IPTL wins case against Standard Chartered Bank

THE High Court of Tanzania has temporarily restrained Standard Chartered Bank (Hong Kong) Limited and two other respondents from enforcing a decision issued by the International Centre for Settlement of Investment Disputes (ICSID) over recalculation of power tariffs.

High Court Judge Fauz Twaib issued the interim order in favour of two applicants, Independent Power Tanzania Limited (IPTL) and Pan African Power Solution Limited (PAP) after considering lengthy and exhaustive submissions presented by advocate Joseph Makandege.

It was argued that implementation of the ICSID decision dated February 12, 2014, had an adverse impact to Tanzanians and was against public interests and policy, as the government would have been forced to pay about 140 million US dollars to Standard Chartered Bank.

“I am satisfied that the applicants have made out a case for the grant of interim orders for the maintenance of the status quo between the parties, and in that regard,, from doing anything towards enforcing, complying with or operationalising the decision of (ICSID),” he ruled.

Judge Twaib also went through the plaint of the suit. Chamber summons and affidavits of officials of that applicant, Parthiban Chandrasakaran and Manraj Singh Bharya in support of the application before granting the interim order in question.

He directed that the order would operate pending hearing and determination of the main application inter-parties on May 8. Other respondents in the matter are Tanzanian advocate Martha Kaveni Renju, who allegedly presenting herself as administrator receiver of IPTL.

The other respondent is Tanzania Electric Supply Company (Tanesco), which has been joined in the matter for the purpose of preventing the state owned company from sitting with Standard Chartered Bank to enforce the London Court’s decision.

In the main application, the two applicants are also seeking for permanent injunction to stop the implementation of the foreign decision until the main case in which they are seeking for demanding 3,240,000,000 US dollars (about 5.3tr/-) from for allegedly fraud, is determined.

Presenting submissions to support the application, advocate Makandege told the court that they were also seeking for declaratory orders to invalidate the ICSID decision because SCBH procured the same fraudulently.

According to Mr Makandege, the interests of the public were at stake and would be in jeopardy if the injunctive orders would not have been issued, but later the applicants emerges victorious in the main case.

“There will be prejudice to the public coffers of this country in the event the recalculation is made and the third respondent (Tanesco) pays the money directly to the first respondent (SCBH,” he submitted.

The advocate added, “This is because, if the applicants emerge victorious, (Tanesco) will be required to pay (IPTL) notwithstanding the payments done to SCBH. Being 100 percent government owned firm, taxpayers of this country will have to foot the bills.”

 He submitted the respondents were barred by Tanzanian law to enforce or domesticate a foreign decision that expressly unlawfully supersedes or circumvents a validly existing decision of a Tanzanian Court that was issued concerning the same subject matter.

“The implementation of the ICSID decision is an abuse of the Sovereignty and Territorial Integrity of United Republic of Tanzania as well as the process, independence, powers and integrity of the Tanzanian courts,” the advocate told the court.

Mr Makandege further said that SCBH had been falsely representing being a creditor of IPTL and procured the decision before a London Court under such fraud, thus such decision was null and void and could not be enforced.

It is alleged in the plaint of the suit that the misrepresentations by SCBH and Ms Renju have caused abortion of transactions by the plaintiffs, notably its ambitious mission of converting the power plant at Tegeta from using heavy fuel (HoF) fired to duo heavy fuel and gas fired.

“Wartsila, to mention but one, declined the conversion of the plant from HoF fired to duo HoF and gas-fired and its expansion from 100MW to 500MW, doubting whether the plaintiffs were the rightful entities to deal with it,” reads one paragraph in the plaint of the suit.

 As a result, the plaintiffs alleged, they have not undertaken the conversion and expansion to date, causing enormous business and financial losses. Under the Purchase Power Agreement (PPA), the plaintiffs were entitled to payment by Tanesco of 2.6 million US dollars monthly.

Such amount, according to the plaintiffs, is for supply of 100MW of electricity only sand by expanding the plant generation capacity to 500MW, the amount payable would increase to 23m US dollars per month being capacity charges to which they would be entitled.

On May 26, 1995, IPTL and Tanesco entered into PPA lasting 20 years from the date the plant would be commercially operative in which it was agreed that latter would design, build, own operate and maintain the plaint to generate and supply electricity to the former.

It is claimed that two years later, IPTL and a consortium of Malaysian Banks entered into a loan facility agreement and the latter obtained a loan facility of the ceiling amount of 105 million US dollars for construction of the plant at Tegeta-Salasala in Dar es Salaam.

However, the plaintiffs claim, only 84 million US dollars was drawn by IPTL for the construction of the plant and by 2007, the latter had already paid a total of 58 million US dollars, leaving a balance of 26 million US dollars only.

“Since 2005 to-date, (SCBH) has been masquerading as a creditor of (IPTL) and has since 2009 been systematically trying to extort from the first plaintiff (IPTL) an amount in excess of hat the lenders would still be entitled, which does not exceed USD 26m only,” it is alleged.

In the suit, apart from the monetary damages demanded, the plaintiffs are also asking the court to declare SCHB and Ms Renju are not a creditor and administrator receiver of IPTL, respectively and have, therefore, no claim whatsoever against the plaintiffs.