Business News of Monday, 31 July 2017
The International Finance Corporation (IFC) and OPEC will today have the opportunity to make a case as to why its case with Quantum Oil should be heard in a London tribunal.
The Commercial Division of an Accra High Court dismissed a similar request by the IFC and OPEC last month.
It was also slapped with a GH?12,000 fine to be paid to indigenous Ghanaian company Quantum Oil. Quantum oil is in court to force IFC and OPEC to free its assets used as collateral to acquire a botched $200 million loan.
It is believed that IFC and OPEC will move to the Appeals court if their request is denied.
At the last sitting, the Commercial Division of the High Court in Accra ordered the IFC and the OPEC Fund for International Development, to file their defence in a matter brought before the court by Quantum Oil Terminals, an indigenous oil and gas firm, which is arguing that the actions of the two institutions have led the company to lose business to the tune of US$41.3 million.
Quantum Oil went to court after a loan agreement it signed with the Bretton Woods institution and OPEC Fund was terminated and did not lead to the disbursement of the funds despite the indigenous company paying up all manner of fees and payments relating to the disbursement of the loan amount.
The Washington-based institution through its local office approached Quantum Oil in 2012 to finance the construction of a tank farm — which at that time was directive from the National Petroleum Authority (NPA) to oil and gas firms dealing in bulk oil distribution.
Despite the urgency of the NPA directive, the process to access the IFC funding which had then brought in OPEC Fund into fray, was laden with a number of contingency measures such as the payment of all manner of fees and other processes such as company audits, environmental assessments, commitment, monitoring, supervision fees etc.
About three years after the first contact between the parties, an agreement was reached which led to the signing of the US$16 million loan deal which consisted of 8 different contracts in all. The deal which was signed in June, 2015 said the Quantum Oil will receive US$8 million being the first tranche after which the second tranche would be disbursed contingent on meeting other set requirements.
After a series of back and forth requisitions, IFC wrote to notify Quantum Oil that the loan facility has been cancelled citing reasons such as a loss in the business volume of the latter’s business.
Quantum Oil averred in its application to the High Court that the delay in the disbursement of the loan despite fulfilling all requirements set before it by the defendants is the reason why it lost business volume hence the IFC and OFID whose delay in disbursing the loan has caused the reduction in business volumes cannot use this reason to cancel the agreement.
Quantum Oil, the plaintiff, told the court that even after the termination of the facility agreement, the defendants were still asking it to pay loans management fees. When it refused to pay, IFC withheld all the securities it had provided to secure payment for the loans it never received. This prevented it from seeking alternative funding leading it to suffer huge damages.
Before yesterday’s ruling, the Bretton Woods institution had argued that based on earlier contracts that were signed between the parties, any dispute arising from the deal will have to be resolved by arbitration in London, United Kingdom.
The plaintiffs argued that, in all eight contracts were signed, six of which stipulate that the high court in Ghana had the jurisdiction to hear disputes but the first two provided for arbitration in London.
The defendants have already begun an arbitration process in London and thus were arguing that the Ghanaian court has no jurisdiction on the matter as instituted by the plaintff. But delivering a ruling on whether it has jurisdiction on not, Justice S.K.A Asiedu, the presiding judge, dismissed the defendants application saying that based on the submissions so far, the court has the jurisdiction to hear the case.
Although the plaintiff prayed the court that a cost of GH¢20,000 be awarded against the defendants, the judge ruled that a cost of GH¢12,000 instead be awarded against the defendants, asking them to open up their defense in the case which the plaintiffs is seeking damages of more than US$40 million being the loss of business due to the actions of the defendants.