9 December 2012

Ethiopia: Hawassa Wabi Shebelle Hotel Owner Loses to Privatisation Agency, Pays 695,000 Br

Wabi Shebele 1 Hotel in Hawassa, which the Privatisation & Public Enterprises Supervising Agency (PPESA) is claimed for delaying its delivery to the united African Group (UAG).

The United African Group (UAG) lost its third court battle against the Privatisation & Public Enterprises Supervising Agency (PPESA), which claimed 695,000 Br for delaying the delivery of an upgrading project on Wabi Shebele 1 Hotel in Hawassa, which the Company had bought from the Agency; it settled the payment to the Agency on December 7, 2012.

The Company acquired the Hotel in 2005, for 6.95 million Br, with the agreement that the UAG would upgrade the Hotel to a three-star status. The Hotel rests on 51,984sqm of land. UAG, established by Haddis Tilahun, an Ethiopian residing inNamibia, and his Namibian wife, has nine hotels in southern African countries.

The upgrading of the lakeside hotel in Hawassa was to be completed in three years' time.

PPESA filed a suit at the Federal High Court in June 2010, alleging UAG did not live up to its contractual pledge to renovate the Hotel.

UAG had put in a proposal to the PPESA to spend a total of 18 million Br on the renovation of the Hotel. Obligatory in this deal was the renovation of 46 rooms of the Hotel. However, the improvements that were undertaken involved only 20 of the 46 rooms of the Hotel, leading to the litigation

The UAG told the high court that the renovation delay was caused due to holdups in securing loans from banks, the time it took to develop a design for the renovation, and disruptive activities by its employees. Nevertheless that argument by Addis Yidneqachew, UAG's lawyer, was not enough to convince Judge Aysheshum Melese, who presided over the case at the Seventh Bench of the High Court that UAG was not at fault.

UAG appealed to the Supreme Court claiming fundamental error of law on June 9, 2012, asserting that it had reached an oral agreement with an official of the Agency to be set free of its contractual obligations since the 26 rooms could not be renovated unless they were demolished and rebuilt.

But Supreme Court judges Abdulqadir Muhamed, Sultan Abatemamo and Reta Tolosa, upheld the high court's ruling. Undeterred, UAG took its case to the Cassations Bench, quoting Civil Code Article 1766, which states that if there is a special agreement between the parties, a written document could be negated.

The bench rejected the argument and closed the case.

Tewodros Haileselassie, lawyer and legal researcher, argues appealing to the Cassations Bench was not the same as appealing to the other courts. To appeal at the Cassations Bench, there should be should be a fundamental error of law that violates the basic constitutional right.

"This case cannot be said to be an error of law," Tewodros said.

UAG still disagrees with the decision of the cassation Bench claiming that the lower court failed to see that Civil Code Article 1766 was applicable. Regardless, the Company has now paid the 650,000 Br judgment, according to Addis, and it will continue with the renovation of the hotel.

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