Tanesco for ICSID award freeze

THE Tanzania Electric Supply Company (TANESCO) has decided to seek annulment of the award issued by International Centre for Settlement of Investment Disputes (ICSID) over payments of 148.4 million US dollars to a bank despite emerging victorious on power tariffs dispute.

Speaking during an interview with the ‘Daily News’ yesterday, TANESCO Managing Director, Engineer Felchesmi Mramba, said the power utility, through its lawyers, R.K Rweyongeza and Advocates, will file the appeal within the 90-day timeframe provided by the tribunal.

The World Bank-affiliated International Centre for Settlement of Investment Disputes (ICSID) recently made a ruling in favour SCB-HK but Tanesco is against the award, noting that the decision is contrary to an initial declaration made by the tribunal in 2014.

“There were serious legal flaws in the hearing and determining the case and we believe the court overstepped its jurisdiction; it is on this backdrop that we want the award to be revisited,” Eng Mramba explained.

Among others, the court pegged the award based on 22.31 per cent of the internal rate of returns (IRR) as opposed to the previous decision where the rate was pegged on between zero and 22.31 per cent.

“As if that was not enough, the court entertained fresh demands contrary to procedures which require the tribunal to only consider the main case which was opened in 2010,” he stated.

On his part, Advocate Richard Rweyongeza, for TANESCO, told the ‘Daily News’ yesterday that the award, appearing to be in favour of Standard Chartered Bank (Hong Kong) Limited (SCBHK), contained serious errors of law in respect of both jurisdiction and tariffs payable to Independent Power Tanzania Limited (IPTL).

“The Tribunal (ICSID) has manifestly exceeded its powers, there has been a serious departure from a fundamental rule of procedure and

the award has failed to state the reasons on which it is based,” the seasoned advocate said. He pointed out that TANESCO has 120 days from the date of the award within which to submit the application for annulment before the same Tribunal.

The ICSID issued its award on September 12, this year. This means that the deadline for submission of the application would be January 9, next year. Mr Rweyongeza was, however, quick to point out that the sooner this is done the better as SCBHK was likely to move fast for enforcement of the ward, which could result in other legal battle and costs.

“The possibility exists to request a stay of enforcement with the application for annulment, whereupon enforcement shall be stayed provisionally until the committee rules on such request,” he said.

Expounding further on the matter, Mr Rweyongeza explained that the award by the Tribunal was defective, alleging that SCBHK was not an investor within the Tanzanian laws, notably the Tanzania Investment Centre Act.

He pointed out that in the jurisdiction and liability decision issued in February 2014, the Tribunal had said that Internal Rate Return (IRR) over power tariffs could not be 22.3 per cent but could not be zero.

On the basis of that, he said, it had directed the parties to seat together and recalculate the tariffs. “Surprisingly, in this award, the Tribunal has used the rate which it had disputed before.

We think this is wrong. For that matter we expected the rate could be below, which has not been the case here,” the advocate said.

Pointing another defect on the award, Mr Rweyongeza said that the Tribunal has ordered direct payments to SCBHK contrary to the previous decision where it was stated that the Tribunal had no jurisdiction to give such an order in the absence of IPTL.

“The Tribunal ruled so because TANESCO did not disclose matters relating to the release of money from the escrow account.

We think there is irregularity. We have sufficient evidence to show that SCBHK was aware of everything, including an e-mail saying they had no interest on escrow account,” he said.