c. Parties and their legal representatives;
d. Arbitral Tribunal;
e. Arbitration Agreement, Applicable Law and Place of Arbitration;
f. Procedural history of the Arbitration;
g. Partial Award;
h. Fact witnesses;
i. Expert witnesses, their reports and joint statements;
j. Tanzanian law;
k. Parties’ list of issues.
"Accepted Contract Amount" means the amount claimed in Clause 1.1.14 of the Contract.
"Addendum" means Addendum No. 1 (to the Contract) dated 15 March 2007.
"Arbitral Tribunal" or "Tribunal" means the tribunal appointed by the Parties as set out in this section.
"CCS" means the Claimant’s written closing submissions.
"Claimant" or "Konoike" means the Claimant in this arbitration as set out in paragraph 4 below.
"Contract" means the construction contract entered into between the Claimant and the Ministry of Works dated 21 March 2003.
"Contract price" has the meaning ascribed to it in the Contract.
"Contractor" has the meaning ascribed to it in the Contract.
"DoS" means the Deed of Settlement dated 15 March 2007.
"Employer" has the meaning ascribed to it in the Contract.
"Engineer" has the meaning ascribed to it in the Contract. The original Engineer, Roughton International was replaced by Black & Veatch.
"FIDIC" means Federation Internationale Des Ingenieurs-Conseils.
"GNT" means the Government Negotiating Team formed for the purpose of negotiating a settlement with Konoike in late 2006.
"GST" means the Government Special Team appointed by the Government to review the Project in November 2006.
"Government" means the Government of the United Republic of Tanzania.
"ICC" means the International Chamber of Commerce.
"ICC Court" means the ICC International Court of Arbitration.
"ICC Rules" means the 1998 ICC Rules of Arbitration.
"IPC" means Interim Payment Certificate.
"Japanese Yen" or "JYN" means the currency of Japan.
"Letter of Acceptance" means the letter sent by the Employer to the Claimant dated 14 March 2009 informing the Claimant that its Tender had been accepted [E2/228/230].
"MoID" means the Ministry of Infrastructure and Development of Tanzania.
"MoU" means the Memorandum of Understanding dated 30 January 2007.
"Outstanding Amount" means the sum of USD 10,602,746.36 which Konoike alleges was owed to it as Price Escalation on the Foreign Currency element of IPCs 7-16.
"Pre-Bid Meeting Minutes" means the minutes of the meeting held on 25 November 2002 in relation to the tender for the design and construction of the Dodoma-Manyoni and the Manyoni -Singida Roads [G1/1/1].
"Parties" means the Claimant and the Respondents together unless the context requires otherwise, and "Party" means each individually as the context requires.
"Price Escalation" has the meaning ascribed to it in the Contract.
"Project" means the design and construction of the Road by the Contractor under the Contract.
"RCS" means the Respondents’ written closing submissions.
"Regulations" means the Public Procurement (Goods, Works, non-Consultant Services and Disposal of Public Assets by Tender) Regulations 2005, GN No. 97.
"Respondents" means the Respondents in this arbitration as set out in paragraphs 6-9 below.
"Road" means the road from Dodoma to Manyoni.
"Schedule" means the Schedule of Costs and Percentages of Listed Elements in the Contract [E1/6/108].
"Section" means a section of the Road.
"Section 1" means Km 0 (Dodoma) to Km 63 (Uhelela) of the Road.
"Section 2" means Km 63 (Uhelela) to Km 84 (Chikuyu) of the Road.
"Section 3" means Km 84 (Chikuyu) to Km 110 (Muhalala) of the Road.
"Section 4" means Km 110 (Muhalala) to Km 127 (Manyoni) of the Road.
"Tanroads" means the Second Respondent, Tanzania National Roads Agency.
"Tanzanian Shillings" or "TZS" means the currency of the United Republic of Tanzania.
"Tanzania" means the United Republic of Tanzania.
"US Dollars" or "USD" means the currency of the United States of America.
"Works" has the meaning ascribed to it in the Contract.
a. Transcript citations: the citation [T1/1/1] refers to the transcript of the hearing on day 1, page 1, line 1.
b. Documents: identified by their electronic hearing bundle reference - [A1/1.1/1].
c. Expert reports: identified by the name of the expert, the number of the expert report and the paragraph number of the expert report.
d. Witness statements: identified by the name of the witness, the number of the witness statement and the paragraph number of the witness statement.
Mr David Thomas QC
Ms Jane Lemon QC
15 Essex Street
London WC2R 3AA
Tel: +44 (0)20 7544 2600
Fax: +44 (0)20 7544 2700
Mr Simon Delves
Mr Ben Mellors
Ms Claire Miller
Mr Nicholas Smith
Beale and Company Solicitors LLP
85 King William Street
London EC4N 7BL
Tel: +44 (0)20 7469 0400
Fax: +44 (0)20 7469 0401
Mr D Brian King
Mr Jonathan Gass
Mr Carlos Ramos-Mrosovsky
Mr Lee Rovinescu
Mr Francisco Franco Rodríguez
Ms Tessa Hayes
Mr Michael Xiao
Freshfields Bruckhaus Deringer US LLP
601 Lexington Avenue
New York, NY 10022
Tel: +1 212 277 4020
Fax: +1 646 521 5620
Ms Jane Davies Evans
Crown Office Chambers
2 Crown Office Row
Tel: +44(0)20 7797 6221
Fax: +44(0)20 7797 8101
Mr John Bellhouse
13 Gray’s Inn Square
London WC1R 5JR
Tel: +44(0)20 7067 1900
Mr Bellhouse’s appointment as President, on the joint nomination of the Parties, was confirmed by the Secretary-General of the ICC International Court of Arbitration pursuant to Article 13(2) of the ICC Rules (2012) on 26 February 2013.
Professor Douglas Jones AO
Level 15, 1 Bligh Street
Sydney, NSW 2000
Tel: +61 2 9353 4120
Fax: +61 2 8220 6700
Professor Jones’ appointment, on the nomination of the Claimant, was confirmed by the Secretary-General of the ICC Court, pursuant to Article 13(2) of the ICC Rules (2012) on 10 January 2013.
Mr Graeme Christie
601 Lexington Avenue
Private Bag 92518
Tel: +64 9 977 5088
Fax: +64 9 977 5028
Mr Christie’s appointment, on the joint nomination of the Respondents, was confirmed by the Secretary-General of the ICC Court, pursuant to Article 13(2) of the ICC Rules (2012), on 10 January 2013.
Arbitration Agreement, the Applicable Law and Place of Arbitration
"Unless settled amicably, any dispute in respect of which the DAB's decision (if any) has not become final and binding shall be finally settled by international arbitration. Unless otherwise agreed by both Parties:
The dispute shall be finally settled under the Rules of Arbitration of the International Chamber of Commerce,
The dispute shall be settled by three arbitrators appointed in accordance with these Rules, and
The arbitration shall be conducted in the language for communications defined in Sub-Clause 1.4 [Law and Language].
The arbitrator(s) shall have full power to open up, review and revise any certificate, determination, instruction, opinion or valuation of the Engineer, and any decision of the DAB, relevant to the dispute. Nothing shall disqualify the Engineer from being called as a witness and giving evidence before the arbitrator(s) on any matter whatsoever relevant to the dispute.
Neither Party shall be limited in the proceedings before the arbitrator(s) to the evidence or arguments previously put before the DAB to obtain its decision, or to the reasons for dissatisfaction given in its notice of dissatisfaction. Any decision of the DAB shall be admissible in evidence in the arbitration.
Arbitration may be commenced prior to or after completion of the Works. The obligations of the Parties, the Engineer and the DAB shall not be altered by reason of any arbitration being conducted during the progress of the Works."
a. In relation to Preliminary Issues No. 3:
• In respect of the items referred to in paragraphs 3.0, 4.0, 5.0, 6.0, 8.0 and 9.10 of the MoU, the MoU is not a "stand alone" document and any claims under the terms of the MoU in respect of the matters set out in such paragraphs are subject to the notice, particularisation and dispute resolution provisions of the Contract.
