Airport contract battle reaches Court of Appeal
Mpho Mokwape | Wednesday October 21, 2015 18:00
The appeal follows a 2014 decision by Lobatse High Court Justice, Michael Leburu, which required government to pay the P43 million into a mutually held escrow account as directed by the Dispute Adjudication Board (DAB).
The money was to be held into the account, and thereafter be used to reimburse the government for any claims duly processed and approved against Sinohydro. The balance of these funds was to go to the Chinese company.
The dispute arose after government terminated Sinohydro’s contract for the SSKIA’s expansion in July 2012 for “failing to complete the expansion of the airport within stipulated time frame and cost estimates”.
Yesterday before the CoA bench, senior state counsel, Charles Gulubane submitted that the trial judge never accorded them a fair hearing despite government having filed a Notice of Dissatisfaction after the DAB decision.
He argued that the trial judge misinterpreted a certain clause in the DAB’s decision and was also mistaken in making his ruling final and binding on both parties.
“The proper interpretation of that clause is that the decision of the DAB in its entirety does not become final and binding on both parties where a notice of dissatisfaction has been issued by either parties.
The judge failed in his application of the law and in terms of contract, any interpretation would be absurd and contrary to the terms of the contract between the two parties,” he said.
Gulubane said the same case was still pending before the International Chamber of Commerce (ICC) in London and thus proceeding with the case in the local courts was tantamount to running a parallel matter.
The ICC, he said, would decide the legality of the contract termination and subsequently determine how the performance bond in dispute should be handled.
“The judge erred in ignoring its case management order by not affording the parties a hearing on issues raised by the order despite it being binding on both parties as well as on the court itself,” he said. “As such the court violated our right to be heard before the final orders were made.”
Representing Sinohydro, Msiya Kindiano of Bookbinders Business Law said government had failed to raise objections to the DAB decision within the stipulated 28 days after the May 2013 verdict, thus rendering the decision final and binding.
He said the case that was pending before the ICC was a different matter dealing with the legality of the contract termination and not with the DAB decision regarding the escrow account. “Government and Sinohydro established a DAB which heard representation of both parties and furnished them with a decision on May, 6, 2013. The state did not raise any complaint through issuance of a notice of dissatisfaction and the judge was right to grant a final and binding order,” he argued.
After the termination of the contract, government had retrieved the P43 million performance bond in November 2012, before the matter was taken to the DAB.
While ruling the termination lawful, the DAB ordered that the funds be transferred back to an escrow account.
Apart from the P43 million performance bond, government also retrieved P21 million from the project’s contract sum, through a retention bond, which was held with Standard Chartered Bank.
The project, which included construction of a new terminal building and the expansion of the runway, was supposed to be completed by May 2010.
President Ian Khama only launched the project last Friday, giving a speech in which he rued “poor construction management,” calling it “a lesson for Batswana”.
Judgement was reserved for October 29.