Industry

Kalpataru Power set to approach New York court against Rwanda to enforce a $32 million arbitration award


Kalpataru Power Transmission Ltd. (KPTL) is set to approach a New York court to seek enforcement of an arbitration award of over $32 million (about Rs 240 crore) against Rwanda Energy Group (REG) in a matter related to a dispute over a contract, sources said.

BSE-listed KPTL, a power transmission and distribution company, had entered into a contract with REG in November 2013 to install and commission a 220 KV power transmission network connecting Democratic Republic of Congo and Rwanda in Central Africa. A dispute arose when REG refused to pay KPTL for price adjustment.

An arbitration tribunal had passed a judgement in favour of KPTL, under which REG was to pay over $32 million to the Indian company by October 18. However, REG refused to pay up.

“The three-member arbitration tribunal, which had one member nominated by REG, recognised unanimously that the state machinery acted in a cohesive manner to sign the settlement agreement,” said two people privy to the development.

Since Rwanda and India are signatories to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, also known as New York Convention, KPTL has decided to approach a court in New York.

“KPTL will approach the District Court of New York within two weeks to recognise the award entered as a judgment in New York and thereafter pursue its enforcement in the USA,” the people cited earlier told ET.

Mumbai-based KPTL declined to comment. An email sent to REG seeking a comment remained unanswered till as of press time on Thursday.

Once a court in New York recognises KPTL’s claim, the Indian company can seek attachment or seizure of REG’s assets in the US or any other country signatory to the Convention to recover the amount awarded by the arbitration tribunal.

Law firm Shardul Amarchand Mangaldas & Co (SAM & Co) is advising KPTL in the dispute.

KPTL had entered into a contract with REG in November 2013 for the design, engineering, supply, construction, installation and commissioning of the network. Construction began in October 2014 and the operational certificate was issued in May 2017.

This was a multipurpose project under joint development by Rwanda and the Democratic Republic of Congo, and was funded by the African Development Fund along with the German state-owned development bank KfW (Kreditanstalt für Wiederaufbau).

According to one of the persons cited earlier, in February 2016, Kalpataru raised a claim of about $24 million with REG for a price adjustment, as per the terms of the contract. However, REG asked KPTL to raise the claim after the completion of the project.

Soon after completing the project, when KPTL raised the claim in March 2017, it was disputed by REG.

As per the clauses in the agreement, the issue was referred to the Disputes Adjudication Board. In December 2019, the board ruled in favour of Kalpataru and said it was entitled to a price adjustment claim of $24 million plus Rwandan franc of 35 million, along with interest of $3.6 million and Rwandan franc of 5.3 million.

REG challenged the ruling by initiating the arbitration process. A three-member arbitration tribunal, after hearing both parties, upheld the ruling of the board in favour of Kalpataru.

On August 28, the tribunal directed REG to pay more than $32.25 million, including price adjustment claim and legal cost, within a month from the passing of the award.



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