• Clause 2 of the MoU and paragraphs 1, 2 and 3 of the DoS are not "stand alone" agreements and any claims made pursuant to Clause 2 of the MoU and/or paragraphs 1, 2 and 3 of the DoS are subject to the notice, particularisation and disputes resolution provisions of the Contract.
b. In relation to Preliminary Issue No. 6: compliance with the contractual notification provisions of Sub-Clause 20.1 of the Contract is a precondition to the pursuit of a claim for an extension of time or additional payment under the Contract.
c. In relation to Preliminary Issue No. 8:
• Any sums due under the terms of the Contract are payable in either US Dollars or Tanzanian Shillings.
d. The Arbitral Tribunal declined to decide as a Preliminary Issue whether the Contract constrains the currency of payment in respect of a claim for damages for breach of the Contract.
a. Tetsuo Sakamoto who was the Project Manager for the Dodoma-Manyoni Road Project at Konoike. Mr Sakamoto filed five witness statements dated 17 May 2013, 13 June 2014, 8 October 2014, 10 December 2014, 18 December 2014.
b. Takashi Yamashita who is the General Manager of the Kenya Office at Konoike. Mr Yamashita filed three witness statements dated 15 May 2013, 11 June 2014, and 26 November 2014.
c. Hajime Nagaishi who is the Operating Officer of the International Division at Konoike. Mr Nagaishi filed two witness statements dated 14 May 2013 and 13 June 2014.
d. Jeffrey McCormick who was a consultant for Konoike in relation to the Dodoma-Manyoni Road Project, Mr McCormick filed two witness statements dated 13 May 2013 and 10 June 2014.
e. Yasutaka Mizobata who was an Operations Officer of the Corporate Planning Department and the International Operation of Konoike. Mr Mizobata filed one witness statement dated 8 May 2013.
f. Akihiko Koizumi who is Section Manager of the Administration Department for the International Division of Konoike. Mr Koizumi filed one witness statement dated 8 May 2013.
g. Nobuo Okada who was a manager in the Business Department of the International Division of Konoike, Mr Okada filed one witness statement dated 12 June 2014.
a. Jotham Ntensibe who was Highway Engineer and subsequently Resident Engineer for the Dodoma-Manyoni Road Project. Mr Ntensibe filed three witness statements dated 2 December 2013, 12 September 2014 and 19 December 2014.
b. Sirilius Matupa who was Principal State Attorney in the Attorney General’s Chambers. Mr Matupa filed one witness statement dated 5 December 2013.
a. David Richards submitted:
• First report in relation to delay issues dated 1 May 2013 [D1/1.1/1];
• Side report on delay issues dated 25 October 2014 [D5/5.1/1];
• Second report in relation to prolongation and disruption issues dated 9 May 2013 [D1/1.2/1];
• Side report on disruption issues dated 31 October 2014 [D5/5.2/1];
• Side report on prolongation and disruption valuation dated 16 November 2014 [D5/5.3/1];
• Revised side report on prolongation and disruption valuation dated 19 December 2014 [D6/15/1];
• Third report concerning pre-Addendum disruption issues dated 17 April 2014 [D1/1.3/1];
b. Tim Tapper submitted a report on quantum dated 20 June 2013 [D2/2.1/1]. Mr Tapper was replaced by Ms Joanne Prior as the Claimant’s quantum expert,
c. Joanne Prior submitted:
• First report on quantum dated 17 April 2014 [D2/2.3/1];
• First side report on quantum dated 13 November 2014 [D5/5.4/1];
• Third side report on quantum dated 24 December 2014 [D6/2/1].
d. Nigel Penfold submitted:
• Report on technical defects dated 12 June 2014 [D4/4.1/1];
• Side report on technical defects dated 13 November 2014 [D5/5.5/1].
a. Wendy MacLaughlin submitted:
• Report on delay and disruption dated 28 February 2014 [D2/2.2.1/1];
• Side report on delay dated 24 October 2014 [D5/5.6/1];
• Side report on disruption dated 30 October 2014 [D5/5.7/1].
b. David Kyte submitted:
• First side report on quantum dated 19 November 2014 [D5/5.8/1];
• Second side report on quantum dated 22 December 2014 [D6/14/1].
c. Christian Busch submitted:
• Report on technical defects dated 29 September 2014 [D4A/1/1];
• Side report on technical defects dated 12 November 2014 [D5/5.9/1].
a. Joint report on delay by David Richards and Wendy MacLaughlin dated 10 October 2014 [D3/3.1/1];
b. Joint report on disruption by David Richards and Wendy MacLaughlin dated 11 October 2014 [D3/3.2/1];
c. List of Agreed Issues on quantum by Joanne Prior and David Kyte dated 17 October 2014 [D3/3.3/1];
d. Joint statement on quantum issues by Joanne Prior and David Kyte dated 17 December 2014 [D6/1/1];
e. Schedule of Agreement and Disagreement concerning prolongation and disruption valuation issues by David Richards and David Kyte dated 7 November 2014 [D3/3.4/1];
f. Further joint report concerning prolongation and disruption valuation issues by David Richards and David Kyte dated 22 December 2014 [D6/16/1];
g. Joint report on technical defects by Nigel Penfold and Christian Busch dated 4 November 2014 [D4/4.2/1].
a. Law of Contract Act, sections 20(1), 21, 23, 59, 60, 73, 73(2);
b. Evidence Act, section 115;
c. Public Procurement Act 2004, section 87;
d. Judicature and Application of Laws Act, section 2(3);
e. Public Procurement (Goods, Works, Non-Consultant Services and Disposal of Public Assets by Tender) Regulations 2005, sections 2(1), 23(1), 44, 118(3), 123(3).
a. An extension of time of 36 months if the administration of the Contract on the Employer’s side remained the same, or 24 months if it was changed together with time-related costs with a minimum total of TZS 9.9 billion.
b. Payment of Price Escalation on the full contract amount.
c. Variations to the work to be paid in full.
d. Additional design costs of TZS 1,813,008,129.
e. TZS 14.6 billion for disruption caused by loss of productivity. [G2/102/525]
a. The Claimant offered to reduce its disruption claim to TZS 10 billion whereas the Employer put forward a figure of TZS 5 billion [G2/107/730].
b. The Claimant offered to accept a 24 month extension of time whereas the Employer offered 19 months with a possible further 5 months [G2/107/730].
c. It was agreed that the Claimant would put forward a proposal for sectional completion at paragraph 25.6 [G2/107/729].
d. The Employer agreed to expedite the payment of Price Escalation because it was a matter that could be dealt with as part of the existing Contract without the need to modify it by Addendum [G2/107/729].
a. IPC 21 was certified on 15 December 2007 [G3/266/1407]. This was paid in full by two payments on 16 and 22 January 2008 [H1/1.13/70].
b. IPC 22 was certified on 15 January 2008 [G3/285/1437]. This IPC was cleared by three payments on 18, 20 and 26 February 2008 [G3/312/1497] [G3/316/1507] [H2/1.56/57].
a. The balance of payments due to it for work it has completed, including:
• The sums agreed in the Addendum for pre-Addendum disruption, additional design costs and price escalation;
• Various disputed bill items and variations.
b. Delay and disruption claims arising from the First, Second and Third Suspensions as outlined above (in addition to further claims during this period resulting from (i) national cement shortage; (ii) emergency repair works; (iii) a cholera outbreak; (iv) waterlogged ground; (v) exceptional rainfall).
c. Claims arising from wrongful termination of the Contract, including:
• Costs of maintaining the Performance Security;
• Losses arising from currency devaluation;
• Loss of opportunity to undertake three further contracts as a consequence of financial difficulties suffered by the Claimant caused by the Respondents’ breaches of contract;
• Financing charges and interest;
• Costs of DAB proceedings, amicable settlement and the arbitration itself.
a. That the Tribunal open up, review and revise IPCs 15 to 25 to exclude sums that were not due to the Claimant pursuant to the Contract.
b. Recovery of sums allegedly overpaid to the Claimant in relation to IPCs 15 to 25, together with pre- and post-award compound interest at an appropriate rate.
c. A declaration that the Claimant failed to complete the Works by the time for Completion.
d. A declaration that Tanroads terminated the Contract on or about 15 December 2008 and did so validly.
e. Liquidated damages for delay in the sum of 10% of the Accepted Contract Amount,
f. Costs of repairing the allegedly defective works.
g. Costs of the DAB referrals and amicable settlement discussions.
a. Mr Chambo - Deputy Permanent Secretary of the MoID;
b. Mr Matupa - from legal department in the Attorney General’s office;
c. Mr Feleshi - from legal department in the Attorney General’s office;
d. Mr Kasuwi - engineer from the Ministry of Finance;
e. Mr Rubibira - Contract specialist from MoW;
f. Mr Macha - engineer with Cowi;
g. Mr Mndowla - from consultancy firm PWC.
