Disputes

There were multiple disputes on the project, starting in 2008 when it became clear that the Procuring Authority would not be able to provide the land access as planned. The Project Company believed that it was entitled to relief in case of delays, however it was not until the delays on the critical path reached nine months that the construction contractor accelerated the works and claimed for compensation. There is a Dispute Resolution Board, but it was set up to deal with issues related to scope and specifications only. Any other issues can be quickly escalated to arbitration without going through the Dispute Resolution Board. In the case of this dispute, the matter went to arbitration as an amicable agreement could not be reached.

Another claim in the project was started by the Procuring Authority after it found that water was leaking into the tunnels, in excess of the maximum ingress permitted. The disagreement was escalated to arbitration. The Procuring Authority won the arbitration award for the water ingress in the tunnel and the Project Company was ordered to carry out remedial works.

In addition, a number of separate disputes had gone to arbitration, and on 18 November 2016, the Procuring Authority and the Project Company agreed to a comprehensive settlement of all disputes relating to the construction period of the project. The mutually agreed settlement brought to an end the protracted, costly and multiple legal and arbitration processes between the Procuring Authority and the Project Company.

The settlement resulted in: 1) the Procuring Authority paying the Project Company an amount of ZAR 980 million in full and final settlement; and 2) the Procuring Authority agreeing to forgo receipts of the railway usage fee in the amount of ZAR 266 million that would otherwise be payable by the Project Company.