South Sudan finds itself in a significant legal and financial predicament, with a hefty $74.32 million penalty looming over the government due to a dispute involving telecom operator Vivacell. As reported by Techpoint Africa, an international tribunal has ruled in favor of Vivacell, a Lebanese company, over a failed investment agreement, leading to this substantial penalty.
The ruling by the International Chamber of Commerce (ICC) includes various components such as a principal amount of $48.45 million, interest totaling $20.85 million, and legal costs amounting to $5.02 million. This decision comes after Vivacell, operating as Network of the World, had enjoyed certain privileges from the Sudanese government pre-independence in 2011. These benefits included tax exemptions, free land for infrastructure development, and favorable licensing terms.
However, following South Sudan’s independence, allegations arose against Vivacell regarding operating without a valid license and evading taxes worth $66 million. These accusations ultimately led to the suspension of its operations in 2018. Initially seeking damages amounting to $2.9 billion, Vivacell’s claim was substantially reduced by the ICC tribunal.
In response to the reduced penalty imposed by the tribunal, South Sudan’s Information Minister Michael Makuei expressed relief at the outcome while emphasizing the government’s commitment to upholding international law and safeguarding national interests amidst this challenging situation.
Despite this reduction in penalties from Vivacell’s initial claim, South Sudan still faces a considerable financial burden given its struggling economy. The government intends to offset this compensation by factoring in losses incurred due to Vivacell’s operations conducted under an outdated license.
Civil society groups have called for more transparency from the government regarding how it handles this case and what implications it may have on future foreign investments within the country.
Vivacell’s departure from South Sudan not only impacted its employees but also raised concerns about the overall investment climate within the nation. To address these challenges and reassure potential investors about safety and stability within South Sudanese markets , governmental authorities are taking steps towards economic diversification specifically focusing on sectors like ICT , agriculture ,and energy .
This particular dispute sheds light on post-independence legal complexities and underscores why clear regulatory frameworks are crucial for fostering foreign investments sustainably . It serves as a poignant reminder that resolving such disputes is essential for maintaining investor trust critical for economic growth .
As South Sudan navigates through its economic hurdles ,the resolution of this arbitration will undoubtedly shape future interactions with international investors .
Techpoint Africa reports that
“South Sudans’ encounter with monetary penalties post-Vivacells’ dispute shines light on necessary reforms”
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Source: techpoint.africa (Link: https://techpoint.africa/insight/techpoint-digest-1103/)
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