"4.1.1 ISSUES OF ESCALATION OF PRICE
The following issue was agreed by the parties.
Whether the pre-bid meetings were properly incorporated into the contract
Arguments for issue determination
The parties agreed that since the clear wording of clause 13.8 allows escalation of price on the whole contract sum and the pre bid meeting was not effectively incorporated in the contract, the price escalation clause should apply to the whole contract sum payable both in local and foreign currency.
The Employer in principal agrees that the escalation clause applies to the whole contract amount.
4.1.2 Price escalation
The parties agreed that price escalation clause should apply to the whole contract sum in accordance with article 13.8 of the Conditions of the particular application.
4.3 Disruption claims
The contractor undertook to provide a cost build-up for the claim of 14,635,397,232 relating to the descriptions causing loss of productivity." [G2/104/671]
a. The Claimant had offered to reduce its disruption claim to TZS 10 billion.
b. The Claimant offered to accept a 24 month extension of time. The Employer offered 19 months with a possible further 5 months.
c. It was agreed that the Claimant would put forward a proposal for sectional completion.
d. The Employer agreed to expedite the payment of Price Escalation because it was a matter that could be dealt with as part of the existing Contract, without the need to modify it by Addendum.
e. The Employer undertook to make sure that the Resident Engineer would be changed and to supervise closely the next Engineer.
"27.1 The Contractor maintained the claim of Tshs.76,228,583,586.00 in accordance with the submitted Bills of Quantities for the Final Approved Design (B2), being a revised Contract Lump Sum amount and Tshs.12 bln for disruption claims. However, he invited the Employer to give another offer for consideration.
27.2 The Employer urged the Contractor to be consistent because already on 9th Jan 2006 [sic] the Contractor had agreed to reduce his disruption claim from Tshs 14.64 billion to Tshs. 10.0 billion.
27.3 Eventually it was agreed that the disruption costs be Tshs.10.0 billion and the Contractor was inclined to discount the balance of the claim. The final agreed Contract Lump Sum amount now will be Tshs. 86.2 bln. It was agreed that the disruption had been adequately substantiated.
27.4 The Contractor maintained the request for an extension to the Time for Completion of 24 months and early payments of Adjustments for Changes in Costs to enable them to continue with the work. In response the Employer informed the Contractor that a balance of Adjustments for Changes in Costs in foreign currency can be paid now on those certificates upon which Adjustments for Changes in Costs for local component has already been certified and paid.
27.5 The Contractor has 64 Km to complete after finishing 63 Km. It was agreed that the time needed is 24 months to finish the Works.
27.6 The Parties settled with the sum of Tshs. 86,228,583,586.00 as an adjusted Contract Price which excludes amounts for Adjustments for Changes in Costs VAT and all Provisional Sums and Contingencies."
a. In respect of Price Escalation, the Claimant was paid a total of TZS 7,545,094,949.00 (TZS 9,054,113,934 including VAT) and USD 23,060,819.64 (USD 27,672,983.57 including VAT) up to and including IPC 24. The Respondents are now seeking to reclaim all Price Escalation paid to the Claimant on the foreign currency element and all Price Escalation in excess of TZS 1.5 billion paid on local currency.
b. Regarding pre-Addendum disruption costs, the Claimant received TZS 10 billion through IPC 19 on 29 May 2008, in addition to Price Escalation on that sum. The Respondents subsequently sought to reclaim this payment in September 2008, instructing the Engineer to deduct the sums certified from IPC 26 and IPC 27.
c. The Claimant also received TZS 1,813,008,129.00 for Additional Design costs in IPC 19, which the Respondents have sought to reclaim.
a. Under the original Contract, Price Escalation was payable on the whole of the Accepted Contract Amount after expiry of the first 18 months of the Contract, payable in Tanzanian Shillings. A provisional sum of TZS 1.5 billion was allowed in respect of Price Escalation but there was no cap on the amount that might ultimately be payable.
b. The effect of the Addendum was that Price Escalation on the US Dollar element of the Accepted Contract Amount was itself payable in US Dollars. The Respondents’ arguments as to the invalidity of the Addendum cannot succeed.
a. On the true construction of the original Contract, Price Escalation was due only on the local currency, capped at TZS 1.5 billion. This is evident from:
• The pre-bid meeting minutes;
• Schedule of Costs and Percentages of Listed Elements;
• Contractual provisions on Contingencies.
b. The Addendum was not effective in modifying the provisions on Price Escalation, as such agreement was void or unenforceable. In any event, the TZS 1.5 billion cap was left intact.
c. In the alternative, even if Price Escalation was due on the US Dollars position, it was not payable in US Dollars, but in Tanzanian Shillings.
a. Sub-Clause 13.8:
"...the lump sum Accepted Contract Amount shall be adjusted for rises or falls in the cost of labour, goods and other inputs to the Works, by the addition or deduction of the amounts determined by the formulae prescribed in this Sub-Clause." [E2/6/273]
b. Clause 1.1.4 of the General Conditions:
" 'Accepted Contract Amount’ means the amount accepted in the Letter of Acceptance for the execution and completion of the Works and the remedying of any defects." [E3/1/605]
c. The Letter of Acceptance:
"The contract sum will be Tsh 63,887,999,940.80 (i.e. Sixty three billion eight hundred eighty seven million nine hundred ninety nine thousand nine hundred forty and cents eighty) only payable in the following proportions: Tshs 15,599,521,051.20 (i.e. fifteen billion five hundred ninety nine million five hundred twenty one thousand fifty one and cents twenty) and USD 48,883,365.00 (i.e. forty eight million eight hundred eighty three thousands three hundred sixty five) only, equivalent to Tsh 48,288,278,889.60 (i.e. forty eight billion two hundred eighty eight million four hundred seventy eight thousand eight hundred eighty nine and cents sixty) at the rate of exchange of 1 USD to Tshs 987.8305." [E2/2/228]
d. Sub-Clause 13.8(b):
"...the sums payable by the Employer to the Contractor shall - in the event of change in the NCC index - be subjected to increase or decrease in accordance with application of the Formula." [E2/6/274]
e. Sub-Clause 13.8(c):
"The value of net work done, certified by the Engineer, in any monthly Interim or Final Certificate as payable by the Employer to the Contractor before deduction of any Retention Money shall be increased or decreased by an amount of ‘F’ Tanzanian Shillings where the value of ‘F’ shall be determined as follows:
F = (lc- lo) x Pc
(i) lc indicates the value of the NCC Index on the day, which falls thirty days before the date of Interim or Final Valuation
(ii) lo indicates the value of the NCC Index on the day, which falls thirty days before the Tender submission date.
(iii) Pc indicates the "effective value" of the work done under the certificate concerned (being the value of that part of the work which is subject to such increase or decrease) and is as defined hereinafter."
f. Sub-Clause 13.8(d):
"The effective value (Pc) or work done which is to be subjected to increase or decrease shall be the difference between:
(i) the amount which, in the opinion of the Engineer, is due to the Contractor under Section 14 [Contract Price and Payment] (before deduction of retention money and before deducting sums previously paid on account) less:
any amount for payment or repayment of any advance payment
any amount for materials on site
any amounts for nominated sub-contractors (if any)
any amounts for any other items based on actual cost or current prices
any sums for increases or decreases in the Accepted Contract Amount as paid under this Sub-Clause and
(ii) the amount calculated in accordance with Sub-Clause 13.8(c)(i) above and included in the last preceded Interim Certificate issued by the Engineer in accordance with Section 14 [Contract Price and Payment] hereof." [E2/6/275]
g. Sub-Clause 14.1(a)
"The Contract Price shall be the lump sum Accepted Contract Amount and be subject to adjustments in accordance with the Contract."
"Q 16 Does sub-clause 13.8 of the Conditions of Particular Application mean that there will be no adjustment for change in Price in respect of the foreign currency element of the contract amount?
A 16 That is correct." [G4/574/2175]
a. Paragraph 18.4 of the Instructions to Bidders stated that any modification to the Contract through the Pre-Bid Meeting must be made by the issue of an addendum. No such addendum was issued by the Respondents in respect of Sub-Clause 13.8.
b. Alternatively, the Pre-Bid Meeting Minutes are inconsistent with Sub-Clauses 13.8 and 14.1 which take priority under Sub-Clause 1.5 of the Conditions of Contract [E2/6/267].
c. In any event, there can be no doubt of the entitlement to Price Escalation on amounts payable in foreign currency after the agreements of January to March 2007.
