Hearing against Konoike’s Sh130bn award starts Friday

Monday October 30 2017

Dar es Salaam. The first hearing of an objection filed by the government through Tanzania National Roads Agency (Tanroads) at a local court to challenge the ruling that awarded $60 million to Japanese Konoike Construction Company starts this Friday.

A reliable source from Tanroads, who asked not to be named, revealed to The Citizen yesterday that the first hearing of the Tanzania authorities’ objections will be held on Friday, November 3, at the High Court of Tanzania.

Tanroads has filed an objection to challenge a February 2016 ruling by the International Chamber of Commerce (ICC) arbitration in London, UK, which awarded $60 million (about Sh130 billion) to the Japanese firm in a contractual dispute with the government.

“We have filed the objections to ask the High Court of Tanzania to set aside the awards given to Konoike, because of misconduct from the part of the arbitrator,” the source said.

The source explained that the main argument of the legal challenge lies on the amount of the award quoted in the ruling; saying it was highly inflated and lacked any basis.

“We feel that the calculation of the amount of award was not proper and this should be considered as misconduct on the part of the arbitrator,” he said.

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He said, Tanroads’ prayer is seeking the local court jurisdictions to set aside the award that was in favour of Konoike Construction because it was issued on baseless submissions.

Furthermore, Tanroads objects to additional costs that were made to the award as it believes that there is no justification for them.

However, when reached for confirmation, Attorney General’s spokesperson Maura Mwingira said her employer was not aware of the objections filed by Tanroards. She had earlier told The Citizen that Tanroads was an entity that had full mandate to deal with such issues on its own.

In July this year, Konoike filed the ICC arbitration court ruling to the local court seeking enforcement of the award. It also filed preliminary objections seeking to block Tanroads from challenging the award in local courts, claiming that the court had no jurisdictions to hear the case.

“The Konoike Construction objections were thrown out because our local court said it has the jurisdiction to hear any case ruled by an international tribunal,” the source said.

Tanroads, together with the Ministry of Works, Transport and Communications were respondents in the arbitration filed in 2010 by the Japanese firm, which had earlier been awarded a tender for road construction.

Konoike won the February 2016 award after a London tribunal concluded that the Tanzania National Roads Agency, the Ministry of Works and other agencies had improperly called upon another contractor to finish the project on a 79-mile stretch of road in the country after Konoike.

It was reported last month from New York that Konoike asked the District of Columbia Federal Court to sign off on an arbitral award issued against several Tanzanian government agencies following a stymied road improvement project.

The dispute has its origins in a 2003 contract by which Konoike agreed to design and construct the 79-mile road section between what is now Dodoma and Manyoni in Singida Region.

The project was originally slated for completion in 2006, but a series of issues arose causing the project to be delayed.

Another target completion date in 2008 was missed when further disputes arose between the parties, and by December of that year, Konoike notified Tanzania of its intention to terminate the contract.

Several months later, Konoike submitted an application for its final payment, having completed 92 per cent of the work but only receiving 71 per cent of the payment due.

In the meantime, however, Tanzania engaged a replacement contractor and required Konoike to cease all further work.

The tribunal concluded those actions amounted to a repudiatory breach of the contract, and that Konoike had therefore been entitled to terminate the contract in March 2009.

Konoike construction was awarded to construct the 79-mile section on Dodoma-Manyoni-Singida road but the tender was terminated in 2009 after Konoike delayed the project, which caused Sh93 billion losses to the government.