Arbitration Tribunal orders Turkish Narin Orme Textile Group to pay 60 mln birr to PPESA

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The Arbitration Tribunal rendered ruling in favour of the Privatization and Public Enterprise Supervising Agency (PPESA) on the case against the Turkish based Narin Orme Textile Group Co.

The ruling of the tribunal indicated that the Turkish company will pay 42.7 million birr net plus 7.5 percent interest and other expenses to the plaintiff PPESA.

According to the letter sent to PPESA’s lawyer Belay Ketema, the Arbitration Tribunal has finalised its proceeding of the case with regards to the lease agreement , entered between the Agency and the Turkish company, and passed its judgement on June 3, 2013.

The claim was filed on December 10, 2010 for the Tribunal presided by Mekbib Tsegaw, a prominent lawyer, and four other members including Israel Tekle, Ketsela Mulat, Aklilu Wolde Amanuel and Bisrat Hamelmal. The proceeding took more than two and half years.

The Turkish company had leased the Hawassa Textile Factory and Arba Minch Textile SC on July 1, 2005 for five years.

Hawassa Textile, established 20 years ago with 112 million birr capital was returned back to PPESA’s care in 2009, after it had amassed huge debts under the management of the Turkish company.

Arba Minch Textile was established in 1991 as a supplier to the Hawassa Textile Factory. Later it was leased to Narim Orme Textile Group on a five-year-agreement, but this failed, and the factory was also returned to PPESA.

The claim amount as computed and submitted by the finance department of the agency as unpaid lease fee, including interest at the rate of 7.5%, is close to two million dollars. This amount represents the period up to October 13, 2010.  In addition it claimed 37.87 million birr balance sheet difference, between the entry and exit of the company.

In the letter the agency lawyer addressed to Beyene Gebremeskel, director general of PPESA, he indicated that the tribunal however, examining the evidences submitted against the case and hearing witnesses saw discrepancy in computing the lease fee and interest initially submitted by the Finance Department of PPESA. It hence established that the respondent be liable to pay lease fee amounting to USD 652,217 only and interest up to the cut off date, which amounts USD146,874. It further ordered that interest shall continue to accrue until the sum is fully paid.

Belay told Capital that the total fee including interest and other costs expected from the company will be over 60 million birr, and some of the payments are expected to be made in foreign currency as per the agreement signed by the two parties in 2005.

He said that the Arbitration Tribunal decision is the final decision. “Based on the original deal between the company and the agency, there is no further appeal about the case,” he explained.

However experts said that the Turkish company can appeal to the relevant court authorities on the basis of wide ranging issues. Moreover the Turkish Company could also appeal to the Court of Cassation saying that there have been fundamental errors of law.

Wendafrash Assefa, public relations head of PPESA, told Capital that PPESA will pursue the claim through the Ministry of Foreign Affairs to secure the amount as the Turkish company has no physical presence in Ethiopia.