"Elements against which no percentage/amount has been entered by the Tenderer shall not be the subject of any payment calculation but shall be deemed to be included elsewhere in the Lump Sum Amount." [E1/2/15]
a. In contrast to the Tanzanian Shillings column, the foreign currency columns for Total Cost of Works and Total Lump Sum Bid Price were the same — at approximately USD 40.7 million — since no amount was included for Price Escalation.
b. The Total Foreign Currency Requirements for the Project stated a figure of USD 40.7 — the same as the Total Cost of Works without Price Escalation.
a. Sub-Clause 13.5:
"The Contingencies shall only be used, in whole or in part, in accordance with the Engineer's instruction and the Contract Price shall be adjusted accordingly. The total sum paid to the Contractor shall include only such amounts from the Contingencies element of the Price as the Engineer shall have instructed."[E2/6/273]
b. Sub-Clause 13.8;
"The costs of complying with the requirements of this sub-clause shall be met from the Contingencies element of the Contract Price." [E2/6/275]
c. Sub-Clause 14.4:
"The Contingencies element of the Schedule does not enter into this valuation of the Work and shall be used or not used entirely as the Employer may see fit, but primarily for meeting the costs of the implementation of sub-clause 13.8; Adjustments for Changes in cost." [E2/6/277]
a. The Addendum was not submitted to a tender board for approval, contrary to Section 44 of the Tanzanian Public Procurement (Goods, Works, Non-Consultant Services and Disposal of Public Assets by Tender) Regulations 2005 ("the Regulations").
b. The agreement on Price Escalation produced an unreasonable windfall for the Claimant, in breach of Section 23(1) of the Regulations.
c. The agreement was void for mutual mistake of fact under section 20(1) of the Law of Contract Act.
d. The original TZS 1.5 billion cap was left unamended by the Addendum in any event.
a. Price Escalation was not payable on the foreign currency under the original Contract;
b. Even if the original Contract had provided for Price Escalation on the foreign currency, on the Claimant’s case, the Addendum still purportedly increased the value of the Contract by:
• Removing the TZS 1.5 billion cap on Price Escalation;
• Providing for payment of Price Escalation on US Dollars in US Dollars.
a. This is not a pleaded point, having been raised by the Respondents for the first time during opening submissions [T14/30/10-13].
b. Approval is not needed in any event. Section 44 does not apply as Price Escalation was payable on foreign currency in the original Contract and consequently there was no change to the value of the Contract by the Addendum. Nor does the change in relation to Price Escalation being paid in dollars change the value of the Contract.
c. Even if Section 44 did apply, the best evidence is that approval was in fact given, even though the MoU itself indicates that it was not needed. Reliance is placed on the record of discussions held in Dodoma on 3 February 2007 [G2/122/856] and the letter from Mr Chambo of 13 March 2007 [G2/129/914].
d. In the event that approval was not given by the Tender Board, the Respondents are estopped from denying that it was given. The Claimant states that it relied on what it was told about approval having been given and on the Addendum being a good and lawful agreement.
a. Applying a TZS inflation index to US dollars could not be a reasonable adjustment. Inflation in Tanzania has consistently exceeded that in the United States. The fact that the Claimant was making dollar-denominated purchases in Tanzania is irrelevant.
b. The available evidence suggests that during the relevant period, dollar prices in Tanzania remained relatively stable. In contrast, the NCC index on which the Price Escalation formula was based increased in 2007 at an annual rate of 31 %.
c. To the extent that the foreign currency amount relates to costs that the Contractor actually incurred in Japan, Price Escalation would be inappropriate. The Japanese Yen was static or deflationary during the relevant period.
a. The Regulations do not apply. Reliance is placed on section 2(1):
"2(1) Subject to sub-regulation (2), these Regulations shall apply to all procurement of goods, works and non-consultant services undertaken by a procuring entity except where the context provide otherwise in which case the provisions of the Act shall prevail." [F3/3.8/7]
b. In this case the context is the Contract. Provided that it does not contravene the provisions of the Act referred to, the Public Procurement Act 2004, the Regulations will not apply.
c. If the Regulations do apply, then on the proper construction of Regulation 23, the effect is to require the Parties to apply a price adjustment formula so as to arrive at a reasonable price. Thus if they apply a price adjustment formula then Regulation 23 deems the price arrived at by its application to be reasonable.
d. Even if the Regulations required the result of the application of the formula to be reasonable, there was compliance because it was reasonable. The Price Escalation formula in fact takes account of only 50% of the increase in the prices of the basket of construction materials on which it is founded.
"23(1) The consideration or object of an agreement if lawful, unless -
(a) it is forbidden by law;
(b) is of such a nature that, if permitted, it would defeat the provisions of any law;
(c) is fraudulent;
(d) involves or implies injury to the person or property of another; or
(e) the court regards it as immoral or opposed to public policy." [F1/1.3/15]
"20(1) Where both the parties to an agreement are under a mistake as to a matter of fact essential to the agreement, the agreement is void.
(2) An erroneous opinion as to the value of the thing which forms the subject matter of the agreement is not deemed a mistake as to a matter of fact.
21) A contract is not voidable because it was caused by a mistake as to any law in force in Tanzania; but a mistake as to a law not in force in Tanzania has the same effect as a mistake of fact."
a. The Minutes of the First Meeting on 19 December 2006 note as an agreed fact that "Procedure for including the minutes for pre-bid meeting was not properly followed." [G2/102/650].
b. The Claimant and the GNT expressly premised the Price Escalation provision of the Addendum on this mistaken agreed fact: "Since...the pre bid meeting was not effectively incorporated into the contract, the price escalation clause should apply to the whole contract sum payable both in local and foreign currency." [G2/104/667].
a. There was no mistake as:
• The minutes of the negotiation meetings were accurate. The procedure at paragraph 18.4 of the Instructions to Bidders was not followed.
• The award of the DAB was based on the fact that the minutes of the Pre-Bid Meeting were included in the Claimant’s tender and in the Contract. The members of the GNT would have been aware of that.
b. Even if there was a mistake, it was a mistake of law not fact, pursuant to section 21 of the Law of Contract Act (Tanzania) read in conjunction with Section 2(3) of the Judicature and Application of Law Act.
c. The requirements of section 20(1) are not satisfied, as the purported mistake did not go to the very basis of the Contract or involve a fact essential to the agreement. Both Parties should have known the true state of affairs in any event. The Claimant relies on Pollock and Mulla "The Indian Contract Act" pages 455-475 [F2/2.28/13] and Sheikh Brothers Ltd v Arnold Julius Ochsner and Another  AC 136 [F2/2.3/1].
d. Any mistake was irrelevant as the Particular Conditions take precedence over the Contractor’s Proposal under the order of priority provisions found in the Form of Agreement and at Sub-Clause 1.5 of the General Conditions.
e. In any event, Price Escalation was payable on foreign currency elements under the terms of the original Contract. If the Price Escalation agreement contained in the Addendum is void for mistake of law, this is ultimately irrelevant.
a. There is no reference to a cap in any of the Minutes;
b. As at IPC No 16 on 20 October 2006, the Respondents had already paid TZS 1,629,788,350 for Price Escalation, in excess of the purported cap;
c. Mr Matupa confirmed that the government was committed to pay Price Escalation without any cap [T5/171/24].
a. Paragraph 2.2 of the MoU:
"The Parties have agreed to interpret the said Clause 13.8 in such a manner that allows the Contractor to be paid for the changes in cost on the full Accepted Contract Amount (or such other amount amended in accordance with the Contract) and in currencies both, Tanzanian as well as Foreign."
b. The Addendum provided at paragraph 1.0(i):
"Sub-Clause 13.8 of the Particular Application shall be correctly interpreted i.e. Price Escalation shall be paid on the whole of the works covered by the Adjusted Contract Price in both Tanzanian Shillings and US Dollars. Price Escalation in accordance with Sub-Clause 13.8, will be paid on all works carried out until the final Time for Completion."
c. The Deed of Settlement dated 15 March 2007:
"The Parties have agreed to interpret the said Clause 13.8 in such a manner that allows the Contractor to be paid for the changes in cost on the full Accepted Contract Amount or such other amount as may be arrived at after amendment of Contract and in currencies both, Tanzanian as well as Foreign."
