A wheat supplier based in the United Arab Emirates (UAE) cannot be held liable for additional costs incurred by a federal public procurement agency in sourcing wheat at a more expensive price after the original supplier failed to fulfil the contract, ruled judges at the Federal High Court.

Failure to deliver the wheat by the winning bidder, Promising International Trading Co., led the Public Procurement & Property Administration Agency to suspend the company from participating in any public procurement bids in Ethiopia for one year. Promising, however, contested this at the Federal High Court.

Promising International won a bid two years ago to supply 200,000tn of wheat for 52 million dollars and signed a contract with the Public Procurement & Property Disposal Service (PPPDS). However, as Promising was getting ready to ship the wheat, the Ethiopian Shipping & Logistics Services Enterprise (ESLSE) marked up the shipping price from the amount agreed upon for its winning bid. The contract document dictated that ESLSE carry out shipping of all milling wheat.

Promising had asked the Service, which is accountable to the Ministry of Finance, for permission to shift to another shipper; in the contract, this was only possible upon receipt of a waiver from the ESLSE. The Service claims to have secured the waiver from the shipping company and agreed in a new contract for the defendant to supply the wheat for 2.6 million dollars less than the initially agreed upon amount. After the unexpected increase in shipment fares by the Enterprise from the initially quoted amount, Promising said it had asked the PPPDS for a waiver from ESLSE to change to the second quoted shipment. Though the Service claimed to have sent the waiver, Promising's lawyers maintained that their client had never been notified.

The dispute reached the Federal Supreme Court Cassation Bench, which finally ruled that Promising was not liable for failing to deliver, resulting in the company being removed from the blacklist.

Due to the non-performance, the Service was then forced to conduct another procurement contract for the same amount of wheat with a purchasing price of 55 million dollars.

It instituted a case in July 2019, appealing to the Federal High Court, claiming that Promising should reimburse the five million dollars additionally incurred, along with interest. Lawyers representing Promising denied the existence of an alternative contract that brought down the original contract value by 2.6 million dollars. They argued their client had not received any notification on the granting of a waiver; nor was there any evidence presented to support either claim.

The Federal High Court, presided over by Judge Endale Tadesse, ruled that Promising is not accountable for the five million dollars sustained as a result of an act of negligence on the part of the PPPDS.

The litigation has already brought damage to the reputation and goodwill of Promising International, claims Biniyam Kebere, a lawyer who represents Promising.

“We've sustained irreparable damage to the good name of the company due to the suspension placed on us," Biniyam told Fortune. "It was us that should've asked for compensation."

Lawyers who represent PPPDS have yet to appeal against the ruling. Its officials were not available for comment when Fortunereached out to them.

PUBLISHED ON Mar 27,2021 [ VOL 21 , NO 1091]

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