The government has won a long-running dispute with energy developer, Dane Associates Limited, following an award by an arbitral tribunal of the International Chamber of Commerce.
The Scottish-registered energy developer last year dragged government before the arbitration tribunal, to demand compensation for cancellation of its contract.
The government had cancelled a joint venture with the firm after the latter had failed to provide sufficient details of $3 million in “pre-project costs.”
In its judgement, the tribunal sitting in Paris, France, on July 7 found that government had “not wrongly terminated the project agreements” it had entered into with the Danish firm for the development of a gas extraction and power generation project on Lake Kivu.
The arbitration was done under Swedish law that provides 30 days after the award for application for review. The 30 days elapsed on August 8, reaffirming Rwanda’s victory.
The arbitral tribunal also found that government had not expropriated Dane’s rights in relation to the project or breached its obligations to Dane under international law.
“These findings in favour of the Government of Rwanda mean that the tribunal rejected all of the main claims made by Dane. Two small, subsidiary claims made by Dane were accepted by the tribunal,” Johnston Busingye, the minister for justice, told The New Times yesterday.
“Once they lost the decision, they had until 30 days to appeal, but have not done so – so we celebrate this victory and we knew it all along that we were the right party.”
According to Busingye, if Dane Associates had won the case, government would have given them over $90 million in compensation for “lost business time” and “lawyer fees.”
The tribunal also rejected various allegations made by Dane that the government had been responsible for the delays in relation to the project and problems with its funding.
“Dane did not keep “the government” appraised in a timely fashion about progress and costs overruns on the Pilot Plant … nor did it act transparently within respect of KP1’s finances, thus, largely due to Dane’s own fault, creating a climate of suspicion and distrust between the Parties that poisoned their relationship,” Busingye said.
“The government welcomes the tribunal’s findings, as it reiterates our commitment to fostering an investment climate in Rwanda that is supportive, robust and law abiding. Investors can be confident that their rights and obligations will be respected.”
Following the decision, KP1’s assets will be liquidated and the proceeds allocated to both sides according to their share size.
The saga began in March 2005, when the government and Dane Associates entered into a concession agreement and power purchase agreement in relation to gas extraction and power generation on Lake Kivu.
In September 2005, KP1 was established under the joint ownership of the Government of Rwanda and Dane, together with a shareholders agreement.
According to Busingye, government invested substantial amounts of debt and equity in KP1, which was to manage the design as well as in construction and operation of a pilot plant.
However, on December 31, 2006, after delays and other difficulties in relation to the Pilot Plant, government exercised its option to terminate its agreement with Dane due to the failure of certain conditions by Dane.