a. A meeting took place between the Claimant and the MoID on 3 February 2007 - that is, after the signature of the MoU and prior to the execution of the Addendum. The Record of Discussions of this meeting (prepared by the Claimant) records that the Minister for the MoID explained that an Addendum would be prepared, ratified by the Attorney General’s office and passed through the ministerial Tender Board. Once agreed and signed by both Parties, the Addendum would become effective [G2/122/855]. The Addendum was signed on 14 March 2007. and the Respondents acted upon it.
b. It is now clear from the Minutes of the Tender Board meeting on 21 February 2007 (submitted by the Respondents by letter dated 2 September 2015) that the Tender Board did consider and approve the Addendum. The Arbitral Tribunal does not consider that the Respondents’ submission that it is "not clear whether the Board was presented with (or purported to approve) the second "Addendum No 1" dealing with price escalation..." carries any weight. It is clear from paragraph 5.3 of the Minutes that the Tender Board discussed each of the "5 main categories" of claims including Price Escalation, and agreed them.
c. The MoU provided at paragraph 10.1.1 that those areas that require amendment of the Contract would be implemented in accordance with the mandatory procedure of the Public Procurement Act Number 21 of 2004 and Regulations GN 97 of 2005. Paragraph 10.1.2 of the MoU stated that the areas which did not need amendment of the Contract would be implemented immediately by the Employer. It is clear from the MoU that the Respondents and the GNT on its behalf were aware of and addressed the need for compliance with the Regulations.
d. In his letter of 13 March 2007 [G2/129/914], Mr Chambo stated that the settlement of certain of the claims was a change to the Contract and this required compliance with the procedure under the Procurement Act. Mr Chambo further stated: "An Addendum for that purpose has already been cleared by the Attorney General and the other procurement machinery has been complied with. You may wish to sign the Agreement as finally approved". The Addendum was signed the following day.
e. Mr Matupa, who was a member of the GNT, gave evidence in relation to Price Escalation that the GNT intended the Contractor to be paid price escalation on the entire contract price [T5/170/21-24].
f. The Respondents did not provide any documentary or witness evidence that demonstrated that approval had not been given to the Addendum by the relevant Tender Board to displace the evidence suggesting that the relevant approval had been given. On the contrary, the documentary evidence, in particular the letter of 13 March 2007 from Mr Chambo [G2/129/914], confirms that the necessary approval was given. Mr Chambo was the Deputy Permanent Secretary of MoID and had been closely involved in the negotiations leading to the Addendum. The Claimant was entitled to rely upon Mr Chambo’s letter.
a. Under the original Contract, after the expiry of the first 18 months of the contract period, the Claimant is entitled to payment of Price Escalation in Tanzanian shillings on both the local currency and the foreign currency elements of the Accepted Contract Amount.
b. The Pre-Bid Minutes do not alter this finding.
c. The fact that the Claimant did not insert a figure in the foreign currency column of the Schedule does not alter this finding.
d. The figure of TZS 1.5 billion inserted in the Schedule is a provisional sum and does not operate as a cap on the amount of Price Escalation payable under the original Contract in Tanzanian shillings on both the local and foreign currency elements of the Accepted Contract Amount.
"ISSUES OF ESCALATION OF PRICE
The following issue was agreed by the parties
Whether the pre-bid meetings were properly incorporated into the contract
Arguments for issue determination
(i) The parties agreed that since the clear wording of clause 13.8 allows escalation of price on the whole contract sum and the pre bid meeting was not effectively incorporated in the contract, the price escalation clause should apply to the whole contract sum payable both in local and foreign currency.
(ii) The Employer in principal agrees that the escalation clause applies to the whole contract amount."
a. The Parties agreed in the Addendum that the contract price would be revised to the "Adjusted Contract Price" of TZS 86,228,583,586 which was expressly recited to include "Disruption and Loss of Productivity." The figure of TZS 10 billion was included in the amended Schedule of Costs and Percentages of Listed Elements which applied following the Addendum at Appendix 2 [G2/130/935].
b. The Minutes of the meetings demonstrate that the Parties reached an agreement on a compromise lump sum, in particular:
• Paragraph 4.3 of the Minutes of the Second Meeting held on 20 December 2006 [G2/104/667].
• Paragraph 14 of the Minutes of the Sixth Meeting on 5 January 2007 [G2/107/726].
• Paragraph 26 of the Minutes of the Eighth Meeting on 9 January 2007.
• Paragraph 27 of the Minutes of the Ninth meeting on 10 January 2007 [G2/107/730].
c. Paragraph 27 of the Minutes of the Ninth Meeting on 10 January 2007 record that:
"Eventually it was agreed that the disruption costs be Tshs 10.0 billion and the Contractor was inclined to discount the balance of the claim. The final agreed Contract Lump Sum amount now will be Tshs 86.2 bln. It was agreed that the disruption had been adequately substantiated."
d. Clause 1 (iv) of the Addendum states that:
"The Addendum provides extra costs required to successfully complete the project...The extra costs are the result of the negotiations held between the Employer and the Contractor on pertinent contract terms and are agreed. The agreed negotiated items are, namely:
(iv) Costs due to Disruption and Loss of Productivity amounting to Tshs 10,000,000,000.00."
a. Under Clause l.0(i) of the Addendum, Price Escalation was payable on the entirety of the Adjusted Contract Price. The Adjusted Contract Price was defined at page 1 of the Addendum and included the sum of TZS 10 billion for Disruption.
b. This was clearly the intention of the Parties as evidenced by the fact that the Engineer in fact certified such sums in IPC 20A which was paid by the Respondents.
c. Furthermore, pre-Addendum Disruption was in fact calculated by reference to a comparison between planned and actual productivity as can be seen from the Contractor’s Minimum Position for Negotiation Paper dated 14 December 2006 prepared for the Addendum Negotiations [G2/101/157-644]. Consequently, there can be no objection to seeking Price Escalation on this sum.
a. Paragraph 5 of the MoU:
"The parties have agreed that any disruption that has sustained the Contractor loss of productivity shall be compensated upon reasonable and fair substantiation of related costs." [G2/118/811]
b. The Minutes of the Second Negotiation Meeting:
"The Contractor undertook to provide a cost buildup for the claim...relating to the descriptions [sic] causing loss of productivity." [G2/104/671]
c. Mr McCormick’s evidence, which is accepted by the Tribunal, is that the GNT had made the request for substantiation and the Claimant had given such an undertaking [T3/149/3-8].
a. It was provided seven years after the event, rather than at the correct time.
b. Mr Richards has not investigated the cause of the discrepancy between the Claimant’s actual productivity and the measured mile on the erroneous assumption that liability was accepted by the GNT during the Addendum negotiations. In fact, only Claims 1, 8, 12 and 13 were acknowledged to have caused disruption.
a. The Contract’s Price Escalation formula at Sub-Clause 13.8 explicitly precludes Price Escalation on any amount that is quantified by reference to actual cost.
b. The Claimant cannot be entitled to a Price Escalation adjustment on a liquidated sum, which it has presented as a negotiated bargain between the Parties for payment of a sum certain. The Respondents submit that the Claimant cannot have it both ways. The amount is either liquidated, as the Claimant alleges, or it is not. The amount cannot be liquidated only to the extent that it benefits the Claimant (i.e. no substantiation required) but not where it does not (i.e. Price Escalation still owed).
a. At the second meeting, the Claimant agreed to provide a cost build up for the disruption claim (paragraph 4.3).
b. At the sixth meeting, the Parties agreed to continue to scrutinise the claims including the disruption claims (paragraph 14).
c. At the eighth meeting, the Claimant offered to reduce the disruption claim from TZS 14 billion to TZS 10 billion to result in a total claim of TZS 86.2 billion (paragraph 26). The Respondents asked the Claimant to reconsider an offer of TZS 5 billion.
d. The MoU provided at paragraph 5:
"5. 0 DISRUPTION CA USING LOSS OF PROD UCTIVITY
5.1 The Parties have agreed that any disruption that has sustained the Contractor loss of productivity shall be compensated upon reasonable and fair substantiation of related costs."
e. At the ninth meeting on 10 January 2007 [G2/119/837] the Parties agreed:
"27.3 Eventually it was agreed that the disruption costs be Tshs 10.0 billion and the Contractor was inclined to discount the balance of the claim. The final agreed Contract Lump Sum amount now will be Tshs. 68.2 bln. It was agreed that the disruption had been adequately substantiated.
