Court discharges Elevo order on performance guarantees

AN attempt to prevent Millennium Challenge Account (MCA) from terminating a contract of a company that did not meet contractual obligations has been thrown out by the Lusaka High Court. The Lusaka High Court has discharged an order that was granted to Elevolution Engenharia (Elevo) that prevented the Millennium Challenge Account (MCA) Zambia from demanding performance guarantees, advances and security. This is a matter in which the Portuguese firm, sued the M&A for terminating its two contracts worth US$52 million for failing to meet contractual obligations and not complying with labour laws. On May 10 2018, the Portuguese firm had its contract terminated by MCA for not meeting its construction targets and for low performance. Elevo had earlier obtained an order from the High Court restraining MCA from instituting parallel dispute resolution procedures or interfering with the company’s access to the site as well as its equipment. But MCA asked the court to dismiss the ex-parte order granted to Elevo because it was delaying the successful completion of the Lusaka Water Supply, Sanitation and Drainage Project (LWSSDP). When dismissing the ex-parte order Justice Irene Mbewe ruled that the application for interim injunction lacked merit as the relief being sought by Elevo could not be entered against the State. “I dismiss the application for an interim injunction and accordingly discharge the ex-parte order granted on May 18 2018,” Judge Mbewe said. She ruled that MCA was implementing the project on behalf of the State by virtue of the MCA compact agreement. Justice Mbewe observed that MCA had a national purpose and was acting on its public capacity on water and sanitation projects in Lusaka. The court said it had no power to grant an interim measure of protection by way of injunction against the State. Judge Mbewe further said that MCA should be treated as a government unit entitled to protection under the State Proceedings Act Cap 17 of the laws of Zambia and the Millennium Challenge Compact Act number 6 of 2013. Elevo was contracted in February 2016 through a competitive and transparent procurement process to construct water supply and sewerage network in Lusaka’s Mtendere and Mtendere East. This included laying about 60 kilometers of water main supply lines and 82 kilometers of sewer lines, and select sewerage facilities in Salama Park and Chelstone. In addition, Elevo was contracted to carry out works to replace old, leaking water pipes to reduce water losses in the existing network and to replace malfunctioning and obsolete water meters, in select parts of Lusaka to improve accurate billing. The matter comes up on July 30 for interpretation of the ruling.