High Court judge, Justice Ueitele last week provided minor relief to government when he struck off the roll, a case in which government was being sued for at least N$80 million by French automaker, PSA Automobiles SA (Peugeot) referring the case to arbitration.
The automaker is a joint-venture partner in an assembly plant situated in Walvis Bay and owns a 51% stake, while government owns the remaining 49% in Peugeot Opel Assembly Namibia (POAN).
In a court order seen by Business Express, Ueitele said the matter is removed from the roll because the joint venture agreement concluded between the parties in clause 20 of that agreement makes provision for the parties to amicably resolve their disputes and if they fail to so resolve their dispute, refer the matter to arbitration.
“The parties must therefore resolve their dispute as contemplated in clause 20 of the joint venture agreement dated 26 February 2018. The matter is regarded as finalised and is removed from the roll,” ruled Ueitele.
The agreement was signed in February 2018, with the Namibian government, represented by the Namibia Industrial Development Agency (Nida) and the Ministry of Industrialisation and Trade, committing to support Peugeot’s investment in the country.
In essence, the joint venture aimed to promote local vehicle assembly and create jobs, while boosting Namibia’s automotive industry.
ARBITRATION
According to the joint venture agreement also seen by Business Express, the Parties committed themselves to seek amicable solutions to all disputes arising in connection with the Agreement.
“If an amicable solution cannot be found within three months from the date of the claim by one of the Parties, it is agreed that: all disputes arising in connection with this Agreement shall be settled, in accordance with the rules of arbitration of the International Chamber of Commerce. The Rules of Arbitration of the International Chamber of Commerce are hereby incorporated by reference into this Agreement,” the agreement reads in clause 20.
It further states that the arbitration shall consist of three arbitrators. PSA Auto shall appoint one arbitrator, the government shall appoint one arbitrator, and the two arbitrators so appointed shall appoint the third arbitrator who shall act as the chairman of the arbitral tribunal and shall not be a citizen of the Republic of Namibia or France.
“Arbitration shall take place in Mauritius. Arbitration shall be carried out in the English language. All arbitration awards shall be final and binding for the Parties and the Parties agree to be bound thereby and shall act accordingly. Each Party waives all rights to challenge any such award under any law of any relevant country or jurisdiction. Any award rendered pursuant of any such arbitration shall include the costs of arbitration, including but not limited to the fees of arbitrators,” further states the agreement.
THE DISPUTE
The French automaker earlier this year filed a lawsuit claiming breach of an investment agreement.
It alleged government’s failure to ensure Peugeot’s joint venture, Peugeot Opel Assembly Namibia (Poan), would be exempt from excise and customs duties, taxes, and levies for exporting vehicles assembled at Walvis Bay to other Southern African Customs Union (Sacu) and Southern African Development Community (SADC) countries, particulars of claim read in part.
Peugeot contends that the Namibian government failed to meet its obligations, despite numerous opportunities to do so detailing atleast 20 meetings of the Sacu Council of Ministers and various provisions in the Sacu Agreement and the Protocol on Trade in the SADC region as potential avenues for the government to have fulfilled its commitments.
It has been reported that the lawsuit alleges that the government’s inaction left Poan unable to compete against other vehicle manufacturers, unable to pay for Semi Knocked Down (SKD) vehicle components, or cover its normal operating expenses.
PSA’s initial contribution to the share capital of POAN was about N$17.5 million, and the Namibia Development Corporation’s (now Namibia Industrialisation and Development Agency) contribution was about N$12.7 million, each amount in proportion to their respective shareholding.
The automaker said it had complied with all its obligations under an investment agreement to assemble more than 150 vehicles. The assembly plant was anticipated to achieve a target volume of 5 000 units by 2020 to meet the Southern African Customs Union (SACU) demand.
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