27.6 The Parties settled with the sum of Tshs. 86,228,585,586.00 as an adjusted Contract Price, which excludes amounts for Adjustments for Changes in Costs, VAT, and all Provisional Sums and Contingencies."
f. Clause l(iv) of the Addendum provides:
The Addendum provides extra costs required to successfully complete the project for THE DESIGN AND CONSTRUCTION OF THE DODOMA-MANYONI ROAD. The extra costs are the result of the negotiations held between the Employer and the Contractor on pertinent contract items are agreed. The agreed negotiated items are, namely:
(iv) Costs due to Disruption and Loss of Productivity amounting to Tshs. 10,000,000,000.00..."
a. The Parties agreed in the Addendum that the contract price would be revised to the Adjusted Contract Price of TZS 86,228,583,586.00. This was expressly stated to include Additional Designs.
b. By the express wording of Clause 1 of the Addendum, "costs due to Additional Designs amounting to Tshs 1,813,008,129.00" were agreed.
c. The amount due for variations at Clause 1 (ii) of the Addendum was expressly described as an estimate whereas the figure for Additional Design was not.
d. Appendix 2 to the Addendum shows Design of the Works as a line item in the breakdown of the Adjusted Contract Price.
"The Parties agreed that the design work was part of the Contractor's obligations. Accordingly, if at all the Contractor has incurred any additional costs as a result of any extra designs, these costs shall be borne by the Contractor. However, if any extra design(s) is or was in any way due to the instruction(s) or additional requirement(s) of the Employer and/or the Engineer, then the cost(s) of executing such designs shall be borne by the Employer." [E5/3/1323]
"The Addendum provides extra costs required to successfully complete the project for THE DESIGN AND CONSTRUCTION OF THE DODOMA -MANYONI ROAD. The extra costs are the result of negotiations held between the Employer and the Contractor on pertinent contract items and are agreed. The agreed negotiated items are, namely:
(iii) Costs due to Additional Designs amounting to Tsh 1,813,008,129.00;
a. September 2006 - mid 2007 ("the First Suspension");
b. April 2008 - June 2008 ("the Second Suspension");
c. November 2008 - March 2009 ("the Third Suspension").
"Sub-Clause 16.1 - Contractor’s Entitlement to Suspend Work
If the Engineer fails to certify in accordance with Sub-Clause 14.6 [Issue of Interim Payment Certificates] or the Employer fails to comply with Sub-Clause 2.4 [Employer's Financial Arrangements] or Sub-Clause 14.7 [Payment], the Contractor may, after giving not less than 21 days’ notice to the Employer, suspend work (or reduce the rate of work) unless and until the Contractor has received the Payment Certificate, reasonable evidence or payment, as the case may be and as described in the notice.
The Contractor’s action shall not prejudice his entitlements to financing charges under Sub-Clause 14.8 [Delayed Payment] and to termination under Sub-Clause 16.2 [Termination by Contractor].
If the Contractor subsequently receives such Payment Certificate, evidence or payment (as described in the relevant Sub-Clause and in the above notice) before giving a notice of termination, the Contractor shall resume normal working as soon as is reasonably practicable.
If the Contractor suffers delay and/or incurs Cost as a result of suspending work (or reducing the rate of work) in accordance with this Sub-Clause, the Contractor shall give notice to the Engineer and shall be entitled subject to Sub-Clause 20.1 [Contractor’s Claims] to:
An extension of time for any such delay, if completion is or will be delayed, under Sub-Clause 8.4 [Extension of Time for Completion], and
Payment of any such Cost plus reasonable profit, which shall be included in the Contract Price." [E3/1/653]
"If the Contractor considers himself to be entitled to any extension of the Time for Completion and/or any additional payment, under any Clause of these Conditions or otherwise in connection with the Contract, the Contractor shall give notice to the Engineer, describing the event or circumstance giving rise to the claim. The notice shall be given as soon as practicable, and not later than 28 days after the Contractor became aware, or should have become aware, of the event or circumstance.
If the Contractor fails to give notice of a claim within such period of 28 days, the Time for Completion shall not be extended, the Contractor shall not be entitled to additional payment, and the Employer shall be discharged from all liability in connection with the claim...
Within 42 days after the Contractor became aware (or should have become aware) of the event or circumstance giving rise to the claim, or within such other period as may be proposed by the Contractor and approved by the Engineer, the Contractor shall send to the Engineer a fully detailed claim which includes full supporting particulars of the basis of the claim and of the extension of time and/or additional payment claimed...
Each payment certificate shall include such amounts for any claim as have been reasonably substantiated as due under the relevant provision of the Contract...
...If the Contractor fails to comply with this or another Sub-Clause in relation to any claim, any extension of time and/or additional payment shall take account of the extent (if any) to which the failure has prevented or prejudiced proper investigation of the claim, unless the claim is excluded under the second paragraph of this Sub-Clause." [E3/1/684]
"Wherever these Conditions provide for the giving or issuing of approvals, certificates consents, determinations, notices and requests, these communications shall be:
in writing and delivered by hand (against receipt), sent by mail or courier, or transmitted using any of the agreed systems of electronic transmission as stated in the Appendix to Tender; and
delivered, sent or transmitted to the address for the recipient’s communications as stated in the Appendix to Tender. However:
if the recipient gives notice of another address, communications shall thereafter be delivered accordingly; and
if the recipient has not stated otherwise when requesting an approval or consent, it may be sent to the address from which the request was issued.
Approvals, certificates, consents and determinations shall not be unreasonably withheld or delayed. When a certificate is issued to a Party, the certifier shall send a copy to the other Party. When a notice is issued to a Party, by the other Party or the Engineer, a copy shall be sent to the Engineer or the other Party, as the case may be."
"1230 RECORDING OF INFORMATION RELATING TO CLAIMS FOR
ADDITIONAL COMPENSATION OR EXTENSION OF TIME
Should any circumstances arise or order be given by the Engineer which the Contractor considers may fairly entitle him to additional compensation, or extension of time for completion of the Contract, then the Contractor shall at the earliest practicable opportunity inform the Engineer of these circumstances so that he may have the opportunity to investigate the circumstances and take such action as he considers desirable in order to reduce possible costs to the Employer. The Contractor shall at the same time inform the Engineer of his intention either to claim additional compensation or extension of time, or to reserve his right to claim at a later stage. The Contractor shall also state on which clause or clauses of the Conditions of Contract, the Special Specifications or other parts of the Contract Documents his claim is based.
In order that the extent and validity of such claims may be properly assessed when they are submitted at a later date, all circumstances relating to claims must be investigated, recorded and agreed upon as far as possible between the Contractor and the Engineer as and when they occur. For this purpose the Contractor shall furnish the Engineer from day to day with records, in a form approved by the Engineer, of all the facts and circumstances that the Contractor considers relevant and may wish to rely upon in support of his claims. The Engineer may in turn record such other facts and circumstances as he considers relevant and the Contractor shall for this purpose, supply him with all the information that he may require in this respect.
