Medupi Power Station: Eskom

Supreme Court of Appeal has dismissed with costs the “confidentiality incentive agreement “signed between the employer and the contractor, and ordered responded to disclose the details and amounts in the document to the subcontractor.

The incentive agreement in dispute relates to the construction of Eskom-owned power plants, signed to appoint the contractor Mitsubishi Hitachi Power Systems Africa (Pty) and Murray & Roberts Ltd (M&R) as subcontractor commissioned to do part of the work at Medupi in Lephalale and Kusile at Witbank.

JSE-listed engineering and construction services group, M&R argued that Mitsubishi must provide information to determined the rights and amounts to be eligible for the contract benefits  received under the main agreement with Eskom.

But Mitsubishi argued that Article 11.3 entitled M&R in the service contract does not contain any contracts with third parties. “The incentive agreement required by M&R does not exist.”

“There are some ‘initiative agreements’ between Eskom and Mitsubishi that do not include M&R. Therefore, the benefits derived from the initiative agreement are not contractual benefit in scope. I know this as the confidentiality argument. “argued Mitsubishi.

To subcontract, M&R referred the dispute to the Dispute Resolution Board (DRB), which refused to mandate Mitsubishi to provide the information M&R requested.

DRB notes that M&R has a contractual right to disclose the incentive agreement.

But the main contract required Mitsubishi to keep the contract a secret without Eskom’s approval and DRB did not have the power to force Mitsubishi to disclose it, arguing that it violate Mitsubishi’s contract with Eskom.

M&R then applied to the Gauteng Division of the High Court, Johannesburg, to secure the disclosure is seeking.

The High Court found that there was enough reason for the matter to entertain in court, and, upon a proper interpretation of the relevant provisions of the main contract and the subcontracts, and that there was no obstacle to granting the relief claimed by M&R.

M&R then applied with the South Gauteng High Court in Johannesburg to secure the required disclosure

The court held that there were enough reasons to review the matter, and after interpreting the relevant terms of the main contract and subcontract, the court held there is no obstacle to assist M&R.

In the motion notice, the court ordered a prayer requesting Mitsubishi to disclose the “Incentive Agreement” and all relevant details, including the actual benefits that Eskom has received.

Mitsubishi will also have to pay application fees.

The High Court granted Mitsubishi an application, requesting an appeal against the disclosure procedure and cost order.

Supreme Court of Appeal ruled there is no reason to refuse the disclosure order.

The ruling read in part “It is unfair for Mitsubishi to request the company to disclose information that violates its obligations under Article 1.12 of the Basic Contract.

There is no such risk. However, even if this is not the case, if Eskom chooses not to provide a reason to guarantee this protection, there is no reason to deprive M&R of the information needed to protect its contractual rights.”

The Appeal court dismisses the appeal with costs, including the cost of hiring two lawyers.

It replaces the High Court decision with:

The court instructs Mitsubishi to disclose part of the incentive agreement it entered with Eskom relating to M&R’s right to perform the contract concerning Item 11.3.

This applies to subcontract agreement between M&R and Mitsubishi, including information relevant to contract benefits received from Mitsubishi concerning subcontractors to which M&R is entitled, according to Clause 11.3.

Therefore, Mitsubishi bears the application and appeal fees.

This judgment was handed down electronically by circulation to the parties' representatives via email, publication on the Supreme Court of Appeal website and release to SAFLII on September 29, 2020.

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