International Container Terminal Services (ICTSI) will today appeal the Durban High Court interdict that prevents Transnet from implementing the public-private partnership agreement with ICTSI, to run Durban Container Terminal Pier 2.
In July 2023, Transnet awarded ICTSI, a global Top-10 firm that runs 32 port terminals in 19 countries, the contract to run the container terminal, in a competitive bidding process.
Global shipping and freight group Maersk, through subsidiary APM Terminals, is one of the failed bidders and approached the courts this year to overturn the contract. While the interdict against the partnership was granted against Transnet, and not ICTSI, the global firm has asked for leave to appeal as findings by the court were damaging to its reputation and had no basis in fact, ICTSI contended yesterday.
In October, the KwaZulu-Natal High Court ordered Transnet to halt the agreement until the matter could be considered in court. It halted what was one of Transnet’s biggest attempts yet to bring in private expertise to revive Transnet port operations, which, according to a World Bank study, rank among the least efficient in the world.
“We believe the court erred significantly in granting the interdict. The full review of the awarding of the contract by Transnet to ICTSI, lodged by Maersk, will still proceed in March 2025, regardless of the outcome of ICTSI’s application for leave to appeal. ICTSI’s appeal does not impact the timeline or court dates of the main case,” a statement from ICTSI said yesterday.
Should the appeal be successful, Transnet may continue to implement its agreement with ICTSI in parallel to the main case’s processes.
ICTSI said Maersk had “misleadingly” argued that ICTSI does not meet a non-defined definition of solvency – a metric used to show its financial ability to meet its obligations.
“ICTSI disputes Maersk’s narrow interpretation of how solvency should be calculated and disputes that the matrix was a mandatory pass/fail,” it said yesterday.
The specific equation to calculate solvency was not prescribed in the tender documents, and ICTSI argued its measure was a reasonable option, which it has always been open and transparent about using. Transnet’s auditors reviewed and accepted the measure during the bidding process, they said.
“What is critical and material is that ICTSI had – and still has – the financial capacity to perform on the terms of the contract. Transnet and their auditors were satisfied with this when it took the decision in July 2023 and again re-confirmed by an independent confirmatory due diligence conducted by Transnet,” said Hans-Ole Madsen, ICTSI regional head for Europe and Middle East and Africa.
Maersk’s definition of solvency is so rigid that it would disqualify many blue-chip companies on the JSE and globally, including, for instance, Apple Inc., from winning the tender, he said.
ICTSI has a global turnover of almost $2.4 billion (R41 billion) annually. It operates in some of the world's biggest and most complex economies, including China, Brazil, the Philippines, Argentina, and Australia.
Maersk South Africa said in a statement in response to BR questions they remained committed to being a trusted partner in South Africa's development journey. They said that with the judicial review matter set for March 2025, ICTSI’s “highly unusual decision to appeal against the interdict puts a swift conclusion to the matter at risk.”
APM Terminals said its challenge was done in good faith, based on the rules applicable to the tender.
“APM Terminals appealed against the decision as rules had been waived, and there was a lack of transparency. APM Terminals was one of many who flagged that ICTSI did not satisfy the RFQ and RFP requirements. Transnet's internal audit committee and external advisors reviewed and confirmed this issue. The Presiding Judge of the Durban High Court concurred with this reading,” they said.
"We are confident that the appeal process will provide the opportunity to address these concerns,” said Madsen.
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