The Engineer and the Contractor shall, at the time of recording, indicate in writing and by signature, their agreement or disagreement as to the correctness of the information recorded. Additional compensation shall for the purposes of this Clause be taken to mean compensation over and above the payments at unit rates and prices bid or agreed upon for work ordered by the Engineer." [E4/2/949]
Factual Background to the Suspensions
|6 June 2006||IPC 15 issued.|
|27 June 2006||TZS portion of IPC 15 paid in full.|
|14 August 2006||Sub-Clause 16.1 notice served in respect of IPC 15 [G1/66/318].|
|5 September 2006||Claimant notified MoID that it was slowing down progress and gave notice under Sub-Clause 20.1 in respect of IPC 15 [G1/72/375]. The Claimant reduced the rate of working.|
|8 September 2006||USD 1,252 million paid to Claimant -leaving USD 25,000 unpaid on IPC 15.|
|10 November 2006||USD 1,458,399.75 paid to Claimant and allocated to IPC 16.|
|22 December 2006||USD 900,000 paid to Claimant: • USD 6,729 allocated to IPC 15, leaving USD 18,000 unpaid. • USD 20,000 allocated to clear small balances on IPCs 13 and 14.|
|10 January 2007||Ninth Meeting between GNT and the Claimant. Minutes record that Outstanding Amount would be paid "now".|
|15 January 2007||IPC 17 submitted but not certified.|
|17 January 2007||IPC 17 re-submitted minus Outstanding Amount [G2/112/771].|
|30 January 2007||MoU signed.|
|6 February 2007||Claimant letter to Respondents seeking payment of Outstanding Amount [G2/123/860].|
|19 February 2007||Claimant letter to Respondents again seeking payment of Outstanding Amount [G2/124/861].|
|16 March 2007||Deed of Settlement signed.|
|19 March 2007||Outstanding Amount certified in IPC 18 [G2/132/958].|
|10 April 2007||Limited remobilization begins [C1/1/21].|
|12 July 2007||Full payment of IPC 18 (Outstanding Amount) received and full remobilization.|
|4 August 2007||Sub-Clause 20.1 notice for Outstanding Amount.|
|2 November 2007||IPC 15 paid in full.|
|16 June 2007||IPC 19 submitted.|
|26 June 2007||IPC 19 certified.|
|16 August 2007||IPC 20 submitted.|
|22 August 2007||Sub-Clause 16.1 notice given in relation to IPC 19 [G3/189/1217].|
|7 September 2007||Revised IPC 20 certified.|
|2 November 2007||USD 182,000 still outstanding on IPC 19.|
|6 November 2007||Sub-Clause 16.1 notice served in|
|respect of IPC 20 [G3/230/1333].|
|26 January 2008||IPC 23 submitted.|
|12 February 2008||Meeting between Tanroads and Claimant - agreed to resubmit IPC 20 as IPC 20A [G3/302/1475].|
|15 February 2008||IPC 20A submitted.|
|19 February 2008||IPC 20A certified.|
|23 February 2008||IPC 23 submitted.|
|26 March 2008||Claimant wrote to Tanroads stating that its Sub-Clause 16.1 notice in respect of IPC20 applied to IPC20A [G3/330/1569].|
|16 April 2008||Sub-Clause 16.1 notice served in respect of IPC 20A [G3/349/1597].|
|18 April 2008||Claimant informs Respondents of Second Suspension [G3/353/1 609].|
|19 April 2008||Claimant commenced Second Suspension.|
|21 April 2008||Sub-Clause 16.1 notice served in respect of IPC 23 [G3/356/1613].|
|25 April 2008||Letter from Claimant to Tanroads stating that its financial situation has deteriorated and that it will be suspending the structure works and ancillary works from 29th April 2008 [G3/357/1614].|
|1 May 2008||Letter from Claimant to Tanroads giving notice of claim for extension of time and associated costs in relation to IPC 20 [G3/361/1621].|
|8 May 2008||Minutes of Progress Meeting 52 [A2/13/5].|
|9 May 2008||Letter from Claimant to Tanroads notifying suspension from 10th May 2008 [G3/367/1629].|
|14 May 2008||Letter from Claimant to Tanroads acknowledging payment of TZS 8 billion but stating that this amount is enough to pay sub-contractors and suppliers for services rendered in|
|March and April 2008 only, and not for resuming works in full capacity. Notes that the amount of outstanding payments for the IPCs, after the aforementioned part payment, is in excess of USD 22 million [G3/371/1636].|
|23 May 2008||High-level meeting at Konoike headquarters in Osaka, Japan [G3/387/1702].|
|24 May 2008||Sub-Clause 20.1 notice provided in respect of IPC 23 [G4/390/1711].|
|29 May 2008||IPC 19 paid in full [G4/393/1715].|
|21 June 2008||Claimant resumed Works.|
|12 July 2008||Full remobilisation.|
|16 September 2008||IPC 20A paid.|
|20 September 2008||Particularisation provided [G4/463/1927].|
|22 September 2008||IPC 23 paid.|
|16 May 2008||IPC 24 certified.|
|5 August 2008||Sub-Clause 16.1 notice for IPC 24 [G4/430/1836].|
|18 August 2008||IPC 25 certified.|
|2 September 2008||Local currency element of IPC 24 paid (TZS 2,182,176,813) [G4/447/1865].|
|17 September 2008||Claimant letter to Tanroads stating entitlement to suspend works (G4/455/1906].|
|22 September 2008||USD 4 million paid, of which USD 3.49 million was allocated to IPC 24 [G4/464/1929].|
|15 October 2008||Claimant submitted a Sub-Clause 16.1 notice based on non-payment of IPC 25. In the same letter, the Claimant asserted that it "would be entitled to terminate the Contract 120 days after IPC 24 was due, on 11 July 2008 [G4/498/2005]. The Employer responded that it was reviewing the prior payments made under the Addendum and asked the Claimant to withdraw its intention to suspend the works [G4/523/2070].|
|3 November 2008||Claimant wrote to Tanroads stating that works would proceed at a reduced rate from that day forward, pursuant to the Sub-Clause 16.1 notice for IPC 24, and that suspension of the works for non-payment of IPC 25 would begin on 6 November 2008 [G4/527/2084].|
|6 November 2008||Claimant confirmed the Third Suspension [G4/534/2096].|
|2 December 2008||Claimant issued a "Notice of Entitlement to Terminate Pursuant to Sub-Clause 16.2" alleging various grounds including that payment for IPC 24 was 144 days late, the Engineer had not certified IPC 26 within the required time, as|
|well as that the Employer had refused to issue Taking Over Certificates and had interfered with the Engineer’s determination of claims [G4/559/2142].|
|15 December 2008||Tanroads informed the Claimant that the Contract was at an end and instructed the Claimant to vacate the Site,|
|11 March 2009||Claimant purportedly terminated the Contract [G5/645/2325].|
a. Sub-Clause 16.1 provides no restrictions on a Contractor’s right to suspend for non-payments. The Claimant was entitled to suspend even if the amount outstanding could be described as de minimis.
b. There is no foundation in law or fact for the Respondents’ argument that it should be treated as having allocated funds from the 10 November 2006 and 22 December 2006 payments to IPC 15 with the result that the right to suspend work ended. The Claimant relies on section 60 of the Tanzanian Law of Contracts Act [F2/2.29/22]. Even if the Claimant had allocated the sums paid in respect of IPC 16 as against IPC 15, sums would then have been outstanding on IPC 16, which would have entitled the Claimant to suspend Works. The Claimant expressly clarified that it had not recognised that the whole of IPC 15 had been paid [H2/1.40/82] [G1/90/486] [G2/104/671] [H1/1.55/1] [G2/113/772].
c. In any event, the claim relates to delayed remobilisation in April-August 2007 due to lack of funds. The Respondents had additionally failed to pay the Outstanding Amount in the sum of USD 10.6 million until 12 July 2007.
a. It was agreed as part of the Addendum by Minute 4.5.0 of the meeting on 20 December 2006 [G2/104/671] that work would not commence until some payment had been made. Given the contractual force of that agreement, further notices under Clauses 16 and 20 were not required.
b. Failure to pay the Outstanding Amount was a "delay, impediment or prevention" on the part of the Employer, entitling the Claimant to an extension of time pursuant to Sub-Clause 8.4(e). Entitlement under this clause does not require the service of a Sub-Clause 16.1 notice.
c. However if and insofar as necessary, notice was given under Sub-Clause 16.1 and 20.1 in respect of the non-payment of the Outstanding Amount by:
• Minute 4.5.0 of the above meeting on 20 December 2006, which was restated and agreed by inclusion in the MoU and the Addendum;
• Letter dated 6 February 2007 [G2/123/860];
• Letter dated 19 February 2007 [G2/124/861].
d. In the circumstances of Works already being subject to a reduced rate of working, notice that they would not be re-commenced until payment was made was sufficient description of the event or circumstances giving rise to an extension of time.
e. Notice provisions such as Sub-Clauses 16.1 and 20.1 are to be construed broadly - Obrascon Huarte Lain SA v Her Majesty’s Attorney General for Gibraltar  EWHC 1028 (TCC).
f. The Respondents have waived their right and/or are estopped from relying upon any failure by the Claimant to comply with the notice provisions.
a. A Sub-Clause 16.1 notice was given in relation to IPC 19 on 22 August 2007 [G3/189/1217]. The Claimant was therefore entitled to suspend on this basis from 12 September 2007. However, the Claimant did not exercise this right immediately and kept working.
b. A Sub-Clause 16.1 notice was served in respect of IPC 20 on 6 November 2007 [G3/230/1333].
c. On 26 March 2008, the Claimant wrote to Tanroads asserting that its Sub-Clause 16.1 notice in respect of IPC 20 applied to IPC 20A [G3/330/1569].
d. A further Sub-Clause 16.1 notice in respect of IPC 20A was served on 16 April 2008 [G3/349/1597].
e. The Claimant eventually suspended on 19 April 2008.
f. A Sub-Clause 16.1 notice for IPC 23 was given on 21 April 2008 [G3/356/1613].
g. On 29 May 2008, IPC 19 was paid in full. [G4/393/1715]. However the Claimant’s entitlement to suspend continued as a result of the non-payment of IPCs 20, 20A and 23.
a. The only IPCs of relevance to this suspension are IPCs 20A and 23. IPC 19 was paid in full and IPC 20 was withdrawn and so neither could found a Sub-Clause 16.1 suspension.
