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High Court directs IFC, OPEC Fund to open defence

  • SOURCE: | qwesa2big
    • POSTED ON: February 26, 2018

    The Commercial Division of the Accra High Court has ordered the International Finance Corporation (IFC) and the OPEC Fund to open their defence within nine days in the suit brought against them by Quantum Oil Terminals.

    The court last Friday ruled that IFC and OPEC Fund could no longer commence any proceedings on the matter in any other jurisdiction.

    The court had earlier ruled that it has jurisdiction to determine whether or not the IFC and OPEC Fund erred in the abrogation of a number of financing agreements signed between them and Quantum Oil Terminals.

    The High Court’s latest ruling means that the two lenders cannot start proceedings in any other jurisdiction against Quantum Oil Terminals, aside from an ongoing arbitration proceeding in London.

    Counsel for Quantum Oil Terminals has filed an application for anti-suit injunction – which is an order issued by a court or arbitral tribunal that prevents an opposing party from commencing or continuing a proceeding in another jurisdiction or forum.

    In granting the injunction, the court – presided over by Justice S.K. Asiedu, said with the latest ruling the two have nine days to open their defence on the numerous issues Quantum Oil has raised.

    An arbitral tribunal in London is expected to make a ruling next month on whether IFC, a member of the World Bank Group, is justified to have abrogated the contracts it signed with the indigenous firm which is into distribution of energy and petroleum products.

    Journey so far

    Quantum Oil went to court after the two lenders failed to release a US$16million loan it had signed an agreement with them for, arguing that it had, meanwhile, gone ahead to make all manner of payments in fees and other commitments.

    The IFC, through its local office, approached Quantum Oil in 2012 to finance the construction of a tank farm after the National Petroleum Authority (NPA) had given a directive to oil and gas firms dealing in bulk oil distribution to construct their own storage facilities.

    The IFC brought in the OPEC Fund as joint lender, but the deal was laden with a number of contingency measures such as the payment of all manner of fees – and other processes like 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 signing of the US$16 million loan deal, consisting of 8 different contracts in all. The deal was signed in June 2015, and states that Quantum Oil would receive US$8million as a first-tranche payment, after which the second tranche would be disbursed contingent on other set requirements.

    After a series of back and forth requisitions, IFC wrote to notify Quantum Oil that the loan facility had 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 disbursement of the loan, after it had fulfilled all requirements set before it by the defendants, is the reason it lost business volume – hence the two lenders could not use that to cancel the loan.

    Quantum Oil told the court that even after termination of the agreement, the defendants were still asking it to pay loan management fees. When it refused to pay, the IFC withheld all the securities it had provided to secure disbursement of the loan it never received. This prevented it from seeking alternative funding, leading it to suffer huge damages.

    In December last year, the Accra High Court gave the go-ahead to five subsidiaries of Quantum Oil Terminals to join in the suit it filed against the IFC and the OPEC Fund.

    The subsidiaries – Sage Petroleum, Cardinal Petroleum, Ecco Petroleum, Quantum Group and Arch investments – filed a motion to join the suit, arguing that they were direct parties to the share charge agreement between themselves and IFC & OPEC.

    The subsidiaries had argued that subsequent to the breach of the share charge agreement, they had suffered damages and were therefore applying to join the suit in order to have the opportunity to lay their claim before the court.

    Their purpose is to avoid a multiplicity of suits and allow the court to determine all the issues between the parties once and for all.

    One Comment

    1. News Review for 26 February 2018 | Comprehensive Ghana Oil and Gas news, information, updates, analysisFebruary 27, 2018 at 1:52 pm

      […] High Court directs IFC, OPEC Fund to open defence […]

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