South African HC rules in favour of APM in Durban Terminal case

More than a year after Transnet awarded the tender to run Pier 2 at the Durban Container Terminal (DCT) to Manila-based International Container Terminal Services (ICTSI), the High Court of South Africa has stayed the contract in favour of APM Terminals.

The plan was to develop the Pier as a joint venture with Transnet Port Terminals, and increase capacity from two million TEUs to eight million TEUs.

ICTSI was to acquire 49 percent of the terminal with an investment totalling around R11 billion over the duration of the agreement, FreightNews reported.

"Rival bidder APM Terminals contended that the award process was flawed and that ICTSI did not meet certain solvency requirements stipulated in the tender."

APM Terminals, in an official statement, said: “The court has granted the interim interdict pending the outcome of the review of Transnet’s decision to award the contract to ICTSI. This is a welcomed development, given how the process has been run. We will commence our preparations for the second part of the legal review process with confidence, and we remain committed to playing a role in developing South Africa's infrastructure and contributing towards its economic growth. We stand ready and are very well-placed to do so upon being given the opportunity.”

Reacting to the ruling, Transnet said it “notes the judgement of the KwaZulu-Natal High Court in respect of APM Terminals’ application to seek an interdict in respect of the selection of an equity partner for DCT Pier 2. Transnet wishes to affirm its commitment to the judicial process and is currently evaluating its options.”

Transnet added that "it remains committed to concluding the transaction expeditiously in the interest of economic growth and development."

The order, written by Mossop J, says: "It appears to me that the approach of Transnet in identifying the second respondent (ICTSI) as the preferred bidder was potentially flawed and prima facie unfair to the other bidders. Different allowances were made for the second respondent that were not offered to other bidders.

"Transnet permitted a bidder that had not established its financial credentials to proceed to the further stages of the tender in which financial capacity was a central requirement."

While acknowledging that the granting of the relief sought by the applicant (APM Terminals) would delay Transnet’s plans for DCT2,, the order said: "Transnet cannot really claim to be prejudiced by such a delay. If time was so critical to the commencement of the project, then Transnet has not acted as though that is the case. When the applicant pointed out the problems with the second respondent’s bid, Transnet was quite happy to take six months to conduct private negotiations with the second respondent."

The FreightNews report says: “This port has been poorly run for years and the ICTSI deal meant that logistics service providers could expect improvement. This process now appears to have been upended, and we’re most likely going back to square one. It means more waiting to see change at the port, more frustration, and more loss of revenue through the government’s ongoing ineptitude to get its house in order."