Tanzania:Local firm files for compensation over fiber optic contract breach

Published by Daily News
On 29 August 2016 saa 01:12
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A local company, Betam Communications Tanzania Limited, has asked the High Court to order a Chinese state-owned company to pay them 20bn/- compensation for allegedly breaching a contract relating to installation of the Fiber Optic Cable Network in Tanzania.

In the suit, being presided over by Judge Zainabu Mruke, the Betam Company, under directorship of Ethiopian Terrefe Ras- Work, is suing the Chinese state company, China International Telecommunication Construction Corporation (CITCC) and CITCC Tanzania Limited, demanding several reliefs.

Ras-Work, who is also an Engineer and Chairman of Ankober Palace Lodge Amba Eco-Tourusm PLC, is the former Head of Africa Division and Policy Advisor of the International Telecommunication Union, a specialised agency of the United Nations.

His Company claims 6,255,000 US dollars from CITCC as agency commission, compound interest at the rate of 10 percent per annum until the date of suit, which is 2,216,926.97 US dollars for period of delay, interests at 10 percent, general and special damages, among others.

Presenting final submissions in the case last Friday, Betam’s advocate Semu Anney told the trial judge that there was existing agreement between the parties in relation to the installation of National Information Communication Technology (ICT) Broadband Infrastructure Backbone Networks in Tanzania.

He submitted that the averments as to the matter were pleaded in the plaint of the suit and specifically admitted on the written statement of defence by the two Chinese companies, who are defendants in the suit in question for the execution of commission agency agreement for the project in the country.

Mr Anney from Makoa Law Chambers submitted that during hearing one of defence witness, a Global Director legal affairs with CITCC, had admitted in her testimony, as to the existence of contractual relations between Betam Communication Limited and the Chinese state company (CITCC).

He told the court further that following Betam’s fulfillments of its obligations as per contract, on April 24, 2007, CITCC managed to secure a lucrative contract for the installation of the Fibre Optic Cable Network valued at 170 million US dollars and Betam’s directors were instrumental towards such success. However, he submitted, the defendants breached the contract as they did not pay Betam Company anything for their contribution to the project, which they were handsomely rewarded.

Among Betam’s obligations as per the contract, according to the advocate, included identification of the project opportunity in Tanzania for CITCC, negotiation of Memorandum of Understanding and cosigning with CITCC and Tanzania and advice on technical, financial and business issues.

Betam Company also made promotion of interests of the CITCC in particular and China in general with Tanzania government officials for the benefit of the two countries and provide support in the implementation of the project as and when required.

CITCC, on the other hand, had to consider project opportunity identified by Betam, evaluate the project and take appropriate actions, consult with Betam on policy matters to ensure its successful implementation and pay appropriate compensation to Betam as per agreement.

Furthermore, the parties agreed the agency commission for project fixed at 3.75 percent of contractual price, 70 per cent of commission shall be paid upon the first withdraw of the money from the financing institution and 30 per cent of commission shall be paid upon the provisional acceptance of project.

During hearing of the suit, the Manager of International Affairs with the two Chinese firms, Li Zhong, told the court that the plaintiff was entitled to nothing from his two companies.

The manager alleged that he does not recognise the plaintiff had never ever transacted with them whatsoever. He denied all the plaintiff’s claims, saying that as a person who was dealing with the project had not known them until 2012, when the suit was lodged.

Mr Zhong told the court that they had made feasibility study for the projects and the plaintiff had no any role to play.