidating IPTL.
Regarding to settlement risk, it is uncertain to access the availability of the escrow amount of US$85m, otherwise, how GOT secure sufficient funding for settlement. Local contacts advise T AN ESCO may inject more to top up escrow funds for a global settlement.342
Hence, investments not devoted to productive purposes, such as those undertaken for speculative purposes and those that do not develop the productive resources of the host State without positive impact on the productivity or increase the standards of living or lab or c onditions, could be considered to be beyond the outer limits of ICSID.343
... If for any reason the Dispute cannot be settled in accordance with the ICSID Rules, whether if the GOT fails to implement the Convention, or if the Company should not be agreed to be a foreign controlled entity, or if the request for arbitration proceedings is not registered by the Centre, or if the Centre fails or refuses to take jurisdiction over such Dispute, or otherwise, any Dispute shall be finally settled by arbitration under the Rules of Arbitration of the International Chamber of Commerce (the "ICC Rules") by one or more arbitrators appointed in accordance with the ICC Rules.
16.1 Assurance Against Discriminatory Action
The GOT shall not take any discriminatory action which materially and adversely affects the Project or the performance of the Company's obligations or the enjoyment of its rights or the interests of the Investors under the Security Package or expropriate or, except as hereinafter provided, acquire the Facility or the Company, whether in whole or in part. Nothing in the foregoing shall apply to any actions taken by the GOT, TANESCO, or any Governmental Authority pursuant to their respective rights and obligations arising under this Agreement, the Power Purchase Agr eement and the other documents comprising the Security Package.352
16.2 Acquisition of Shares or Assets
Subject to Article 20.1, the GOT undertakes to the Company that neither it nor TANESCO or any Governmental Authority will expropriate, compulsorily acquire, nationalise, or otherwise compul sor ily procure any Ordinary Share Capital or assets of the Company [...].353
i. National Investment (Promotion and Protection) Act, 1990, Section 28:
28.-(I) No approved enterprise, or any property belonging to any person shall be compulsorily taken Possession of, and no interest in a right over such enterprise or property shall be compulso rily acquired except for public interest and after due process of the law.370
ii. The Tanzania Investment Act, 1997, Section 22:371
22(1) [...] (a) no business enterprise shall be nationalised or expropriated by the Government, and
(b) no person who owns, whether wholly or in part, the capital of any business enterprise shall be compelled by law to cede his interest in the capital to any other person.
(2) There shall not be any acquisition, whether wholly or in part of a business enterprise to which this Act applies by the State unless the acquisition is under the due process of law which makes provision for -
(a) payment of fair adequate and prompt compensation [...]
(1) Every person is entitled to own property, and has a right to the protection of his property held in accordance with the law.
(2) Subject to the provisions of subarticle (1), it shall be unlawful for any person to be deprived of his property for the purposes of nationalization or any other purposes without the authori ty of law which makes provision for fair and adequate compensation.385
"TANESCO", or "any Governmental Authority", The term "Governmental Authority"391 is defined as -
Any state, municipal or local government or regulatory department, body, political subdivision, commission, instrumentality, agency, ministry, court, judicial or administrative body, taxing authority or other relevant authority having jurisdiction over either Party, the Facility.
ii. the Tanzanian courts (particularly the actions of Utamwa J in handing down the Utamwa J Order);
iii. the provisional liquidators appointed over IPTL and the Administrator General;
v. the Minister of Energy and Minerals and the PS MEM;
vi. the Attorney General; and
vii. the Bank of Tanzania.
i. TANESCO's failure to make payments to IPTL or SCB HK under the PPA;
ii. the steps taken to frustrate the Interpretation Proceedings by TANESCO, the Tanzanian courts and the First PL;
iii. the First PL's failure, in breach of his duty to preserve and protect IPTL's assets, to take any steps to enforce TANESCO’s obligation to pay the tariff under the PPA;
iv. the steps taken by TANESCO, the Second PL and the Tanzanian courts to frustrate the PPA Arbitration;
v. the Second PL and Administrator General's countersignature of the VIP-PAP-SPA which purported, wrongly, to recognise PAP as owner of Mechmar's shares in IPTL;
vi. the Utamwa J Order;395
vii. the actions of TANESCO, the Minister of Energy, the PS MEM, the Attorney General and the Bank of Tanzania in the period September to December 2013 facilitating the release of the Escrow Account funds to PAP; and
viii. the Minister of Energy and the PS MEM's refusal to consider the evidence submitted by SCB HK, following the Utamwa J Order, concerning its rights over IPTL's Ordinary Share Capital. This was followed by BRELA's subsequent registration of PAP as the owner of all of the shares in IPTL, which constitutes an expropriation of IPTL's Ordinary Share Capital.
IPTL's rights under the PPA : payments under the PPA were delayed by TANESCO's decision to dispute invoices issued by IPTL. This decision was justified by IPTL overcharging TANESCO, as eventually recognised by the PPA Tribunal. In not pursuing the Interpretation Proceedings (which were eventually withdrawn by Mechmar) the first provisional liquidator of IPTL, Mr Rugonzibwa (even assuming that he may be considered a Government official in his function as provisional liquidator, which is denied), exercised his discretion as granted to him by the law. In any case, TANESCO and IPTL eventually reached an agreement to end the Tariff Dispute and restore payments to IPTL, which now renders Claimant's complaint in this respect moot and untimely.
The Ordinary Share Capital of IPTL : This was transferred by Mechmar and VIP, the original shareholders of IPTL, to PAP. To the extent that said transfers violated SCB HK's rights as a secured creditor, VIP and Mechmar are the entities responsible for said violation. To the extent that the Utamwa J Order recognised said transfers, SCB HK did not take the necessary actions to counter said finding or to have its rights otherwise judicially recognised in Tanzania and is thus now barred from bringing a claim of expropriation by the judiciary. Furthermore, Claimant cannot complain about Mr Saliboko, the second provisional liquidator of IPTL (assuming that he may be considered a Government official in his function as provisional liquidator, which is denied) countersigning the VIP/PAP SPA as Mr Saliboko was entitled to have doubts on SCB HK's standing as a secured creditor, given that the PwC Report noted that the Security Deed had not been registered or stamped at BRELA. In any case, as provisional liquidator, Mr Saliboko's actions were subject to the scrutiny of the High Court of Tanzania, before which Claimant failed to adequately challenge them. Finally, Claimant can neither complain about Government officials or BRELA recognising the transfer of the Ordinary Share Capital of IPTL as they could not reverse the findings of the judiciary made through the Utamwa J Order.
