THE government of the United Republic of Tanzanian has won a case of challenging payment of $55,099,171.66 opened in the United States by the family of a prominent businessman Devram Valambhia (now dead) over a contract involving the supply of military equipment.
According to a statement issued by the Office of the Attorney General yesterday, the case was opened on February 12, 2018 against the government of Tanzania in the US-based District Court of Columbia in the United States. The claimants in the case were Viplar Valambhia, Priscilla Valambhia, Bhavna Valambhia, Punita Valambhia and Krishnakant Valambhia, who are the widow and four children of Valambhia, who died in 2005 in the United States.
The respondents were the Attorney General, the Bank of Tanzania (BoT) and the Ministry of Defence and National Service. It is stated that the claimants, all Americans, had requested the US Court through the Uniform Foreign- Country Money Judgments Recognition Act, DC Codes, to recognise and execute the decree on the payment of $55,099,171.66 issued by High Court of Tanzania in 2003.
The complainants had claimed that such amount of money had to be paid since June 4, 2001 with seven per cent of interest annually. Therefore, when filing the suit in the US in February 2018, the real debt amountedto $64,500,750.87. It wasstated that the claim in the case was based on a contract on the purchase of military equipment between the Transport Equipment Ltd (TEL) of Mr Valambhia and the government of Tanzania.
The contract was entered in 1980 and TEL Company was claiming that it had not been paid the entire contractual sum, a move that forced the same to open a case in 1989, which was3later determined by the Tanzanian Court. Having rushed to the US Court for enforcement of the decree, the Tanzanian government presented its defence on July 13, 2018 to strongly oppose the same.
In its defence, the government protested the allegations of Valambhia’s family. In the defence, the government stated that the case was opened against the US laws and regulations on Recognisation and Enforcement of Foreign Judgments in the United States. According to the Attorney General’s statement, the government of Tanzania had immunity as a State for one to open enforcement proceedingsof judicial decisions in the United States.
Such immunity is recognised under the US Foreign Rule Immunities Act, 28 USC. “1602”(“FSIA” or “Act”). After hearing the matter, on March 31, 2019, the District Court of Columbia in the United States under Judge Tanya Chutkan, issued its decision. The US Court decided that the allegations presented by the Valambhia family did not involve commercial activities in the United States as the US Act “Uniform Foreign-Country Money Judgments Recognition Act” requires.
As a result, the complainants admitted through submissions presented before the court that the matter involved issues that occurred outside the US between a non-American company and the government of Tanzania. In this context, the court agreed with arguments of the government of Tanzania that the claims of the Valambhia family had no legal basis and that the complainants were not eligible to open such a case in the US, so the case was dismissed in court in favour of Tanzania.
Court records show that Mr Valambhia was awarded $55,099,171 through a decree dated February 12, 1991 by the High Court. BoT was directed to pay the sum.The order by the High Court followed the delivery of military equipment and trucks in 1985 by the businessman in which the government failed to pay.
A garnishee order was issued on June 4, 2001 by then Judge Buxton Chipeta of the High Court, but BoT did not comply. Instead, advocates for BoT, Cuthbert Tenga and Rosan Mbwambo, applied for a stay of execution of the order, pending determination of an appeal.
The appeal was struck out with costs by Justice Augustino Ramadhani, as he then was, on March 27, 2002. The Valambhia case began, as a civil suit between two business partners during the second phase of government. However, the government, through the Attorney General, intervened in the case to rescue such payment to be effected.