The Supreme Court has ordered for an expert analysis into a multi-million Rwandan francs lawsuit between Nyamasheke district and Banque Populaire du Rwanda Plc (BPR). The two parties are locked in a Rwf600 million case, where BPR is challenging the legal grounds which lower courts based on to give them a hefty fine for not fulfilling some terms of a particular contract with the district. The Rwf 600 million fine arose from a contractor company that failed to deliver on a project for the district, yet it had received a performance guarantee from the bank. The saga started in 2008 when BPR gave a performance guarantee worth Rwf19,935,235 and an advance payment of Rwf39,870,470 to Hategeka Consult & TP, a company contracted to construct school facilities in Nyamasheke District. However, it turned out that the company failed to honour the contract and abandoned the project. In reaction, the district terminated the contract in 2010 and asked BPR to refund all the money given to the Hategeka Consult & TP, but the bank was not responsive. Consequently, the district filed a suit against the bank in 2019 demanding a refund and compensation worth Rwf 639,923,932 As per the 2007 Public Procurement Law, in the event the contract is not fully or well executed, the Bank or authorized financial institution shall be obliged to give to the procuring entity all the amount of the performance security upon claim by the latter within ten working days from the receipt of such a claim. And in case of delays, the bank or authorized financial institution shall also be obliged to pay an additional interest of one per cent for every day of payment delay. In this case, BPR was ordered to pay an additional interest charge of 1 percent accumulated for 3,330 days of delay. Both, BPR and the District have since battled in various courts until the case reached the Supreme Court in September this year. BPR insists the law was misinterpreted and according to its Legal and Collateral Manager, Joseph Mugire, the public procurement law used to penalize the bank was applied in such a way that contradicted other provisions of laws, like article 146 of the law governing contracts The article stipulates that, “Damages for breach of contract may be provided for in the contract but at a reasonable amount based on the actual or potential loss in case of breach of contract or in case of difficulty in providing evidence of the loss.” With similar arguments, he asked the court to look into the case, and the relevant laws in this regard. Delivering the Supreme Court’s decision on Friday, October 7, the presiding judge said the court “has found it necessary” to bring on board an expert who will assist them to understand the proper application of additional interest (fines) that arise from delays to fulfil contracts. Here, the court chose Rene Munyamahoro, an International Investment law and Human Rights expert from the University of Rwanda to do the job. He is required to submit a report to the Supreme Court before the end of next month. After that, the hearing of the case will continue.
