Eskom wins Concourt judgement

December 21st, 2016, Published in Articles: EE Publishers, Articles: Energize

 

The Constitutional Court has affirmed Eskom’s award of a R5-billion contract to Areva for the replacement of the six steam generators at the Koeberg power station near Cape Town. This decision ends a long-standing dispute between the power utility and Westinghouse, a rival service provider.

According to a report on Business Day’s website (http://bit.ly/2ieZUSN), the decision by the Constitutional Court (Concourt) sets aside judgments of the Gauteng High Court and Supreme Court of Appeal over the R5-billion contract to Areva on the grounds that Westinghouse Electric Belgium Societe Anonyme (Westinghouse) does not have locus standi (i.e. the right to bring an action, to be heard in court, or to address the Court on a matter before it because the company is unable to demonstrate sufficient connection to and harm from the law or action challenged to support the company’s participation in the case) [1].

The details of this dispute was covered in some depth by EE Publishers earlier this year and can be read by clicking here: http://wp.me/p5dDng-Afr

The report says that the Concourt held that the case should have been brought by Westinghouse USA as this was the real bidder for the tender and Westinghouse Belgium was simply acting as an agent for the company. Throughout the long process of litigation Westinghouse claimed Eskom had introduced “strategic considerations” into the tender evaluation at a late stage in order to favour Areva.

Justice Raymond Zondo apparently also granted Eskom and Areva leave to appeal against a Supreme Court of Appeal judgement and upheld Areva’s appeal, but although deputy Chief Justice Dikgang Moseneke delivered a dissenting judgement, Justice Zondo was supported in his judgement by five other Constitutional Court judges.

Moseneke reportedly said Westinghouse had the requisite standing in the judicial review it sought. In any event, it is not in the interests of justice for a court of final instance to dispose of a matter, of this constitutional magnitude, commercial import and of high public interest, by way of only a technical and dilatory bar as locus standi. Whatever the correct description of Westinghouse or its relationship with Westinghouse USA is, it was never a thing of substance in the tender process, Moseneke said, adding that the matter changed nothing in the tender or subsequent litigation process and no entity may correctly claim that it had been prejudiced thereby.

Moseneke and acting Justice Lebotsang Bosielo are quoted as saying Eskom was “truly meticulous and proper in its assessment of the bids”, saying the power utility had resorted to independent interlocutors to help it assess the technical strength of the respective bids. There was no suggestion in evidence or argument that the board tender committee was actuated by malice, irrationality, corruption or other improper motive. Moseneke apparently said he was unable to agree that the strategic considerations by the board tender committee in awarding the tender to Areva made the decision unlawful because irrelevant considerations were taken into account or relevant considerations were not considered. The evidence suggests that the process was a hallmark of careful consideration of all relevant factors.

Westinghouse’s claim, he is reported as saying, that certain vital strategic tender requirements were irregularly considered midstream is not supported by a careful evaluation of the tender process, and that the Supreme Court of Appeal erred by finding that the strategic considerations fell outside the bid evaluation criteria. Had the Supreme Court of Appeal given full and proper consideration to the actual bid evaluation criteria, it should have found that the strategic considerations were integral to the bid evaluation criteria or at the very least, could be properly inferred from the bid evaluation criteria.

Apprently, Moseneke says that Westinghouse must have understood that too, because there was no suggestion by Westinghouse prior to the parallel negotiations or even during the negotiations that the strategic considerations were extraneous or that it did not understand them. Westinghouse did not seek clarity on what these considerations were. The report says that Moseneke pointed out that Westinghouse took part in the negotiations without complaining.

Eskom has apparently welcomed the Constitutional Court’s decision. The utility has consistently rejected Westinghouse’s contention, arguing throughout the court processes that the strategic considerations were part and parcel of the tender evaluation criteria from the beginning. The power utility is quoted as saying that it insisted that Westinghouse and Areva were treated equally and fairly throughout the tender process in relation to the strategic considerations.

Eskom’s interim CEO, Matshela Koko, is quoted in the report as saying that while Westinghouse’s price offering was cheaper than Areva’s, it was never, at any stage, an outright winner of the steam generator replacement tender. After considering both offers, the board tender committee awarded the tender to Areva. He said Eskom had explained to the Constitutional Court that Westinghouse had clearly admitted it would not be able to meet the 2018 deadline.

[1] https://definitions.uslegal.com/l/locus-standi/

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