TAARIFA KWA UMMA - DOWANS Vs TANESCO

The following is brief summary on the awards issued by the International Chamber of Commerce (ICC)  in November, 2010 on the Arbitration Cases instituted by Richmond Development Company (Richmond)and Dowans Holdings SA (Costa Rica)/Dowans Tanzania Limited (Dowans) against TANESCO.

BACKGROUND:

Richmond submitted a request for arbitration at the International Commercial court (ICC Tribunal) in September, 2008.  The claim amounted to USD 169 million for alleged defamation and damages for termination of the Agreement.  The matter was heard in April 2010 in Dubai.

Similarly Dowans submitted a request for arbitration at the ICC Tribunal in November 2008 claiming damages for alleged repudiatory breach of contract and for partially unpaid capacity charges.  The claim amounted to USD 149 million.  The case was heard in June 2010 in Dar es Salaam.

THE TRIBUNAL’S AWARD

1.1                    Arbitration matter No. 15910/VRO RDEVCO LLC d/b/a Richmond Development Company (USA) Versus Tanzania Electric Supply Company Limited. 

Richmonds’ claim amounted to USD 169 million. TANESCO has successfully won the case and has been awarded USD 1,201,933.08 million being fifty percent (50%) of TANESCO’s legal and other cost while Richmond was awarded  USD 50,000 (United States Dollars Fifty Thousand only) for defamation claim against TANESCO.

1.2                    Arbitration matter No. 15947/VRO between Dowans Holdings SA (Costa Rica) and Dowans Tanzania Limited Versus Tanzania Electric Supply Company Limited.

-       TANESCO shall pay the sum of U.S. Dollars Twenty-Four million One Hundred Sixty Eight Thousand Three Hundred Forty-Three and Eighty Three cents (US$24,168,343.83), plus simple interest at Seven and One-Half percent (7.5%) per annum on the aggregate principle sum of US$19, 955,626.71from 15^th June 2010 to the date of payment.

-       TANESCO shall pay the sum of U.S. Dollars Thirty-Nine Million Nine Hundred Thirty-Five Thousand Seven Hundred and Sixty-Five and Fifty cents (US$39,935,765.50) plus simple interest at Seven and One-half percent (7.5%) per annum on the aggregate principle sum of US$36,705,013.94 from 15^th June 2010 to the date of payment.

-       TANESCO shall pay to Dowans jointly their legal and other costs in the amount of  One Million Seven Hundred and Eight Thousand Five Hundred and Twenty One

U.S. Dollars (USD1,708,521).        

                       

The actual amount payable to Dowans (the amount awarded including interest) has yet to be calculated based on the Award and the Award has yet to be registered with the High Court of Tanzania as required by law.

TANESCO has requested the Tribunal to register the award with the High Court of Tanzania as is required by law being the process by which foreign arbitral awards allow TANESCO to take any action should it consider necessary.

Despite the rules of arbitration requiring that the award details be confidential, TANESCO is, as a result of the articles published in the local media, entitled to disclose such information about the Award as it finds necessary to protect its interests.  TANESCO is still reviewing the Award  of the above arbitration matter and where necessary  may release more information so that the Awards are not distorted.