The Facility : The same considerations made with respect to the Utamwa J Order in relation to the transfer of the Ordinary Share Capital of IPTL apply to the transfer of the Facility to PAP.
IPTL's interest in the Escrow Account and top-up payments : further to the Utamwa J Order transferring the affairs of IPTL to PAP and to TANESCO and IPTL reaching an agreement for the release of the Escrow Account funds, the Government could not refuse to transfer said funds to IPTL. While the Escrow Agreement expressly prohibits payments being made to creditors of IPTL (such as SCB HK) - and contains no such prohibition with respect to shareholders or managers of IPTL - the Government released the funds on the basis of IPTL's instructions. The Government played no role with respect to the top-up payments, which were agreed exclusively between TANESCO and IPTL in October 201 3 and were directly paid by TANESCO to IPTL in the years thereafter.396
[...] It will be unfair to determine the petition to wind up IPTL before its applications for stay is determined. However, due to intervening factors since March, 2002 to date, a decisions on application for stay may not serve any useful purpose [...] And as correctly stated by the applicant the application for stay of proceedings has been overtaken by events and is now redundant. It has become obsolete; it does not serve any useful purpose. In the circumstances, the application for stay of proceedings pending arbitration is accordingly dismissed. [...].
On the degree of urgency; its relevancy here cannot be overstated because the oppressive acts, fraud, etc of Mechmar against VIP has been in a continuous process since 2001; that is, for a period of over seven years […]
The need for the appointment of a Provisional Liquidator pending winding up has in no doubt been adequately established by VIP through the affidavits of J ames Burchard Rugemalira filed on 25.2.2002 and 24.9.2003. [...].408
But what has taxed my mind a great deal is whether my granting of the prayer for appointing an administrator has the effect of torpedoing, cancel[l]ing or over ruling my sister Judge which powers I do not have. I am aware that Oriyo, J. was seeking to protect the assets of the Company without more. An application like the present one was not before the court then. After giving the question serious thought, in my considered opinion, this court has if it grants the application, an opportunity to take matters further in a positive way, by rescuing the company. Under the provisions of section 250 of the Act, an administration order protects a company from its creditors and also protects the creditors. [...]
I am persuaded that the powers as provided are far more than those of a provisional liquidator and are capable of rescuing the company and protecting the creditors. This means the 100mw the company is capable of ge ner ating, and was actually generating, will not go down the drain.415
See: https://icsid.worldbank.org/en/Pages/cases/casedetail.aspx?CaseNo=ARB/98/8 (as last accessed on 27 June 2019).
HB/H/145/2091-2093 at pg. 2093: Letter from ICSID to IPTL and Tanesco, 8 July 2010.
HB/H/146/2094: Letter from Hunton & Williams to ICSID, 13 July 2010.
On 3rd February, 2009, SCBHK exercised its lien over the Company's shares in IPTL and appointed a Receiver & Manager over these said shares. As such, the Company also lost control to govern the on-going legal proceedings against TANESCO a nd the Government of Tanzania in the capacity of a shareholder of IPTL.444
Mechmar Corp will take such steps and execute such documents or may be required to assuage the concerns of the Government of Tanzania in relation to claims of other parties. Mechmar Corp will also give an irrevocable undertaking to co-operate and assist the Government of Tanzania as well as TANESCO in resist ing and defending against any such claims and to assert its own claims.450
(t) PAP has represented and warranted to VIP that it indirectly bought MECHM[A]R's Shares in IPTL from PIPER LINKS INVESTMENTS LIMITED as a bonafide purchaser since the year 2011 and that transaction was not only sanctioned but validated by MECHMAR; and SCBHK being cognizant of that fact, several times signed Agreements with PAP (copies of which PAP exhibited to VIP) attempting to sell to PAP for US$75.0million the debt which SCBHK purports that it is owed by IPTL.471
i. Agreement for Sale of Shares between Piper Link and Mr Sethi dated 21 October 2010;474 and
ii. Deed of Assignment of Shares between Piper Link and PAP dated 21 October 2011.475
1. That this court marks the petition as duly withdrawn with no order as to costs.
2. That the appointment of the Provisional Liquidator be terminated.
3. That the Provisional Liquidator shall hand over all the affairs of IPTL including the IPTL Power Plant (the plant) to PAP, which has committed to pay off all legitimate Creditors of IPTL and to expand the plant capacity to about 500 MW and sale power to TANESCO at a Tariff of between Us Cents 6 and 8/Unit in the shortest possible time after taking over in the public interests.
4. That parties are free to commence new independent claims in any court with competent jurisdiction against any party should they fail to reach amicable settlement out of court on any issue which arose in IPTL.
5. That t he c ourt has taken judicial notice of the agreement between VIP and PAP.478
i. the decision to settle the Tariff Dispute was triggered by the Utamwa J Order;
ii. once the Tariff Dispute was settled, the relevant Governmental Authorities could not resist the release of the funds in the Escrow Account;480
iii. the Escrow funds were released to IPTL and it was for IPTL to repay creditors;481
iv. IPTL’s non-payment of SCB HK was beyond GoT’s control;482
v. it had been advised to satisfy itself that PAP had acquired Mechmar’s shares and was given an indemnity by IPTL against adverse claims;483
vi. the Attorney-General’s advice that "Any decision to release the Tegeta Escrow Account is safeguarded, protected and cushioned by the decision of the High Court (Utamwa, J)";484
vii. the funds from the Escrow Account were released to IPTL and therefore there could not be any expropriation; and
viii. the responsibility for the losses allegedly suffered by the Claimant lies with Mr Sethi who after receiving the funds failed to settle with SCB HK. Further, that Mr Sethi was not an agent of the GoT.485
i. PAP had yet to register its ownership of the VIP shares with BRELA, because PAP had yet to pay for the same in full;
ii. there was a potential claim by SCB HK;
iii. SCB HK was not a party to the "Compromise Agreement";495
iv. there were pending actions commenced by IPTL Administrator Receiver, Martha Renju in Commercial Case No. 123 of 20 1 3496 seeking declaration of SCB HK’s interest and injunction restraining releasing assets in the Escrow Account and seeking control of the IPTL Power plant;
v. SCB HK had no plausible claims;
vi. Martha Renju’s documents were executed outside Tanzania and would be inadmissible as evidence; and
vii. IPTL (Mr Sethi) had agreed to consider a 10-15% discount off TANESCO’s outstanding debts.
