Somalia engages Dutch law firm for €393,000 in fight over contractor’s €66m claim

By T. Roble

Somalia is engaging a Dutch law firm at the cost of €393,000 in a legal battle whose genesis can be traced to a deal which saw the government commit itself to an ambitious coastguard contract it could not even raise the initial deposit.

The arbitration which is set to kick off soon at the TAMARA arbitration in the Netherlands comes a year after the Atlantic Marine and Offshore Group (AMO), the contractor in the coastguard deal submitted its notice of arbitration.

The arbitration follows default by Somalia to pay honour the terms of the contract which amounted to €132 million. The contract covered the construction and delivery of six patrol vessels by AMO. The second part of the contract covered training and support to Somali Coast Guard. However, as admitted by the Financial Governance Committee chaired by the Minister of Finance and includes representatives from the World Bank and IMF among other institutions, Somali government defaulted.

AMO’S CLAIM

In the case, AMO is seeking Somalia be compelled to abide by the terms of the Building Contract entered into between the two parties in 2013. Abiding by the contract for now principally means Somalia pays AMO the principal amount of €66 million in addition to interest accrued from 2013.

In its notice last October 2018, AMO indicated the interest accrued stood at €24.6 million. One year since then, that interest has shot up.

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In a letter of engagement between the Ministry of Defense and the Dutch law-firm, Legaltre dated November 19 and seen by Goobjoog News, the total legal cost is €393,000 charged at €300 per hour. The team will work for a period of 1,310 hours. This cost does not include costs for a parallel law firm in Mogadishu to be contracted based on the letter of engagement.

These figures are not cast on stone, the legal firm says. It may vary according to ‘the further information we may find and, in particular, on the developments in the arbitral proceedings.

SINGLE SOURCING

AMO had in October filed a case against Federal Government of Somalia (FGS) but went ahead to file a second case against the Federal Republic of Somalia (FRS), the formal contract holder.

Following the filing of the second case, the Minister of Defence Hassan Mohamed wrote to Finance Minister Abdirahman Beileh informing him of single sourcing in which case he settled for Legaltree which has been representing Somalia in the former case.

“Based on the above, I have recommended the award of this contract to Legaltree and have signed the engagement letter,” the letter dated November 13 from the MoD reads in part.

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In the engagement letter signed by Defence Minister Mohamed and Attorney General Osman Guled, Legaltree demands 76% of the total cost in what could be indicative of cushion from default by FGS as demonstrated in the AMOSC deal.

“We require that an amount of EUR 300,000 be paid in advance. We will hold this payment on behalf of the FRS until such a time as we invoice, on a monthly basis, for our service,” Legaltree notes.

Should the remainder of the advance payment becomes less that EUR 50,000, Legaltree says, we will request a further advance payment that the FRS shall pay within four weeks.