Attorney General, Judge Frederick Werema
Chief Justice, Mohamed Chande Othman
THE High Court of Tanzania will likely reject a ruling of the Paris-based International Court of Arbitration (ICC) that awarded highly controversial payments in favour of Dowans Holdings SA (Costa Rica)/Dowans Tanzania Limited, it has been revealed.
According to top legal experts in government, the High Court is well-placed to reject the ICC ruling because of gross irregularities in the proceedings of the case and the illegality of the actual ruling itself.
Section 15 of the Arbitration Act gives the High Court of Tanzania outright powers to dismiss the ICC ruling.
"Where an arbitrator or umpire has misconducted himself or an arbitration or award has been improperly procured, the court may set aside the award," says the legislation in part.
Before Dowans can claim any payment of funds, the complete ruling of the ICC has to be registered at the High Court of Tanzania to become enforceable by law.
But legal experts say enforcement of the ICC ruling would be unconstitutional because it would directly contravene the country's Public Procurement Act of 2004.
"One of the major flaws of the ICC ruling is that it unlawfully attempts to give legality to the Richmond/Dowans contract, which was deemed illegal under Tanzania's Public Procurement Act," a respected government lawyer told THISDAY.
The 2006 tender process was hijacked from TANESCO by the Ministry of Energy and Minerals and high-level government officials.
Former Prime Minister Edward Lowassa appointed a government negotiation team that finally awarded the contract to Richmond against TANESCO's expert advice.
"Section 31 of the Public Procurement Act explicitly states that no public body shall award any contract unless the award has been approved by the appropriate tender board," he said.
"Under the country's law, the Richmond/Dowans contract is the product of an illegal tendering system because it was not awarded by TANESCO's own tender board."
This was the basis for TANESCO's ultimate decision to terminate the contract assigned to Dowans Tanzania Limited by Richmond.
The dubious ICC ruling, which has not been fully made public by the International Chamber of Commerce itself, Dowans nor the government, orders the Tanzania Electric Supply Company (TANESCO) to pay Dowans tens of millions of dollars.
Contrary to a popularly quoted figure of 185.5 billion/-, it is understood that ICC has ordered TANESCO to pay Dowans around $64.2 million (97 billion/-), which is still a colossal amount of money.
"The High Court has power to either bless the ICC ruling or set it aside. In this case, since the ruling goes against the law of the land, the High Court will have little choice but to reject it," said another official close to the judiciary.
Well-placed government officials told THISDAY there was intense lobbying to ensure the government makes the payment ordered by ICC to the proprietors of Dowans as quickly as possible.
"Payment vouchers have been prepared at Treasury and all the relevant paperwork is ready to make swift payment to Dowans after the final go ahead is given," an official in the Ministry of Finance told THISDAY.
Prime Minister Mizengo Pinda and Attorney General Frederick Werema have separately issued controversial statements suggesting that the government was ready to make the illegal payment to Dowans.
However, legal experts say the government appears to be strangely rushing to make the payment while there is legal recourse for TANESCO to avoid the crippling payment.
The cash-strapped TANESCO has raised power tariffs by 18.5 percent effectively from January 1, but says it is still operating at a huge loss primarily due to monthly capacity charges being paid to Songas Limited and Independent Power Tanzania Limited (IPTL).
TANESCO's average monthly revenue collection amounts to around 40 billion/-.
Each month, the state-run power utility pays 6.1 billion/- to Songas and another 3.5 billion to IPTL in capacity charges alone, amounting to a staggering 9.6 billion/-.
"TANESCO spends another 5.5 billion/- each month to service a syndicated loan and doles out another 5 billion/- per month for various contractual commitments," said an official close to the energy sector.
"If TANESCO is forced to pay Dowans on the basis of the ICC ruling, just as it was forced to sign the Richmond/Dowans contract, this company will collapse."
TANESCO secured a syndicated loan of 300 billion/- in 2007 from various local commercial banks.
The highly-indebted public utility also recently obtained a loan of $468 million (approx. 700 billion/-) from the European Investment Bank, the World Bank, African Development Bank, Japan International Cooperation Agency and Korean Economic Development Cooperation Fund to strengthen the power transmission grid