On the issue of indemnity against futuristic claims against the Government, I do earnestly think, that is farfetched and illusory. Talking about on-going wrangles, none of them will negate what has already been decided by the High Court (Utamwa J). I am thus of the firm view that the only issue of substance relates only to funds in 'permitted investment.' This is the issue given that TANESCO invoices and other claims are out of the way.
The government should not be seen to be waffling in implementing what the court decided. This decision saves wider public interests that the never-ending wrangles over funds in escrow account. Any decision to release the Tegeta Escrow Account is safeguarded, protected and cushioned by the decision of the High Court (Utamwa, J). There is no obstruction or injunction to deal with the account as of now.
The Government should use this golden opportunity to disentangle herself from unwarranted litigation. The High Court has given us a summons of relief. We should act now instead of acting as a devil's Advocate. Time is of essence.
|Be nef iciary Name:||INDEPENDENT POWER TANZANIA LIMITED C/O PAN AFRICA POWER SOLUTIONS (T) LIMITED|
|Bank Name:||UBL BANK (TANZANIA) LTD [...]|
The Government and the Escrow Agent being cautious of the pending and potential disputes against IPTL in connection with the escrow monies including the remnants of the Standard Chartered Hong Kong's claims pending in Courts, are minded to have the Government and the Escrow Agent indemnified by IPTL against all present and future claims, charges, actions, proceedings that may arise against or may be submitted to the Government consequent upon the release and payment of the funds in the Tegeta Escrow Account to IPTL.511
The GOT shall not take any discriminatory action which materially and adversely affects the Project or the performance of [IPTL's] obligations or the enjoyment of its rights or the interests of the Investors under the Security Package or expropriate or, except as hereinafter provided, acquire the Facility or [IPTL], whether in whole or in part. Nothing in the foregoing shall apply to any actions taken by the GOT, TANESCO, or any Governmental Authority pursuant to their respective rights and obligations arising under this Agreement, the Power Purchase Agreeme nt and the other documents comprising the Security Package.512
i. "favouring PAP and VIP (IPTL's minority shareholder)", which are "two Tanzanian entities [...] over Mechmar (IPTL's majority shareholder)" and the Claimant which was "(IPTL's lender and secured creditor)";513 and
ii. "favouring IPTL when it wrongly came into Tanzanian hands, while mistreating IPTL when it was legitimately owned/controlled by foreign entities".514
i. only IPTL can bring a claim under Article 16.1;
ii. any purported discriminatory action must be between companies with similar projects;
iii. the discriminatory action must issue from the "Government" and not any other "Governmental Authority";517
iv. a discriminatory intent is required, which is absent in the present case;518 and
v. there was no evidence that any of the alleged acts caused material and adverse effects on IPTL.
"Governmental Authority" : Any state, municipal or local government or regulatory department, body, political subdivision, commission, instrumentality, agency, ministry, court, judicial or administrative body, taxing authority or other relevant authority having jurisdiction over either Party, the Facility.
[I]n order to establish when a measure is discriminatory, there must be (i) an intentional treatment (ii) in favor of a national (iii) against a foreign investor, and (iv) that is not taken under similar circumstances against another national.
146. In the context of investment treaties, and the obligation thereunder not to discriminate against foreign investors, a measure is considered discriminatory if the intent of the mea sure is to discriminate or if the measure has a discriminatory effect.544
For reasons not on record it is apparent that the first and second respondents did not file any counter affidavits to oppose the petition for winding up IPTL. [...]
As stated earlier, the 1st and 2nd respondents do not have much by way of affidavits in reply/opposition; so their written submissions are limited to points of law. Otherwise they are mere statements from the bar. Since the respondents have not countered the affidavits in the petition by the applicant; those ave rme nts stand uncontroverted and are accordingly adopted by the court.553
On the degree of urgency; its relevancy here cannot be overstated because the oppressive acts, fraud, etc of Mechmar against VIP has been in a continuous process since 2001; that is, for a period of over seven years. […]
The need for the appointment of a Provisional Liquidator pending winding up has in no doubt been adequately established by VIP through the affidavits of James Burchard Rugemalira filed on 25.2.2002 and 24.9.2003. And on the basis of the said affidavits, both VIP and IPTL (the company) stand to suffer irretrievably if a Provisional Liquidator is not appointed. But for Mechmar; if the appointment of a Provisional Liquidator is not immediately made; it does not stand to suffer or lose anything except prolong the period of corpor ate waste, diversion of funds, conversion of ass[e]ts, fraud, deadlock etc.554
On the issue of public interest considerations; it calls for urgent action towards appointment of a Provisional Liquidator. It is intended to serve interests of groups like those doing bu sine ss with IPTL including TANESCO and the government of Tanzania.555
i. The Administrative Receiver of IPTL filed a plaint against IPTL before the High Court (Commercial Division) at Dar Es Salaam on 11 September 2013 in Original Commercial Case No. 124 of 2013 seeking inter alia a "perpetual injunction order restraining the Defendant [IPTL] [...] from preventing the Plaintiff [Administrative Receiver] from entering the Plant and exercising the lawful right to take possession and control of IPTL and its assets; [...]".575
ii. On 11 September 2013, the Administrative Receiver of IPTL filed for an ex parte interim injunction to restrain IPTL from "committing breach of contract by preventing the Applicant [Administrative Receiver] from taking possession of the power plant", pending determination of the permanent injunction application on an inter partes basis.576
iii. On 12 September 2013, the Claimant’s application for a Revision from the Proceedings, Ruling and Orders of Utamwa J’s earlier order of 24 April 2013, came up for hearing before the Court of Appeal. SCB HK attempted to bring to the court’s attention Utamwa J’s order of 5 September 2013 transferring the affairs of IPTL to Pan Africa Power Solutions (T) Limited. The Court of Appeal declined to consider the matter adding that:
[The] Court cannot on the basis of the Notice of Motion journey into what the applicant anticipates from subsequent decisions of the High Court [...] At any rate, we were not availed with any copy of the proceedings to see for ourselves what Utamwa, J. ordered in September, 2013.577
iv. On 6 September 2013, the Administrative Receiver of IPTL (Ms Martha Renju) filed a plaint against PAP, VIP and BoT before the High Court (Commercial Division) at Dar Es Salaam in Commercial Case No. 123 of 2013 seeking "inter alia a perpetual injunction order restraining the Defendants or any person under or acting pursuant to the Defendants order, control, or instructions whether as employee, agent or trustee from taking possession of, releasing, transferring or dealing with all or any of the proceeds of the Escrow Account [...]".578
v. On 6 September 2013, the Administrative Receiver of IPTL also filed a plaint against PAP, VIP and BoT before the High Court (Commercial Division) at Dar Es Salaam in Misc. Commercial Case No. 98 of 2013 (originating from Civil Case No. 123 of 2013) seeking inter alia an interim injunction to maintain 'status quo' and restrain VIP and PAP or any other person from taking possession or exercising control on the proceeds in the Escrow Account until the "hearing and final determination of the main suit".579
vi. On 4 November 2013, the liquidators of Mechmar applied to the Court of Appeal to quash Utamwa J’s order of 5 September 20 1 3.580 This application was filed before the funds in the Escrow Account were transferred out. The appeal remains unheard.
