SORAS AG v. IKIGO CY’IGIHUGU GISHINZWE GUTEZA IMBERE IBYOHEREZWA MU MAHANGA BIKOMOKA KU BUHINZI N’UBWOROZI (NAEB)

SORAS AG v. IKIGO CY’IGIHUGU GISHINZWE GUTEZA IMBERE IBYOHEREZWA MU MAHANGA BIKOMOKA KU BUHINZI N’UBWOROZI (NAEB)

The surety (SORAS AG Ltd) is unconditionally liable to pay the outstanding advance payment guarantee to NAEB upon first demand, as per the terms of the guarantee and procurement law, regardless of whether the advance is reflected in the works performed. The guarantee is not limited to cases of misuse but covers any...

Source-derived case information.

Citation
RCOMAA 00037/2019/CA
Parties
Appellant: SORAS AG Ltd; Respondent: IKIGO CY’IGIHUGU GISHINZWE GUTEZA IMBERE IBYOHEREZWA MU MAHANGA BIKOMOKA KU BUHINZI N’UBWOROZI (NAEB)
Court
Court of Appeal
Jurisdiction
Rwanda
Judgment Date
13 October 2019
Case Number
RCOMAA 00037/2019/CA
Procedural Posture
Commercial Appeal / Final Appellate Judgment
Outcome
appeal dismissed; partial success for respondent's cross-appeal
Legal Topics
Advance Payment Guarantee, Contractual Obligations, Public Procurement Contracts, Surety Liability, Damages and Costs
Contract Law Insurance Law Public Procurement Advance Payment Guarantee Contractual Obligations Public Procurement Contracts Surety Liability Damages and Costs

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Parties

SORAS AG Ltd

Appellant

IKIGO CY’IGIHUGU GISHINZWE GUTEZA IMBERE IBYOHEREZWA MU MAHANGA BIKOMOKA KU BUHINZI N’UBWOROZI (NAEB)

Respondent

Procedural Posture

Commercial Appeal / Final Appellate Judgment

  1. 1 Whether SORAS AG Ltd is liable to pay the outstanding advance payment guarantee to NAEB despite the advance being reflected in the value of works performed by EMMR.
  2. 2 Whether the use of the advance payment by the contractor in the works extinguishes the surety's obligation.
  3. 3 Whether NAEB is entitled to additional damages for being drawn into litigation without cause.

Ratio Decidendi

The surety (SORAS AG Ltd) is unconditionally liable to pay the outstanding advance payment guarantee to NAEB upon first demand, as per the terms of the guarantee and procurement law, regardless of whether the advance is reflected in the works performed. The guarantee is not limited to cases of misuse but covers any failure to reimburse the advance as contractually required. The surety cannot raise defences based on the underlying contract unless exceptions are definitively established.

Court Disposition

appeal dismissed; partial success for respondent's cross-appeal

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.