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KISS JV REJECTS GOVT’S MOVE TO TERMINATE ICC CONTRACT

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MBABANE – The decision by government to terminate the contract between itself and the contractor of the International Convention Centre (ICC) is being rejected by the KISS Joint Venture.

This is according to a letter which has been written to government (the employer) with regard to ending the contract which was Tender No. 210 of 2014/2015. 

The response follows a letter which was written by government through the Principal Secretary (PS) in the Ministry of Economic Planning and Development, Bheki Bhembe, addressed to the engineer (The FIDIC Engineer), purporting to terminate the contract last week Friday. 

The KISS JV has labelled the attempt to terminate the contract as one ‘without merit and legally flawed’.

 The contractor’s letter dated October 28, 2020 and signed by one Billy Howes alleged that the move by government indicated the unequivocal intention to no longer be bound by the contract and this repudiation. 

According to Howes, in terms of Clause 14.7 of the contract, government was obliged to pay the amount certified in each interim payment certificate to the contractor within 56 days after the engineer received the contractor’s statement and supporting documents. 

Breach 

It was, however, alleged that government was in breach of the aforementioned clause as it had consistently failed to pay the amount certified. 

“The engineer has been regularly given notice of this breach,” claimed Howes. Several examples were cited dating back to 2017, where it was alleged that government had failed to make payments on several interim certificates. 

The highest amount outstanding was for about 17 Interim Payment Certificates and as at May 19, 2020, government was allegedly still owing about E570 126 043.61. 

“On October 8, 2020, the engineer was notified that although some partial payment had been made, the employer had still failed to make full payment of Interim Payment Certificates 6-23 that the amount of E140 493 662.02 was due, owing and payable,” reads the letter.  The letter states that the contract contained reciprocal obligations. Howes stated that it was trite in a contract of reciprocity, a failure by one party to perform its obligations excused the other party from performing its antecedent obligations. 

“As evident from the above, the employer has been in breach of its obligations since November 2017,” reads the letter. It was stated that given these alleged material breaches of the contract, the government could not hold the contractor liable to performance of its antecedent obligations including the obligation to extend the validity of the performance security. According to government, the contractor had allegedly breached some provisions of the (Red Book) in its performance security.  The PS had stated that the KISS JV had contrary to their express obligations, as they arose in terms of Sub-clause 4.2 of the Red Book, failed to renew the performance security as was provided to the ministry within 28 days of the expiry of such performance security. 

“As a consequence of such default, the ministry hereby gives notice, in accordance with Sub-clause 15.2 of the Red Book, of its termination of the principal contract,” read government’s letter. 

Performance 

It was further communicated that the failure of the KISS JV to renew the performance guarantee further constituted repudiation by the joint venture of its obligations as they arose out of the principal contract. 

Meanwhile, the KISS JV, through its letter, stated that government could not seek to enforce the contract when it was in material breach of its terms, especially when such breach had been ongoing for an extended period of time. 

“The employer’s attempt to terminate the contract in circumstances where it has committed persistent and ongoing material breaches thereof constitutes a clear repudiation,” submitted Howes. 

The contractor further denied that the notice of cancellation was valid, adding that government had no right under the FIDIC Red Book or in law to cancel the contract with or without notice or at all. 



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