In the event TANESCO fails to provide the security for payment required by Article 6.6 of the Power Purchase Agreement, the GOT shall within 10 Days after receipt of a notice from the Company to GOT, that states that TANESCO have [sic] failed to provide the security for payment required by Article 6.6 of the Power Purchase Agreement, provide directly to the Company [IPTL] the security for payment on the same terms and conditions as required under the Power Purchase Agreement[...].
19.1 Termination for Default [...]
(b) Termination by the Company
Each of the following events shall be an event of default by the GOT (each a "GOT Event of Default"), which, if not cured within the time period permitted (if any) to cure shall give rise to the right on the part of the Company to terminate this Agreement pursuant to Article 19.2; provided, however, that no such event shall be an Event of Default by the GOT (aa) if it results from a breach by the Company of the Power Agreement or this Agreement or; (bb) if it occurs as a result of a Force Majeure Event during the period provided pursuant to Article 17.4:
(i) The expropriation, compulsory acquisition, or nationalization by the GOT or any Governmental Authority of (i) any Ordinary Share Capital, or (ii) any material asset or right of the Company (except as contemplated by the Security Package);
(vi) Any material breach by the GOT of this Agreement that is not remedied within ninety (90) Days after notice from the Company to the GOT stating that a material breach of the Agreement has occurred that could result in the termination of this Agreement, identifying the material breach in reasonable detail, and demanding remedy thereof;
(vii) Any material breach by TANESCO of the Power Purchase Agreement including but not limited to the failure by TANESCO to provide the security for payment required by Article 6.6 of the Power Purchase Agreement, that is not remedied within thirty (30) Days after the receipt of a notice from the Company to TANESCO that states that a material breach of the applicable agreement has occurred that could result in the termination of that agreement, identifies the breach in reasonable detail, and demands remedy thereof or the failure of the GOT to provide the security for payment required under Article 15.3 [...].
19.2 Termination Notices
(a) Upon the occurrence of a GOT Event of Default or a Company Event of Default, as the case may be, that is not cured within the applicable period (if any) for cure, the non-defaulting Party may, at its option, initiate termination of this Agreement by delivering a notice (a "Notice of Intent to Terminate") of its intent to terminate this Agreement to the defaulting Party: The Notice of Intent to Terminate shall specify in reasonable detail the Company Event of Default or the GOT Event of Default, as the case may be, giving rise to such notice.
(b) Following the delivery of a Notice of Intent to Terminate, the Parties shall consult for a period of up to thirty (30) Days in case of a failure by either Party to make payments when due, and up-to sixty (60) Days with respect to any other Event of Default (or such longer period as the Parties may mutually agree), as to what steps shall be taken with a view to mitigating the consequences of the relevant Event of Default taking into account all the circumstances. During the period following the delivery of the Notice of the Intent to Terminate, the Party in default may continue to undertake efforts to cure the default, and if the default is cured at any time prior to the delivery of a Termination Notice in accordance with Article 19.2(c), then the non-defaulting Party shall have no right to terminate this Agreement in respect of such cured default.
(c) Upon expiration of the consultation period described in Article 19.2(b) and unless the Parties shall have otherwise agreed or unless the Event of Default giving rise to the Notice of Intent to Terminate shall have been remedied, the Party having given the Notice of Intent to Terminate may terminate this Agreement by delivering a Termination Notice to the other Party, whereupon this Agreement shall immediately terminate and Article XX shall apply.
20.1 Compensation Upon Termination [...]
b) GOT Event of Default
In the event the Company terminates this Agreement pursuant to Article 19.1(b) as a result of GOT Event of Default, the Company may elect to transfer the Facility to the GOT or its designee and, upon such transfer, the GOT or its designee shall pay the Company the compensation amount set forth in Row 2 of Schedule 2. [...]"
The Claimant summarised the various steps leading to its Termination Notice608 as follows:
|Event A :609 Expropriation of the Facility and of IPTL's shares by Governmental Authorities (Article19.1(b)(i))||• On 3 December 2013, the Claimant served a notice on the Respondent notifying it that the expropriation of the Facility and Mechmar's shareholding in IPTL amounted to a GoT Event of Default.610|
• On 5 February 2014, the Claimant served a notice on GoT notifying it that the 60-day consultation and remedy period had elapsed without the Respondent remedying the Event of Default and that the Claimant reserved its right to terminate the Implementation Agreement without further consultation.611
• As there is no cure period under Article 19.1(b)(i), the Claimant immediately issued Notice of Intention to Terminate under Article 19.2(a) of the Implementation Agreement, triggering a 60-day consolation and remedy period and reserved its right to terminate the Implementation Agreement should the Respondent not remedy its default within the 60 days.
