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Zakhem grabs P47 million in Jwaneng-Kanye road impasse

A company owned by business magnate, Nickolas Zakhem, ZAC Construction will now heave a sigh of relieve after Court of Appeal (CoA) confirmed its claim which suggested that construction giant Elsamex Botswana acted in bad faith by unlawfully kicking it out of a P118 million Jwaneng-Kanye road sub-contract.

This dispute has also delayed the progress of the Jwaneng-Kanye road which is a sponsored by the World Bank. According to a claim brought before the court, Elsamex frustrated ZAC from carrying out contractual obligations and caused delays in progress before abruptly cancelling the contract leaving the latter’s plant idle.

Elsamex had in 2015 sub-contracted ZAC for three contracts being an earthworks contract, a culvert construction contract and a supply of concrete for the P1 billion Jwaneng-Kanye Road which is still under construction. The Kanye-Jwaneng section of the road is a component of the World Bank’s Output and Performance Based Road Contract (OPRC) Package 1 pilot project, which is approximately 123 kilometers.

Out of the P1 billion, Elsamex sub-contracted ZAC to do earthworks, culvert and supply of concrete for P118 million. This contract was ended abruptly leading to a dispute which took three years to settle. According to court papers seen by this publication, ZAC made claims for sum of P6 million in respect of idling plant, rentals, salaries and wages and water shortages. The second claim was sum of P22 million for works executed by ZAC while the third claim was for P31 million in respect to breach of contract.

According to court documents, interest in respect of each claim is claimed at 10 percent per annum. Before arbitration, ZAC received only P16 million for what he has already done in the works. The dispute went to arbitration where ZAC successfully won. Before ruling that Elsamex acted in bad faith in the sub-contract, by also cancelling the agreement unlawfully then coming with a bid to have ZAC’s claims reduced, the arbitrator Rauf Abdulla awarded ZAC P47 million.

“….The Defendant (Elsamex) did unreasonably delay processing of claims and payments thereby frustrating the claimant (ZAC) from carrying out contractual obligations and thereby also cause delays to progress. The defendant did unlawfully cancel the contract…The Defendant did display bad faith during negotiations and opportunities to prevent this dispute and subsequent cancellation,” said the arbitrator.

After arbitration, ZAC went to the High Court which confirmed the award from the arbitrator. Justice Jennifer Dube ordered that ZAC be paid P47 million, but Elsamex appealed the judgment before claiming that the calculation of claims was erroneous, also stopping short of accusing the arbitrator of misconduct.

CoA dismissed Elsamex’s argument of the arbitrator having errered saying the company failed to use the rules for the conduct of arbitration which states that a party which received an award should issue a notice to the other party about an error or mistake and ask the arbitral tribunal to correct any error within 30 days upon the receipt of the award.

 CoA dismissed Elsamex appeal with costs meaning that ZAC stands to consolidate P47 million in the P118 million failed contract. Elsamex-ITNL JVCA is a joint venture between Elsamex from Spain and IF&LS Transportation Networks Limited from India. It has won an over P1 billion ten-year Jwaneng-Kanye road contract which started in May 2014 but was marred by delays which also involved legal disputes.

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