$41m law suit: World Bank’s IFC withdraws motion

IN what appeared to be a dramatic backtracking at the Commercial High Court 1 in Accra, the International Finance Corporation (IFC), the private lending arm of the World Bank Group and the OPEC Fund For International Development (OFID), withdrew their motion that sought to challenge the jurisdiction of the High Court to entertain the suit filed against them by the indigenous Ghanaian company, Quantum Oil Terminals Limited.

This follows an agreement reached by the parties in London, United Kingdom, to set aside an ex-parte injunction granted by a London Court restraining the Ghanaian company from litigating against IFC and OFID in any court in Ghana.

The setting aside of the injunction paved the way for Quantum Oil to amend its writ to refer three of the nine agreements signed by the parties to arbitration in London if it so wishes and maintain its claims based on the six other agreements as well as allegation of discrimination and racism against IFC and OFID.

When His Lordship Justice Samuel K. A. Asiedu, the presiding judge of Commercial High Court 1, called the case yesterday, lawyers for IFC requested to withdraw their motion on notice for stay of proceedings pending arbitration in London which it filed on March 28, 2017.

Their oral application was granted by the judge to enable lawyers for IFC and OFID to file their statement of defence to the amended writ by the plaintiff.

This means lawyers for IFC have eight days, counting from the day the amended writ was served on them, to file their statement of defence.

6 agreements for Ghana Court

His Lordship Justice Samuel K. A. Asiedu, the presiding judge, will, therefore, be dealing with alleged breaches of six agreements as well as allegations of discrimination and racism that Quantum Oil has leveled against IFC and OFID.
It will be recalled that Quantum Oil Terminals sued IFC and the OPEC Fund for International Development for damages totaling $41.3 million ($41,319,123) as damages for alleged breach of contract.

Quantum Oil lawyers to go to London Court

Lawyers for Quantum Oil, who were billed to appear in a London High Court on May 19, 2017, to argue their case as to why it was proper to maintain the entire suit in Ghana and the fact that the High Court in London ought not have granted the ex-parte anti-suit injunction against their client, have had to abandon the trip due to an agreement reached by the parties that led to the setting aside of that order in London.

Information gathered by The Finder indicates that Quantum initially agreed to refer disputes in the first three agreements, signed between it and the Quantum Oil, but later saw this agreement abrogated when IFC and OFID arbitrarily decided to abrogate these agreements and refused to disburse the funds promised in those agreements on grounds that Quantum Oil felt it was flimsy and unfair thus rendering the provision for the arbitration also unfair and oppressive.

The source was quick to add that Quantum agreed to arbitration with the view that IFC and OFID would disburse the loan on time for Quantum Oil Terminals to construct its tank farm when it would have been in position to afford such arbitration in London which is thought to be extremely expensive.

According to sources, it was agreed that the remaining six agreements covering guarantees and securities would be resolved in Ghanaian courts.

Legal analysts The Finder spoke with indicate that by Ghana laws, the fact that the parties agreed to arbitration in London does not mean the case cannot be dealt with in Ghana.

The Finder has learnt that though parties may agree to refer disputes between them for resolution by arbitration, same does not deprive courts in Ghana of jurisdiction to hear the matter when subsequent occurrence or conduct by the parties renders the arbitration inoperative and warrant the court to go into the matter.

They noted that for various vitiating factors, convenient purposes, balance of hardship, way of reducing cost and for claims based on constitutional provisions, the court can entertain such disputes or the parties can subsequently agree to submit themselves to the jurisdiction of the court.

According to them, both IFC and OFID have offices in Ghana with lawyers but Quantum Oil does not have any office in London and, therefore, it makes sense to resolve the issues in Ghana but IFC lawyers have rejected this notion.
Quantum deems this stance by IFC and OFID very oppressive and a further attempt to prevent it from seeking justice as the expensive nature of the procedure operates as a bar to it from seeking justice.