• By 2 November 2007, all but USD 182,000 had been paid on IPC 19.
• When the Contractor received payments totalling nearly USD 8 million on 16 January, 23 January 20 February and 26 February 2008, it allocated the entire sums to IPCs 21 and 22, although those were not due for weeks. The exercise of discretion under s 60 of the Law of Contracts Act must be used reasonably
• Therefore when the Claimant suspended on 19 April 2008, nearly eight months after its Sub-Clause 16.1 notice for IPC 19, any outstanding balance was de minimis and could not justify the suspension.
b. Furthermore, the Claimant never purported to suspend on the basis of IPC 19. The Claimant announced the Second Suspension by its letter of 18 April 2008 [G3/353/1609] referring only to IPC 20 and the Sub-Clause 16.1 notice given in respect of IPC 20. It did not invoke IPC 19 as a basis for the suspension. On 20 September 2008 when the Claimant submitted its particularised claim in respect of the Second Suspension [G4/463/1927] IPCs 20, 20A and 23 are listed but not IPC 19.
c. The Sub-Clause 16.1 notices upon which the Claimant relies in relation to IPC20A and IPC 23 were not effective until 21 days after they were given. Accordingly, the earliest the Claimant could have reduced the rate of progress or suspended the Works was 7 May 2008 (and 14 May 2008 for IPC 23). Any suspension prior to this time was in breach of contract.
d. The Sub-Clause 16.1 notice that was issued in respect of IPC 19 cannot be left open for 10 months as the Claimant alleges. Sub-Clause 16.1 notices cannot reasonably be construed to give a perpetual right to suspend.
e. Irrespective of the issues on Sub-Clause 16.1 notices, the claim must fail as no Sub-Clause 20.1 notice was given in respect of the Second Suspension within the required time. Additionally, particularisation of the claim was not given until 20 September 2008.
f. In any event, on a proper analysis of the balance of payments made, no monies were due to the Claimant during the period 19 April 2008 to 12 July 2008, as set out in the Respondents’ Schedule of Balance of Payments Against Revised IPCs at Appendix A to the SoDC.
g. As a matter of Tanzanian law, the Respondents were under no obligation to make payments to the Claimant due to its alleged failure to recover the delay to progress caused by its purported slow remobilisation of work following the previous suspension in 2007.
a. Despite the part payments, a sum of USD 182,000 remained outstanding on IPC 19 until the 29 May 2008 and the Claimant was therefore entitled to suspend work on 19 April 2008. There is no de minimis restriction on the Claimant’s right to suspend under Sub-Clause 16.1.
b. The Respondents never questioned the Claimant’s reliance on its Sub-Clause 16.1 notice for IPC 20 in relation to IPC 20A or its right to suspend. By their conduct, the Respondents have waived their rights or are estopped from contending the contrary. The Respondents have not shown that there was any agreement made that there should be a further 56 days for the payment of IPC 20.
c. The Respondents’ reliance on the table in Appendix A is misplaced. Appendix D to the Reply records the actual, contemporaneous payment situation with regard to certified amounts, with allocation of sums received from the Respondents by the Claimant taking into account any intimation from the Respondents as to how the sums should be attributed.
d. The Claimant states that Sub-Clause 20.1 notices were given as set out in the table below:
|e. 1 19 n a n y e V||• Letter dated 18 April 2008 [G3/357/1614] • Minutes of Progress Meeting 52 on 8 May 2008 [A2/13/5] • Letter dated 14 May 2008 [G3/371/1636] • Minutes of the meeting on 23 May 2008 [G3/387/1702] • Alternatively, the Sub-Clause 16.1 notice of 22 August 2007 [G3/189/1217] was also a notice under Sub-Clause 20.1|
|e 20 n t J t h e R e||• Letter dated 1 May 2008 [G3/361/1621] • Minutes of Progress Meeting 52 on 8 May 2008 [A2/13/5-6] • Letter of 14 May 2008 [G3/371/1636] • Minutes of the meeting on 23 May 2008 [G3/387/1702] • Further or alternatively, the Sub-Clause 16.1 notice dated 6 November 2007 [G3/230/1333] was also a notice under Sub-Clause 20.1|
|s 20A P o n d e n||• Letter of 1 May 2008 [G3/361/1621] • Letter of 9 May 2008 [G3/367/1629] • Alternatively, Sub-Clause 16.1 notice dated 6 November 2007 [G3/230/1333] was also a notice under Sub-Clause 20.1|
|t 23||• Letter of 24 May 2008 [G3/390/1711]|
s cannot rely on any alleged failure to notify the claim under Sub-Clause 20.1 to their advantage by virtue of the prevention principle - Gaymark Investments Pty Ltd v Walter Construction Group Ltd  NTSC 143 [F1/1.1/1]. Furthermore, the notice provisions do not apply to the Claimant’s claims for breach of contract.
f. The failure to particularise within the time limits prescribed by Sub-Clause 20.1 is not a condition precedent and therefore not fatal to the Claimant’s claim.
a. They are discharged from liability as a result of the Claimant’s failure to particularise the claim until submission of its Final Account on 26 June 2009 [A3/1.1/109].
b. In any event, no monies were due to the Claimant during the period of suspension from 6 November 2008 to 11 March 2009 due to the invalidity of prior amounts paid previously under the Addendum, as set out in the Respondents’ Schedule of Balance of Payments Against Revised IPCs at Appendix A. The Claimant had been substantially overpaid and therefore was not owed the monies covered by IPCs 24 and 25 and could not suspend. Under Sub-Clause 20.6, the Tribunal is entitled to open up, review and revise any IPC.
c. On 15 December 2008, Tanroads informed the Claimant that the Contract was at an end and instructed the Claimant to vacate the Site. That the Claimant decided to wait until 11 March 2009 until it commenced demobilizing is a matter for its own account, and cannot found an entitlement to additional time and money. Even if the Claimant is correct about anything else in relation to the final suspension, the maximum Extension of Time that could be sustained is 40 calendar days: 6 November 2008 to 15 December 2008 inclusive.
d. As set out above, the Employer was entitled to refuse to authorize further payments to the Contractor given that the Contractor had not yet recovered the unexcused delay to the schedule, nor remedied the other shortcomings notified to it pursuant to Regulation 123(3).
a. As set out in paragraph 52 above, the Claimant was not entitled to maintain its suspension on the basis of the Sub-Clause 16.1 notice given on 14 August 2006 following the payment made by the Respondents on S September 2006. In the absence of further notice it is not commercially sensible for a suspension notice to be able to continue when after such a payment, a de minimis sum remains outstanding.
b. There is thus no significant period of time during which the Claimant was entitled to suspend or slow down the work given that the 21 day period specified in its notice of 14 August 2006 was overtaken virtually immediately by the substantial payment of almost all of the amount the subject of the notice on 8 September 2006.
c. The suspension cannot be justified on the basis of the non-payment of the "Outstanding Amount" which was not the subject of a Sub-Clause 16.1 notice.
a. A Sub-Clause 16.1 notice was given in respect of IPC 24 on 5 August 2008 [G4/430/1836].
b. The Claimant’s letter of 17 September 2008 [G4/455/1906] reactivates the notice of 5 August 2008 and expressly refers to Sub-Clause 16.1.
c. A Sub-Clause 16.1 notice is given in relation to IPC 25 on 15 October 2008 [G4/498/2005] which also reactivates the notices in respect of IPC 24 of 5 August 2008 and 17 September 2008.
d. By the letter of 3 November 2008 [G4/527/2084] further referring to and reactivating the notice of 5 August 2008, a suspension was advised commencing that day. This letter also referred to the separate notice that had been issued on 15 October 2008 in relation to IPC 25 indicating that when its due period had lapsed, a suspension based on that notice would begin on 6 November 2008.