Dar es Salaam. A Japanese firm is seeking court orders in the United States to enforce an award of $60 million (Sh130 billion) against Tanzania over a 2009 road construction dispute.
News reports yesterday revealed Konoike Construction Company on Tuesday asked the District of Columbia Federal Court to sign off the award it won in February 2016 against the government.
The award was issued by the International Chamber of Commerce (ICC) in London in an arbitration pitying Konoike and Tanzania Road Agency (Tanroads). The arbitration case followed a fallout during the implementation of the Singida-Manyoni road construction.
Impeccable sources within Tanroads who spoke to The Citizen on condition of anonymity confirmed the development yesterday in a telephone interview.
The Konoike award adds to the list of investor-government fallout cases and will pile pressure on treasury which is struggling to pay another award of $38 million (Sh84 billion) to Stirling Civil Engineering of Canada.
The Canadian company has seized a new Bombardier plane bought by the government for Air Tanzania to force payment of the award it won, after it was ejected from a road project in Dar es Salaam.
Several other companies namely Acacia, Symbion Power and EcoEnergy have filed for arbitration against Tanzania in the International Court over soar business relations. These cases are yet to start but the firms are claiming millions of dollars in compensation.
Reports suggest Konoike is seeking attachment orders under US jurisdiction which is easy to navigate. It is also emerging that the decision may have been informed by a decision by Tanzania to challenge the ICC award at the High Court in Dar es Salaam.
If successful, the Japanese company will seize any of Tanzania’s assets overseas. The firm had accused the Ministry of Works and other agencies of improperly terminating its contract for the nearly 150km road project in 2009. The government ordered the termination of the project over delay concerns.
Reports say the contractor abandoned work because of unpaid claims and even when they were called back, demanded first to be paid the arrears in full.
The spokesman at the Office of the Attorney General Maura Mwingira told The Citizen yesterday that the office was not aware of the award. However our sources at Tanroads said the government has since appealed against the decision.
The sources said Konoike declined an out of court settlement with the government.
The case in the High Court seeks to stop Konoike from enforcing the award before the appeal is heard. The government has argued that the ICC award violated procedures of their agreement. Konoike unsuccessfully sought orders at the ICC to block Tanzania from challenging the award in any other court.
The $60 million ICC award includes contract damages, interest and costs and also requires the Tanzanian ministries and its attorney general to indemnify Konoike for any additional tax assessments or related interest or fines, according to the complaint.
The dispute has its origins in a 2003 when Konoike won the contract to tarmac the road between what is now the Tanzanian capital, Dodoma, and Manyoni.
The project was originally slated for completion in 2006. Konoike claimed it had completed 92 percent of the work and received 71 percent of the payment before their ejection. The project in the end cost Sh205.4 billion.