South Sudan Wins Appeal To Reduce Penalty On Vivacell Dispute

The Republic of South Sudan has been asked to pay a total of $74.32 million penalty after an international tribunal ruled in favour of Vivacell, a Lebanese Telecom Operator, over a failed investment agreement. The International Chamber of Commerce (ICC) tribunal’s decision includes a principal amount of $48.45 million, interest of $20.85 million, and legal costs of $5.02 million.

This amount has been reduced as the initial claimed amount on the first hearing was $2.9 billion, with interest continuing to accrue at a claimed exorbitant and extraordinary rate.

In a press statement, the Minister of Information, Communication Technology and Postal Services in South Sudan, Hon Michael Makuei, hailed the reduction as a victory, emphasising the government’s commitment to upholding international law and protecting national interests. 

“I am pleased to report that the Tribunal’s decision in the arbitration has substantially reduced the amount claimed against us, highlighting the strength of our legal position. We take pride in our legal team, which worked tirelessly to defend the interests of our nation, leading to a substantial reduction in the financial award from the initial claim of several billion US dollars to USD 48,452,035 plus interest and costs. This decision not only validates our resolve and the decision the Republic of South Sudan took to defend itself, it also demonstrates our commitment to international law and to ensuring that South Sudan’s laws are upheld and respected,” the statement from the Minister reads in part.

Vivacell, operating under the trade name Network of the World, had secured significant concessions from the Sudanese government before South Sudan’s independence in 2011. These included tax exemptions, free land for infrastructure, and favourable licensing terms. However, post-independence, South Sudan’s government accused Vivacell of operating without a valid licence and evading taxes amounting to $66 million, leading to the suspension of its operations in 2018. 

Despite the reduced penalty, the financial burden remains substantial for South Sudan’s struggling economy. The government has indicated plans to offset the compensation by accounting for losses incurred due to Vivacell’s operations under an outdated license. Civil society groups have called for greater transparency in the government’s handling of the case and its implications for foreign investment.

Vivacell’s exit from South Sudan left over 200 employees jobless and raised concerns about the country’s investment climate. The government asserts that it is taking measures to ensure South Sudan remains a safe destination for foreign investors, emphasising sectors like ICT, agriculture, and energy for economic diversification.

This case underscores the complexities of post-independence legal transitions and the importance of clear regulatory frameworks for foreign investments. As South Sudan navigates its economic challenges, the outcome of this arbitration may influence future dealings with international investors.