DOKEZO - A Case of Inflated Claims and Questionable Practices (ORYX Energies Vs Oilcom)

Anonymous (2c05) · 2024-11-20T11:31:16+00:00

In a case that has captured national attention, the arbitration dispute between Oryx Energies and Oilcom Tanzania has raised profound questions about business integrity, arbitration practices, and transparency in Tanzania. The controversy began with a contractual disagreement over oil transport volumes and culminated in an unprecedented TZS 468 billion arbitration award, a figure that has stunned industry experts and legal analysts alike. At the heart of the dispute lies a 2016 agreement in which ORYX, a leading oil importer, committed to using Oilcom’s trucks for at least 40% of its oil product transit to neighboring countries. However, Oilcom alleged that Oryx had failed to meet this obligation and lodged an initial claim of USD 5,087,078 in May 2019. Over the years, the claim ballooned, first to USD 131,602,238 in 2021 and eventually to a staggering USD 173,084,708 by March 2023. The arbitral tribunal, composed of Hon. Dr. Engera Kileo, Hon. Sophia Wambura, and Prof. Mussa Assad, ruled in favor of Oilcom, awarding Sh468 billion on November 30, 2023. More on the links below: News - Oryx Energies The size of the award prompted immediate scrutiny. Oilcom’s claim was based on alleged losses resulting from ORYX’s failure to allocate the agreed transport volumes. However, a closer look revealed that the figures presented by Oilcom were based on gross turnover rather than net profit—a fundamental flaw in calculating damages. By ignoring operational costs such as fuel, maintenance, and salaries, the claim appeared grossly inflated. Adding to the skepticism, Oilcom’s financial records showed minimal or nonexistent profits during the disputed period. If the claim were accurate, Oilcom should have reported annual profits of USD 24 million, yet no such figures were reflected in reports submitted to the Tanzania Revenue Authority (TRA). Moreover, evidence indicated that Oilcom’s fleet continued operating during this time, undermining the claim of substantial losses. Questions also arose about Oilcom’s fleet ownership. It was revealed that Oilcom did not own any trucks; its operations were handled by Al-Hushoom Investment (T) Ltd, a company not covered under the original contract with Oryx. Including volumes managed by Al-Hushoom in the claim further cast doubt on its legitimacy. The arbitral tribunal’s handling of the case raised even more concerns. Prof. Mussa Assad, one of the arbitrators, had undisclosed ties to Oilcom, having previously worked as a consultant for the company and served on the board of a Kenyan bank partially owned by Oilcom’s shareholders. Despite Oryx’s requests for his recusal and to stay the proceedings, the tribunal dismissed these objections. More on the link: THREE OIL COMPANIES LOCK HORNS AS EX-CAG REMAIN ARBITRATOR Professor Mussa Juma Assad - Premier Bank The tribunal also refused to hear testimony from an international expert engaged by Oryx to challenge the inflated figures. When Oryx proposed a local expert as an alternative, this request was also denied. Such decisions cast a shadow over the tribunal’s impartiality and the fairness of the process. (Attached please find the expert report). The controversy deepened during the enforcement phase of the arbitration award, where the conduct of Deputy Registrar raised significant alarm. On November 6, 2024, Oilcom reported difficulties in recovering the full awarded sum from ORYX’s attached bank accounts. Despite a scheduled court hearing on November 15, 2024, the Deputy Registrar unexpectedly summoned ORYX’s legal team for an unscheduled session on November 7, 2024. During this session, ORYX legal team was informed them that liability would be extended to ORYX’s shareholders and shares in several Tanzanian companies owned by Oryx Energies, including TIPER—a joint venture between Oryx Energies and the Tanzanian government—entities not named in the original arbitration proceedings. This decision violated standard legal procedures requiring a new application for such actions and bypassed the 15-day notice period stipulated in the garnishee order. The unprecedented extension of liability to affiliates uninvolved in the arbitration, coupled with actions perceived as favoring Oilcom, has fueled widespread speculation about undue influence and partiality. Timing added another layer of complexity. Under the framework agreement, Oryx had until 2032 to reconcile any shortfalls in meeting the agreed transport volumes. By awarding damages before the contract’s expiration, the tribunal issued what Oryx described as a premature decision. Furthermore, the outturn reports cited by Oilcom to support its claim were called into question. According to the TRA, Oryx was merely a notified party in the importation process, not the consignee, rendering these reports an unreliable basis for the claim. The Sh468 billion award has spotlighted critical flaws in Tanzania’s arbitration system. Arbitration, intended as a neutral and efficient alternative to litigation, is still evolving in the country. This case has exposed vulnerabilities in the process, from questions of impartiality to the rejection of expert evidence. As calls grow for an investigation into the tribunal’s decision and Oilcom’s financial disclosures, the broader implications of this case are becoming clear. Beyond the specifics of the Oryx-Oilcom dispute, it underscores the urgent need for transparency, fairness, and rigor in arbitration practices. The resolution of this case will not only determine the fate of Oryx and Oilcom but will also set a precedent for how such disputes are handled in Tanzania. As the nation watches closely, this saga serves as a critical moment for accountability in business and arbitration, with lessons that could shape the future of Tanzania’s legal and economic landscape.

Anonymous (2c05)

Guest

Nov 20, 2024

Attachments

Letter-Office of the Solicitor General to BRELA-12112024.pdf
128 KB · Views: 14
TIPR.pdf
387.5 KB · Views: 14
Oilcom Tanzania Limited vs Oryx Oil Company Limited and Another 2024 TZCA 1090 (13 November 20...pdf
286.8 KB · Views: 20
2775_001.pdf
231.8 KB · Views: 15
Prohibitory Order iro Landed Properties.pdf
2.2 MB · Views: 9
20241120-Oilcom-Tanzania-vs-Oryx-Energies.pdf
203.5 KB · Views: 12
OILCOM Tanzania Limited vs ORYX Oil Company Limited Another (Civil Application No 71001 of 2...pdf
323.9 KB · Views: 10
Oryx Oil Company Ltd Another vs Oilcom Tanzania Ltd (Misc Civil Cause 138 of 2022) 2022 TZHC ...pdf
184.8 KB · Views: 12
Oryx Letter to EWURA 301024.pdf
744.4 KB · Views: 14
Oryx Letter to TRA 301024.pdf
698.9 KB · Views: 11
PHOTO-2024-10-28-18-17-56.jpg
200.5 KB · Views: 16
OILCOM ARBITRATION - POSITION PAPER FOLLOWING AWARD - FINAL 30 April 2024.pdf
241.2 KB · Views: 12
FTI France SAS - Oilcom v Oryx - Quantification Summary - 30 April 2024.pdf
197 KB · Views: 9
551.64_12_Letter 2.pdf
273.1 KB · Views: 12
551.64_12_Letter.pdf
273.1 KB · Views: 13
ORYX vs OILCOM Litigation summary v12.pdf
463.2 KB · Views: 11

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DOKEZO A Case of Inflated Claims and Questionable Practices (ORYX Energies Vs Oilcom)