SORAS AG v. NAEB

SORAS AG v. NAEB

SORAS AG Ltd, as guarantor, is unconditionally liable to pay the outstanding advance payment to NAEB upon first demand, as per the terms of the advance payment guarantee and applicable procurement law, regardless of the value of works performed by EMMR. The guarantee remains valid until the advance is fully reimbursed. The use of the advance in the works does not extinguish the guarantor's obligation. NAEB is not entitled to additional damages for being drawn into litigation, but is entitled to reasonable legal costs.

Citation
RCOMAA 00037/2019/CA
Parties
Appellant/defendant: SORAS AG Ltd; Respondent/plaintiff: NAEB (National Agricultural Export Development Board); Contractor (third Party): Entreprise MUKAKIMENYI Marie Rosine/EMMR
Court
Court of Appeal
Jurisdiction
Rwanda
Judgment Date
13 December 2019
Case Number
RCOMAA 00037/2019/CA
Procedural Posture
Commercial Appeal / Final Appellate Judgment
Outcome
Appeal dismissed; lower court judgment affirmed with minor modification on legal costs.
Legal Topics
Advance Payment Guarantee, Surety Obligations, Public Procurement Contracts, Contract Interpretation, Liability of Guarantor
Source Language
rw, en
Contract Law Commercial Law Insurance Law Public Procurement Advance Payment Guarantee Surety Obligations Public Procurement Contracts Contract Interpretation +1 more

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Parties

SORAS AG Ltd

Appellant/defendant

NAEB (National Agricultural Export Development Board)

Respondent/plaintiff

Entreprise MUKAKIMENYI Marie Rosine/EMMR

Contractor (third Party)

Procedural Posture

Commercial Appeal / Final Appellate Judgment

Legal Issues

  1. 1 Whether SORAS AG Ltd, as guarantor, is obliged to pay the outstanding advance payment to NAEB regardless of the value of work performed by EMMR.
  2. 2 Whether the use of the advance payment in the contracted works extinguishes the guarantor's obligation.
  3. 3 Whether NAEB is entitled to additional damages for being drawn into litigation without cause.

Ratio Decidendi

SORAS AG Ltd, as guarantor, is unconditionally liable to pay the outstanding advance payment to NAEB upon first demand, as per the terms of the advance payment guarantee and applicable procurement law, regardless of the value of works performed by EMMR. The guarantee remains valid until the advance is fully reimbursed. The use of the advance in the works does not extinguish the guarantor's obligation. NAEB is not entitled to additional damages for being drawn into litigation, but is entitled to reasonable legal costs.

Court Disposition

Appeal dismissed; lower court judgment affirmed with minor modification on legal costs.

Orders

  • SORAS AG Ltd to pay NAEB 217,718,742 Frw as outstanding advance payment guarantee.
  • SORAS AG Ltd to pay NAEB 26,126,249 Frw as interest for late payment.