While the IFC and OFID have access to unlimited funds, being money belonging to the World Bank and OPEC, and can, therefore, afford any expensive process, Quantum, being just a local-based entity, cannot afford such expense.

Details of law suit

Quantum Oil alleged that the IFC deceived them into coming to the table with the promise of board approval for a loan facility to complete their tank farm within 6 months and subsequent loan disbursement within a year of engagement, leading Quantum Oil to close all other funding doors it was already pursuing before it was approached by the IFC.

It said what followed was four years of constant engagement with the IFC in the form of calls, emails, document requests etc during which time Quantum Oil was made to spend over $2million in fees and other payments to the IFC and other costs in relation to the promised $16 million loan facility. It alleges that though IFC and OPEC did not disburse $1 to it, officials of IFC and OFID ended up pocketing over $630,000.00 indirect fees from Quantum.

It added that after satisfying all the requirements for the disbursement of the loan, IFC, in a move inconsistent with international practice, strangely refused to disburse, leaving the 75% completed tank farm project in a state of limbo.
Quantum Oil further alleges that the IFC proceeded to discriminate against it as they preferred rather to invest in businesses in Ghana owned by foreigners rather than Ghanaians.

According to Quantum Oil, even the conduct of the defendants is against the advice of multiple internal reviews of the loan facility by agents of the defendants.

It said contrary to international practice and IFC’s own transparency rules, IFC took another strange decision by refusing to share the report of the industry expert with Quantum Oil, mainly because it did not support the decision not to disburse.

The company alleges that having taken a decision not to disburse, IFC fraudulently invoiced it for portfolio supervision fees that are payable yearly and are only due a year after the facility has been disbursed.

To make an already bad situation worse for Quantum Oil, the company said IFC still held unto the Quantum Oil’s multiple securities used to guarantee the loan, which was never disbursed, even after the defendants had decided to abrogate the loans agreement.

IFC and OFID still insist that even though they have decided not to disburse the loan and canceled the agreement, Quantum still owes them fees for about $100,000 for the loan application processes and so refused to release the securities to Quantum until the latter pays that amount.

Quantum has questioned the portfolio supervision fees of $100,000 which could not have been due only if the loan had been disbursed.

Quantum Oil alleged that this action has been designed by the IFC to make it difficult for them to raise the needed funding from other sources to complete their tank farm facility still standing uncompleted when it should have been completed and in operation more than 2 years ago.

The amount in damages being claimed by Quantum includes fees and charges paid directly paid to IFC and OPEC Fund, fees and charges paid to various consultants at the direction of IFC and OPEC Fund and statutory fees paid by plaintiff to create charges for the benefit of IFC and OPEC Fund.

Quantum Oil said rather than assisting it to develop and grow its business, IFC and OPEC Fund rather worsened and reduced Quantum Oil’s business fortunes and prospects and in the process, rendered Quantum Oil poorer than before.

It is seeking $4,200,000 being cost of escalation in the project due to delay occasioned by defendants, $681,050 being fees and charges paid by plaintiff directly to the defendants, $331,015 being various consultancy defendants directed plaintiffs to pay and $9,645,582 being lost interest income on funds spent by plaintiff on the project prior to defendants’ breach.

In addition, Quantum Oil seeks $2,430,808 as additional interest cost to be incurred by plaintiff on the project due to defendant’s breach to disburse the loan thus causing delay in the execution of the project, $17,520,882, being lost business revenue to its associated trading company as a result of defendants’ breach and $6,509,786 being lost margins to Cardinal Petroleum Limited directly attributable to delay in the project resulting from failure to disburse the loan by defendants.

Source: Elvis Darko || The Finder

Ghana News Online

The primary function of GhanaNewsOnline.com.gh is to gather, process and distribute news about Ghana and Africa to the World. To serve as a News Agency with the mandate to present complete, in-depth objective and impartial information, news, and features rooted in investigative journalism.

Leave a Reply

Your email address will not be published. Required fields are marked *

Hey there!!! click "Send" to begin to chat us

-Team Ghananewsonline.com.gh
Powered by