• The Claimant in its Termination Notice gave notice of the exercise of its termination right pursuant to Article 19.2(c) based on this GoT Event of Default.612
|Event B : Material breach of the PPA by TANESCO in failing to pay undisputed sums (Article 19.1(b)(vii))||• On 3 December 2013, the Claimant notified the Respondent of the Event of Default that TANESCO had failed, despite the Claimant’s demands, to pay undisputed sums under the PPA, and of its failure to remedy the breach within 30 days of being notified. It also triggered a 60-day consolation period to remedy the Default pursuant to Article 16.2(b) of the Implementation Agreement.613|
• On 5 February 2014, the Claimant noted that the Respondent had failed to remedy its Event of Default and gave notice of Intent to Terminate under Article 19.2(a) of the Implementation Agreement based on the default.614
• On 9 April 2014, the Claimant notified the Respondent that the 60-day consultation and remedy period initiated by the Notice of Intention to Terminate was over.615
• The Claimant in its Termination Notice gave notice of the exercise of its termination right pursuant to Article 19.2(c) based on this GoT Event of Default.616
|Event C : Expropriation of the Facility and of Ordinary Share Capital of IPTL in material breach of Articles 16.1 and 16.2 of the Implementation Agreement by the GoT (Article 19.1(b)(vi))||• On 3 December 2013, the Claimant notified the GoT regarding this event of default.617|
• On 10 March 2014, the Claimant served a notice on the Respondent informing it that the material breaches of Article 16.1 and 16.2 had not been remedied within the 90-day period and gave Notice of Intention to Terminate triggering a 60-day consultation and remedy period.618
• On 1 June 2018, the Claimant notified the Respondent that the 60-day consultation and remedy period initiated by the Notice of Intention to Terminate was over and that it was entitled to terminate the Implementation Agreement under Article 19.2(c) and reserved its right to do so without further consultation.619
• The Claimant in its Termination Notice gave notice of the exercise of its termination right pursuant to Article 19.2(c) based on this GoT Event of Default.620
|Event D : Failure of GoT to provide security for TANESCO's payment obligations (Article 19.1(b)(vii))||• On 5 February 2014, the Claimant served a notice on the GoT notifying it that given the dissipation of the Escrow Account monies, TANESCO had failed to provide a security in accordance with Article 6.6 of the PPA.621|
• On 25 February 2014, the Claimant served a notice on the Respondent notifying it that it had failed to provide the "replacement security" under Article 15.3 of the Implementation Agreement, and that this constituted a GoT Event of Default, and gave Notice of Intention to Terminate under Article 19.2 (a) of the Implementation Agreement.622
• On 1 June 2018, the Claimant notified the Respondent that the 60-day consultation and remedy period initiated by the Notice of Intent to Terminate was over and that it was entitled to terminate the Implementation Agreement under Article 19.2(c) and reserved its right to do so without further consultation.623
• The Claimant in its Termination Notice gave notice of the exercise of its termination right pursuant to Article 19.2 (c) based on this GoT Event of Default.624
|Event E : Expropriation in relation to the Escrow Account (Article 19.1(b)(i))|
• On 5 February 2014 the Claimant notified the Respondent that it had failed to remedy this Event of Default due to expropriation relating to the Escrow Account. It also noted that there is no cure period under Article 19.1(b)(i) and gave Notice of Intention to Terminate under Article 19(2)(a) of the Implementation Agreement.625
|Event F : Dissipation of Escrow Account in material breach of Articles 16.1 and 16.2 of the Implementation Agreement by the GoT (Article 19.1(b)(vi))||• On 5 February 2014, the Claimant gave notice of an Event of Default under Article 19.1(b)(vi) of the Implementation Agreement due to the escrow monies being dissipated and demanded that the Respondent remedy the same within 90 days.|
• On 29 January 2018, the Claimant noted that the Respondent had failed to remedy its Event of Default and gave Notice of Intention to Terminate under Article 19.2(a) of the Implementation Agreement.627
• On 1 June 2018, the Claimant notified the Respondent that the 60-day consultation and remedy period intimated by the Notice of Intent to Terminate was over and that the default had not been remedied so the Claimant had the right to terminate the Implementation Agreement pursuant to Article 19.2(c) and expressly reserved the right to terminate the Implementation Agreement without further consultation.628
• The Claimant in its Termination Notice gave notice of the exercise of its termination right pursuant to Article 19.2(c) based on this GoT Event of Default.629
|Event G : Failure by TANESCO to provide replacement security in material breach of the PPA (Article 19.1(b)(vii))||• On 7 February 2014, the Claimant’s legal representatives wrote to the Respondent’s legal representatives noting the release of funds in the Escrow Account and asking TANESCO to provide replacement security within 30 days in accordance with Article 6.6 of the PPA. A copy was given to the Respondent.630|
• On 10 March 2014, the Claimant notified the Respondent of its the failure to replace the security in material breach of Article 6.6. and 6.8 of the PPA and that the default had not been remedied within 30 days of being notified of the same. The Claimant demanded that the respondent remedy the default within the 90-day cure period given to TANESCO under Article 16.2(c) of the PPA.631
• On 29 January 2018 the Claimant noted in its letter that the Respondent had not remedied the Event of Default and gave Notice of Intent to Terminate under Article 19.2(a) of the Implementation Agreement.632
• On 1 June 2018, the Claimant notified the Respondent that the 60-day consultation and remedy period initiated by the Notice of Intention to terminate was over and that the Respondent had not remedied the Event of Default, so the Claimant would be entitled to terminate the Implementation Agreement under Article 19.2(c) and expressly reserved its right to terminate the Implementation Agreement without further consultation.633
• The Claimant in its Termination Notice gave notice of the exercise of its termination right pursuant to Article 19.2(c) based on this GoT Event of Default.634
|Event H : Material breach of the PPA by TANESCO in failing to pay the amount under the PPA Award (Article 19.1(b)(vii))||• On 13 October 2017, the Claimant informed TANESCO that it had failed to pay the sums owed under the PPA (USD 163,384,358.40), thereby materially breaching the PPA, and asked TANESCO to remedy the same in 30 days. A copy was given to the Respondent.635|
• On 20 November 2017, the Claimant notified Respondent of this Event of Default due to TANESCO’s failure to pay the sums owed under the PPA in material breach of the PPA, and its failure to remedy this within 30 day of being notified, and gave a Notice of Intention to Terminate pursuant to Article 19.2(a) of the Implementation Agreement.636
• On 29 January 2018, the Claimant noted that the Respondent had not remedied the default and it also gave a Notice of Intention to Terminate under Article 19.2(a).637
• On 1 June 2018, the Claimant notified the Respondent that the 60-day consultation and remedy intimated by the Notice of Intention to Terminate was over and the default was not remedied so the Claimant would be entitled to terminate the Implementation Agreement under Article 19.2(c) and expressly reserved its right to terminate the Implementation Agreement without further consultation.638
• The Claimant in its Termination Notice gave notice of the exercise of its termination right pursuant to Article 19.2 (c) based on this GoT Event of Default.639
HB/J (Bundle J was submitted by the Claimant at the Hearing).
