October hearing for Nidco's appeal of $850m award

A HIGH COURT judge will hear the appeal by the National Infrastructure Development Company (Nidco) of the award of the international arbitration panel in favour of Brazilian firm Construtora OAS SA in October, at an expedited hearing.

On Thursday, Justice Frank Seepersad adjourned the hearing to July 19 for directions ahead of the October hearing.

He has been asked by Nidco to set aside the billion-dollar arbitration award.

In its appeal of the arbitration award, Nidco has asked the court to find, among other things, that its contract with the Brazilian construction firm was validly terminated. The limited-liability state company has also asked the court to send back the partial final arbitral award to the tribunal for reconsideration, as well as an order staying the enforcement of the award until the claim is determined and one preventing the arbitrators from continuing any hearing until the appeal is decided.

The arbitrators are Andrew White, QC, Adam Constable, QC, and John Fellas. Nidco has also asked for certain declarations related to particular clauses in the contract.

On March 11, 2011, Nidco contracted OAS, under the former People’s Partnership administration, to build 43.5 kilometres of dual highway from San Fernando to Point Fortin for $5.3 billion.

On July 6, 2016, the contract was terminated. Nidco was able to recover $670 million in 2016 in letters of credit and bonds from a number of banks that had provided guarantees for OAS in previous litigation.

The partial award to OAS was made on April 16 and revealed a month later by Opposition MP Dr Roodal Moonilal in Parliament.

The tribunal ruled that Nidco must pay OAS a total of US$126 million ($857 million) and Moonilal has asserted this could increase by an additional $100 million in legal, professional and other fees.

He has since called on the Government to say who advised Nidco to terminate its contract with OAS for the Point Fortin highway.

On May 24, the Prime Minister told a PNM meeting that three days before the 2015 general election, an addendum had been added to the OAS contract which led to the country's losing millions.

"We had a contract with a clause that said if the company went bankrupt, the government could use the bonds put up by the contractor to complete the work.

"We went to court and argued that that behaviour on the part of the government did not make good sense and we were awarded the bonds.

"However, the contractor took the matter to arbitration and because that clause was removed, we now owe the contractor $852 million,” Dr Rowley said.

Rowley said the contract had clauses that would have protected the country, but there was one clause, (15 (2) (e)), that said if the contractor was insolvent or went bankrupt, the bonds would go to the State.

On this contentious clause, Nidco, in its application, claimed OAS, compounding with its creditors in 2016, gave rise to a new and independent right to terminate the contract and it was entitled to do so.

Nidco also claimed it was not in default of any payment and it was OAS which faulted the contract by failing to remain mobilised on site.

In its defence, OAS will argue that Nidco’s application “discloses no reasonable cause of action and ought to be struck out in its entirety.

“More particularly, the statement of case is a transparent attempt to appeal the award which is not legally permitted,” the company asserted, adding it had no realistic prospect of success, as there the tribunal made no errors of law or fact, nor any unreasonable or unsupported finding.

“The statement of case seeks to relitigate the precise issue that was submitted to the tribunal for resolution and reopen findings that have already been conclusively determined by the tribunal in its award. This is impermissible on any of the grounds advanced by the claimant in the statement of case.”

OAS further asserted that the case had already been determined by the tribunal’s award, except for those issues still to be decided. The tribunal has reserved its decision on OAS’s claim for damages on the ground that Nidco was overpaid when it seized the bonds in connection with the advance-payment deductions and the award of interest on the sums awarded, sums sought on the advance payment and costs.

Representing Nidco are attorneys Marcelle Ferdinand and Jason Mootoo. OAS is represented by retired appeal court and CCJ judge Justice Rolston Nelson, SC, Gregory Pantin and Miguel Vasquez.