The Commercial Division of the Accra High Court will today rule on an application filed by Quantum Oil Terminals that seeks to prevent the International Finance Corporation and the OPEC Fund from commencing other proceedings on the matter already before the court in another 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 the parties. But the IFC – not satisfied with the ruling – is said to be pursuing arbitration proceedings in London over some aspects of the case earlier-on decided by the Accra High Court.
Counsel for Quantum Oil Terminals is not amused by the development and 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.
When granted, the decision is supposed to bar IFC from commencing other actions in any other jurisdiction on the matter for which the Accra High Court has already ruled it has jurisdiction.
Expectedly, an arbitral tribunal in London is to make a ruling next month on whether IFC – a member of the World Bank Group – is justified in having abrogated contracts it signed with the indigenous firm that 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 to signing of the US$16million loan deal, consisting of 8 different contracts in all. The deal, which was signed in June 2015, stated that Quantum Oil would receive US$8million as 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 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 cannot 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 International Finance Corporation (IFC) and OPEC Fund.
The subsidiaries – Sage Petroleum, Cardinal Petroleum, Ecco Petroleum, Quantum Group and Arch investments – had filed a motion to join the suit arguing that they are direct parties to the share charge agreement between themselves and IFC & OPEC.
The subsidiaries argued that, subsequent to the breach of the share charge agreement, they have suffered damages and are therefore applying to join the suit in order to have an 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.