Numbering of the Events of Default adopted here are the same as in the Termination Notice at HB/J.
HB/J Tab 2/pg. 5; HB/H/352/4948-4953: Letter from SCB HK to Principal Secretary, Ministry of Water, Energy and Minerals, 3 December 2013.
HB/H/360/5116-5118: Letter from SCB HK to Principal Secretary, Ministry of Water, Energy and Minerals, 5 February 2014.
HB/ J/Tab 1, para. 6.
HB/H/352/4948-4953: Letter from SCB HK to Principal Secretary, Ministry of Water, Energy and Minerals, 3 December 2013.
HB/H/360/5116-5118: Letter from SCB HK to Principal Secretary, Ministry of Water, Energy and Minerals, 5 February 2014.
HB/J/Tab 2/pgs. 15-16: Schedule to Termination Notice titled "SCHEDULE - NOTICES IN RELATION TO IMPLEMENTATION AGREEMENT" ("Schedule"), paras. 4-6; HB/H/370/5304-5305: Letter from SCB HK to Principal Secretary, Ministry of Water, Energy and Minerals, 9 April 2014.
HB/J/ Tab 1, para. 10.
HB/H/352/4948-4953: Letter from SCB HK to Principal Secretary, Ministry of Water, Energy and Minerals, 3 December 2013.
HB/H/365/5125-5126: Letter from SCB HK to Principal Secretary, Ministry of Energy and Minerals, 10 March 2014.
HB/J/Tab 2/pgs. 24-25: Schedule, enclosing letter dated 1 June 2018.
HB/ J/Tab 1, para. 14.
HB/H/360/5116-5118: Letter from SCB HK to Principal Secretary, Ministry of Water, Energy and Minerals, 5 February 2014.
HB/J/Tab 2/pg. 12: Schedule, enclosing letter dated 25 February 2014.
HB/J/Tab 2/pg. 25: Schedule, enclosing letter dated 1 June 2018.
HB/ J/Tab 1, para. 18.
HB/J/Tab 1, para. 21.
HB/J/Tab 2/pg. 21: Schedule, enclosing letter dated 29 January 2018.
HB/J/Tab 2/pg. 25: Schedule, enclosing letter dated 1 June 2018.
HB/J/Tab 1, para. 25.
HB/J/Tab 2/pgs. 10-11: Schedule, enclosing letter dated 7 February 2014.
HB/J/Tab 2/pgs. 13-14: Schedule, enclosing letter dated 10 March 2014.
HB/J/Tab 2/pg. 22: Schedule, enclosing letter dated 29 January 2018.
HB/J/Tab 2/pgs. 25-26: Schedule, enclosing letter dated 1 June 2018.
HB/J/Tab 1, para. 30.
HB/J/Tab 2/pgs. 17-18: Schedule, enclosing letter dated 13 October 2017.
HB/J/Tab 2/pgs. 19-20: Schedule, enclosing letter dated 20 November 2017.
HB/J/Tab 2/pg. 22: Schedule, enclosing letter dated 29 January 2018.
HB/J/Tab 2/pg. 26: Schedule, enclosing letter dated 1 June 2018.
HB/J/Tab 1, para. 35.
In the event the Company terminates this Agreement pursuant to Article I9.1(b) as a result of GOT Event of Default, the Company may elect to transfer the Facility to the GOT or its designee and, upon such transfer, the GOT or its designee shall pay the Company the compensation amount set forth in Row 2 of Schedule 2.
In the event the GOT or TANESCO expropriate, compulsorily acquire, nationalise, or otherwise compulsorily procure any Ordinary Share capital or assets of the Company, the GOT shall pay the Company the compensation account set forth in Row 4 of the Compensation Table in schedule 2.
i. Damages of USD 176,291,811 for breach of the Implementation Agreement relating to the PPA tariff for the period up to September 2013: dissipation of the Escrow and failure to use the top-up payment to discharge IPTL’s debts.653
ii. Damages of USD 176,227,447 for breach of the Implementation Agreement in relation to losses arising from the transfer of IPTL’s affairs to PAP and relating to the period after September 2013 which includes:
a) Damages of USD 120,733,915 for October 2013 to 31 August 2018;654 and
b) Damages of USD 55,488,533 for 31 August 2018 to January 2022.655
i. Damage related to the amounts covered by the PPA Award (tariff payments for the period up to September 2013)-
a) by calculating the amount, including any interest earned, that would have been available in the Escrow Account as at September 2016 (PPA Award) and therefore available to satisfy the PPA Award and in turn reduce IPTL's debt to SCB HK, had the Escrow Account not been paid out to PAP in late 2013;
b) alternatively, on the assumption that the funds withdrawn from the Escrow Account in November and December 2013 (plus the top-up sum paid by TANESCO) should, having been withdrawn, have been paid to SCB HK in USD, and should have been used to reduce the amount outstanding under the SCB HK loan, to calculate the damage to IPTL as at 31 August 2018 resulting from the non-payment of these sums to SCB HK; and
c) alternatively, and assuming no payments before September 2016, to calculate the damage to IPTL as at 31 August 2018 from TANESCO's failure to pay the PPA Award as at September 2016.
ii. Damages incurred for the period October 2013 to January 2022-
a) Loss of capacity payments between October 2013 and 31 August 2018; and
b) Loss of capacity payments between 31 August 2018 and January 2022.
