Active Partners Group Limited v. The Republic of South Sudan, PCA Case no 2013/4
PCA · Investment (ICSID and treaty) · Kenya · 27 Jan 2016
Why it matters
This case is a rare example of an UNCITRAL arbitration against the Republic of South Sudan, addressing state contract breaches in a post-conflict setting. It clarifies the application of contractual termination clauses and damages for lost profits in infrastructure projects, setting a precedent for investor-state disputes in South Sudan.
Summary
Active Partners Group Limited, a Sudanese company, entered into a contract with the Government of South Sudan to construct electric power infrastructure in eight state capitals. The contract consisted of a Technical Contract and a Finance Agreement. The Claimant alleged that the Respondent failed to make the contract operational by not issuing a required bank guarantee and not paying an advance payment, leading to the contract's termination. The Respondent argued that the Claimant was insolvent and lacked authority to sign the contract. The Tribunal, applying South Sudanese law and the UNCITRAL Rules, found that the Respondent breached its obligations under Clause 4.2 of the Technical Contract and Clause 5.9(2) of the Finance Agreement by failing to issue the bank guarantee and make the contract effective. The Tribunal held that the Claimant was entitled to terminate the contract and awarded damages for lost profits, direct and indirect expenditures, and liquidated damages, totaling USD 35,770,243.33, plus interest at 3.75% compounded monthly from the date of the Notice of Arbitration. The Tribunal also ordered the Respondent to bear the costs of the arbitration.
The detail
Parties: Active Partners Group Limited v. The Republic of South Sudan, PCA Case no 2013/4
Case number: italaw/cases/4177
Outcome: The Tribunal found that South Sudan breached its obligations and ordered it to pay USD 35,770,243.33 in damages plus interest and costs.
Quantum: USD 35,770,243.33
Applicable law: UNCITRAL Arbitration Rules 1976; Technical Contract and Finance Agreement; Contract Act of South Sudan 2008
Issues in play: The dispute involved contractual interpretation under South Sudanese law, particularly regarding the obligation to issue a bank guarantee and the effective date of the contract.
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