A group of three arbitrators ruled in favor of the Ethiopian Roads Administration (ERA) in its dispute with African Insurance S.C, after ERA sued the insurer for failing to pay bond payments. ERA was awarded 45.8 million birr.
Chair of the arbitrators was Zekarias Kenea (Ass. Prof.) and was picked by the plaintiff and defendant. Tilahun Teshome (Prof.) was selected by the administration, while the insurer selected Yonas Zewdu. The administration was represented by its lawyer, Eskedar Wodajo, and the insurer was represented by its lawyer, Birhanu Tadesse.
For a 38.5 km road project from Worabe to Bejober in Silte Zone, 170km south of Addis Ababa, the administration awarded the design and construction work to Yemane Girmay Construction in May 2016, with a project cost of over 458 million birr.
The insurance company then gave the administration performance bonds worth 10 percent of the project cost, which amounts to 45.8 million birr with a guarantee for four years beginning May 13, 2016.
According to the deal between the plaintiff and the contractor, the project should have been completed in 1,095 days since the beginning of construction on January 26, 2017. However, a year later, the project had reached eight percent of its completion, when it was supposed to have reached 30 percent.
Due to the sluggish performance by the contractor, the plaintiff terminated its deal with the contractor on March 1, 2018, compelling the administration to request the insurer for payments to the guarantee bonds.
Even though the insurer requested for alternatives such as completing the projects by hiring another contractor in March 2018 – to Teklebirhan Ambaye Construction – it bore no fruit.
The administration prepared another bid to complete the remaining project. The least bidder was Markan Trading Plc, presenting an offer of 795 million birr, over 336.5 million birr more than the amount the Contractor, Yemane Girmay, offered.
After going through several hearings of both sides, last Monday, the arbitrators ordered the insurer to pay 45.8 million birr performance bond request and an additional nine percent interest from the same amount beginning March 2018.