There is no issue raised as regard the amount in the Escrow Account when converted to USD in December 2013, it was USD 125,719,064. Reference to the Johnson Expert Report hereafter is a reference to the latest updated version.
The Claimant submits that the transfer of IPTL to PAP in breach of the Implementation Agreement deprived IPTL of the ability to earn and apply income under the PPA from September 2013, which would have reduced its debt to the Claimant and other creditors. The loss suffered in relation to this is calculated based on the loss of capacity payments and bonuses that IPTL would have expected to receive from TANESCO during the continuing operation of the Facility under the PPA.670 The figures provided in Mr Johnson’s calculations amount to USD 176.22 million, as summarised in the table below:
|October 2013 to 31 August 2018||Net Capacity Charges that IPTL would have earned under the PPA (taking into account the costs of earning those charges).||USD 105,974,522671|
|Bonus Payments that IPTL might reasonably have expected to earn.||USD 2,891,983672|
|Had these proceeds been properly applied so as to reduce IPTL's indebtedness under the Facility Agreement, IPTL would have avoided interest and penalties.||USD 11,867,410673|
|As at 31 August 2018, the overall loss suffered by IPTL for this period.||USD120,733,915674|
|31 August 2018 to January 2022||The net Capacity Charges that IPTL would have earned under the PPA (taking into account the costs of earning those charges)||USD 71,847,199675|
|Bonus Payments that IPTL might reasonably have expected to earn.||USD 3,254,711676|
|Applying a discount rate of 17.96% to these amounts, the overall loss suffered by IPTL for the period||USD 55,488,533677|
Claimant’s Reply PHB, paras. 132-138.
Updated Johnson Expert Report, paras. 5.7-5.8.
Updated Johnson Expert Report, paras. 5.11-5.13.
Updated Johnson Expert Report, para. 5.16.
Updated Johnson Expert Report, para. 5.18.
Updated Johnson Expert Report, para. 5.20.
Updated Johnson Expert Report, para. 5.21.
Updated Johnson Expert Report, paras. 5.22-5.23.
The Respondent criticised Mr Johnson’s calculation of bonus payments, the exclusion of applicable taxes, and improper interest rate selection for bringing forward historical damages calculated between October 2013 and 31 March 20 1 8.678 It provides an alternative calculation by removing the bonus payments from 2013 onwards, takes into account corporate income taxes and applies a risk-free interest rate to cash flows from October 2013 to August 2018 which it submits should reduce the Claimant’s claimed damages under this head to USD 142.39 million. The Respondent prepared the following comparative table of this calculation viz :679
|Claimant's Calculations (USD mil)||Respondent's Calculations (USD mil)|
|Loss of capacity payments between October 2013 and August 2018||120.73||99.26|
|Loss of capacity payments between August 2018 and January 2022||55.49||43.13|
Respondent’s PHB, paras. 171-181; Respondent’s Reply PHB, paras. 113-116.
Respondent’s Reply PHB, pg. 37 Table 7.
The Respondent has in its Reply PHB adjusted these using Johnson’s native Excel spreadsheet submitted as directed by the Tribunal and arrived with the following results:683
|Claimant's Calculations (USD mil)||Respondent's Calculations (USD mil)|
|Loss of capacity payments between October 2013 and August 2018||120.73||99.26|
|Loss of capacity payments between August 2018 and January 2022||55.49||43.13|
Respondent’s Reply PHB, pg. 37 Table 7.
a= Sum of (i) the total amount outstanding to the Lenders under the Financing Documents (including interest during the original construction period through the earlier of the date of termination of this Agreement or the Scheduled Commercial Operations Date) plus (ii) the total amount outstanding under any loan agreements for capital improvements to the Facility that are required under the Power Purchase Agreement, as approved by the GOT, plus (iii) the total amount of any other outstanding debt incurred by the Company that was approved by the GOT, less any insurance proceeds available to the Company following a Force Majeure Event and not spent for Restoration.
b= The initial equity investment by the shareholders of the Company multiplied by a fraction, the numerator of which is the number of years remaining in the initial term of the Power Purchase Agreement and the denominator of which is the initial term of the Power Purchase Agreement.
e= The summation of the products of (i) any additional equity amounts that are contributed by the shareholders of the Company for any of the events that are described under Article 17.5 plus any such equity contributions approved by the GOT, times (ii) a fraction, the numerator of which is the number of years remaining in the initial term of the Power Purchase Agreement and the denominator of which is the number of years remaining in the initial term of the Power Purchase Agreement at the time of such contribution or approval for each such additional equity amount.
i. Scenario A - the actual initial equity investment of USD 60 million is used. This is on the basis that a shareholder's loan represents equity because the shareholder was taking equity risk and calculated this amount as USD 10,594,521.
