Eskom loses, loses again … and again

Eskom has launched an attack on the conduct of a respected retired judge after he ruled against them in an arbitration with one of its suppliers over a multi-million rand outstanding bill. But Eskom’s claims have been dismissed by four judges as “exaggerated”.

When the power utility’s refused to accept Judge Lewis Goldblatt’s arbitration award in its three and a half year battle with the supplier, it went to the high court on review and then on appeal.
It lost, both times. In the cases, Eskom accused the judge of “bias,” “gross irregularity”, “misconduct” and of ignoring the parastatal’s evidence when he found in favour of the supplier.

The dispute dates back to 2013 when Eskom prematurely terminated the services of Khum MK Investments cc and BIE International Engineers (Pty) Ltd, because Khum and BIE had (in 2010) changed their legal structure from a joint venture to a single company with a new name, each holding a 50% stake. The company, providing the same basket of services including safety, health and quality inspection, said they had been instructed to make the change, which Eskom denied.

The parastatal, in an affidavit filed by its internal senior legal adviser, Leena Ramprsad, for a high court review of the ruling, said: “The most glaring problem … is that the arbitrator completely disregarded the evidence that contradicted his conclusion … the arbitrator eschewed all the evidence that assisted Eskom’s case.”

Eskom said there was no evidence to support the award in favour of the supplier and that “such lack of evidence is so glaring as to amount to a total want of the exercise of judicial capacity, and contends that the lack of evidence is such that misconduct on the part of the arbitrator ought to be properly inferred therefrom”.

“It cannot be seriously contended that he gave fair consideration to the matter. He ignored highly relevant evidence that assisted Eskom’s case … the arbitrator’s findings on the illegality arguments portrays a misunderstanding on his part regarding the uncontested facts and the nature of the enquiry,” continued Eskom.

Furthermore, Eskom said, Goldblatt had “closed his mind to Eskom’s evidence and arguments”.

But Judge Dimpheletse Moshidi didn’t agree and dismissed the review application with costs in June 2015 when he ruled that there was no gross irregularity, misconduct, bias or misconstruing on the part of Goldblatt.

“The application therefore had no merit at all since it was premised on the basis that the arbitrator’s conduct was wrongful and improper, or dishonest, or mala fide, or partial, or and due to moral turpitude,” Moshidi said.

Eskom then lodged an appeal, concluded two weeks ago, which it lost. In this case the court found that the claims Eskom levelled at Goldblatt were “exceedingly exaggerated and unfortunate in the extreme”.

“There was no indication from the record of evidence that the arbitrator’s conduct during the arbitration proceedings was improper in the sense of acting dishonestly, partially or in bad faith. Eskom’s criticism of the arbitrator’s conduct, in particular his purported bias towards the company’s witnesses was ill-founded,” reads the judgment.

The court upheld the original arbitrator’s award.

Asked to respond to the claims by Eskom, Goldblatt — who was cited as a respondent in the matter —  said in an email that arbitrators seldom oppose reviews on cases they presided over. “Instead, I would let the record and the award speak for itself. I feel that the judgments by both courts speak for themselves as to the lack of merit in Eskom’s attack on me.”

He said it was regrettable that Eskom’s actions had caused an inordinate delay in finalising this dispute, especially since the parties had agreed to arbitration to resolve it swiftly.

A year after landing the deal in 2009, an Eskom staffer allegedly told the joint venture to form a company, which the parties did. Upon registering a company, Khum MK Investments & BIE Joint Venture Pty Ltd, Eskom continued to pay for its services — more than R1-billion, according to court papers.

But in 2013 the power utility said it had not agreed to the new structure and refused to make any further payments. This followed a contractual dispute when Eskom suddenly became “alive” to the fact that it had a contract with the joint venture not with the company. The company then launched legal proceedings to recover outstanding money from Eskom.

Although Eskom disputed claims that it had consented to the formation of a company, court papers allude to the suspension of an Eskom staff member who faced disciplinary action as a result of his conduct relating to this contract.

In Goldblatt’s arbitration award, he found that Eskom had acknowledged the company as a contracting party “by accepting and paying invoices” submitted by the company. This, the company argued, was proof that Eskom had essentially “ratified” the new company as the contracting party. 

Eskom had said: “It is far-fetched to think that anyone within Eskom would have noticed such a subtle name change.”

Eskom unsuccessfully argued that it had received proposals from the joint venture, issued task orders to the joint venture and wrote letters to the joint venture. “ It cannot by any stretch of the imagination be said that there were representations that Eskom had accepted the company as the new contracting party.”

Eskom spokesperson Khulu Phasiwe said: “Eskom’s papers are based on legal argument related to the reviewability of the arbitrator’s award. Like any other litigant, and like any other court case Eskom may be involved in, Eskom is entitled to pursue in court the arguments available to it.”

He said the parastatal had until March 24 to make a decision or to file its intention to appeal to the Supreme Court of Appeal.



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