ii. Scenario B - an initial equity investment of USD 41.4 million is used, which was the deemed amount of equity for the purposes of calculating the tariff in the ICSID 1 Award. Mr Johnson had calculated this amount as USD 7,310,219.699
i. Element (a) in the compensation formula which is the amount outstanding to the lenders may overlap with the damages for breach of the Implementation Agreement because the damages reflect the loss suffered by IPTL due to its indebtedness not being reduced. The Claimant proposes that in case the Tribunal goes against its primary case then the amount awarded under element (a) could be deducted from the damages award; and
ii. Element (d) of the compensation formula which is the net cash flows following termination could overlap with damages in relation to Net Capacity Charges and bonuses earned after 31 August 2018 and the Claimant proposes that should the Tribunal decided against its primary case, the amount awarded under element (d) could be deducted from the damages in relation to the net Capacity Charges and bonuses for the aforementioned period.704
The Tribunal summarises below the quantification of the claims amounting to USD 287.26 million which it has reached, as follows:
|Calculations (USD mil)||Overlap (USD mil)|
|Tariff payments for the period up to September 2013||144.87|
|Loss of capacity payments between October 2013 and August 2018||99.26|
|Loss of capacity payments between August 2018 and January 2022||43.13|
|Compensation under Article 20.1(d)||41.33|
i. making a declaration as to the total amount of damages and compensation due under the Implementation Agreement (or a declaration that this is greater than the sum due under the Facility Agreement, if this is the case); and
ii. ordering that the GoT pay to SCB HK the full amount due under the
Facility Agreement, comprising:
(a) US$187,269,605, being the current amount due under the Facility Agreement; plus
(b) additional interest and other sums due in relation to the period after August 2018, as calculated by the Facility Agent; less
(c) any amounts recovered by SCB H K o r SCB Malaysia from IPTL or Tanesco prior to the Tribunal's award.705
The Claimant submits that the loan balance under the Facility Agreement as at 31 August 2018 stood at USD 187,269,605 and that this includes additional interest, penalties and enforcement costs, since 16 November 2016 when USD 168,800,063.87 was found outstanding by Flaux J.706 The breakdown of the outstanding loan balance as per the Updated Loan Model at Appendix 8 of the Updated Johnson Expert Report is given in tabular form in the Johnson Expert Report at paragraph 4.13 and reproduced below:
|Projected Balance At 31 August2018||USD|
Claimant’s PHB, para. 201.
i. Article 61(2) of the ICSID Convention which provides:
(2) In the case of arbitration proceedings the Tribunal shall, except as the parties otherwise agree, assess the expenses incurred by the parties in connection with the proceedings, and shall decide how and by whom those expenses, the fees of the members of the Tribunal and the charges for the use of the facilities of the Centre shall be paid. Such decision shall form part of the award.
ii. ICSID Arbitration Rule 47(1) (j) which provides:
(j) any decision of the Tribunal regarding the cost of the proceeding.
The Claimant claims its costs for this arbitration as incurred up to 19 September 2018 and any additional costs incurred in connection the arbitration arising after that date. It provides the breakdown of its costs in Annexures to its Costs Submissions and summarises its costs in a table which is reproduced below:725
|Herbert Smith Freehills LLP - legal services and disbursements||£2,145,668.15|
|Linklaters LLP - legal services and disbursements||£142,835.15|
|Payments to ICSID||US$712,764.33|
|Witness costs||US$41,876.44; HK$66,784.49; TZS30,627,410|
|Expert costs||£249,925.58; and US$37,170|
|Total costs (to 19 September 2018):||£2,540,144.88; US$791,810.77; HK$66,784.49; TZS30,627,410|
Claimant’s Cost Submissions, para. 28, Annexure 1- 3.
i. that the Claimant’s parent company started the BIT Arbitration, and, even though claims were rejected for lack of jurisdiction, the tribunal, ordered each party to bear their own costs and half the ICSID fees each. The Respondent adds that the Claimant is now attempting to recover its part of the BIT Arbitration costs by including them in the calculation as enforcement costs in the claimed outstanding loan amount;
ii. that various procedural errors were made by the Claimant before the Tanzanian Courts which included missing relevant deadlines;
iii. that the Claimant’s withdrawal from the Tanzanian court proceedings and its failure to properly challenge Utamwa J Order shows that its litigation strategy was not genuine;
iv. the fact that the Claimant bringing this arbitration after obtaining the PPA Award and 2016 Flaux J Judgment, which shows that its intention is to pressurise the Respondent; and
v. finally, that the Claimant has inflated its relief which was reflected: (a) in its own admission that there many areas of overlap in the Claimant’s calculations; (b) Claimant originally claiming a payment order under the Loan Facility Agreement which was changed once challenged by the Respondent on the illogical nature of such an order; and (c) the claim for declaratory relief on behalf of IPTL for amounts which IPTL would not be entitled is irrational.728
The Respondent claims the following as costs:730
|1||Fees and Expenses of the Tribunal and the Charges of ICSID||USD 175,000|
|2||Counsel Fees (Legal fees paid to Curtis, Mallet-Prevost, Colt & Mosle LLP)||USD 4,000,000|
|3||Counsel Expenses (total)||USD 529,607.94|
|3.1||Expenses incurred by Curtis, Mallet-Prevost, Colt & Mosle LLP||USD 429,877.70|
|3.2||Expenses incurred by Crax Law Partners in Association with RK Rweyongeza and Co. Advocates||TZS 227,686,000 (approximately USD 99,730.24)|
Respondent’s Reply PHB, paras. 128-131.
The costs of the arbitration, including the fees and expenses of the Tribunal, ICSID’s administrative fees and direct expenses, amount to (in USD):
Arbitrators’ fees and expenses
|Prof Lawrence Boo (President)||251,812.18|
|Justice David Unterhalter SC (Co-arbitrator)||254,164.53|
|Dr Kamal Hossain (Co-arbitrator)||216,718.04|
|Mr Stanley Burnton (Co-Arbitrator)||3937.50|
|ICSID’s administrative fees||148,000.00|
|Direct expenses (estimated)||128,243.56|
The Tribunal hereby Declares -
I. That the Tribunal has jurisdiction over the Parties and the dispute:
a. The Claimant is the lawful assignee under Article 15.2 of the Implementation Agreement and has the title and interest to pursue its claims against the Respondent for any breach of the Implementation Agreement in its own name; and
b. under Article 25 of the ICSID Convention.
II. that the United Republic of Tanzania has breached Articles 15.3, 16.1 and 16.2 of the Implementation Agreement;
III. the Implementation Agreement was terminated on 6 July 2018 in accordance with the Claimant’s Termination Notice; and
IV. the Claimant is entitled to compensation pursuant to termination under Article 20.1(d) of the Implementation Agreement and damages for the Respondent’s breaches of the Implementation Agreement.
And the Tribunal therefore, Adjudges, Awards, Orders and Directs that -
The United Republic of Tanzania shall:
V. Pay to the Claimant the sum of USD 185,449,440.04 together with interest thereon at the rate of LIBOR (6-month) +2% from the 1 September 2018 until the date of full and final payment; and
VI. Bear its own legal costs and expenses.