A Qatari bank has lodged a legal complaint against South Sudan at the International Centre for Settlement of Investment Disputes (ICSID) after the world’s youngest country defaulted on payment of a $700 million loan it borrowed during the civil war.
According to the complaint seen by HIJ, South Sudan had borrowed from Qatar National Bank Group an undisclosed amount in 2012, and Juba defaulted on the payment of the amount. In 2015 the world’s youngest country decided to agree with the Qatari bank on how to repay the loan.
In 2018, South Sudan asked for more money, which should be repaid within a duration of 15 years starting in 2019, but has since defaulted again, triggering the Qatari bank to lodge a legal complaint against South Sudan.
“The Claimant is part of the QNB Group, one of the largest banks in the Middle East, with extensive operations in multiple jurisdictions worldwide, including Africa, Europe, and Asia. The QNB Group provides banking and financial services, including corporations and governments,” the complaint obtained by media reads in part.
“The Claimant has a long-standing relationship with the Respondents, which dates back to 2012 – not long after South Sudan gained independence from Sudan. Starting in June 2012 further to agreements entered into with BSS (which is the central bank of South Sudan), the Claimant provided credit to be used to import strategic goods to South Sudan, including specific commodities to aid South Sudan’s development such as food and agricultural products, pharmaceuticals, construction materials, and refined oil products. This credit facility was increased and renewed thereafter.
“In May 2015, BSS defaulted on payment obligations it had assumed in connection with the credit facilities provided by the Claimant. As such, the Claimant and BSS entered into a restructuring agreement on 3 February 2016 for the repayment of BSS’s outstanding obligations (the “2016 Agreement”).”
“On 5 April 2018, the Claimant agreed with South Sudan and BSS to restructure the debt owed to the Claimant and refinance obligations under the 2016 Agreement as well as to increase lending to South Sudan.
“This was done by way of the Facility Agreement, which was executed by South Sudan as borrower and BSS as guarantor. This Facility Agreement is the subject of the present dispute.
“Under the Facility Agreement, the Claimant agreed to make available to South Sudan a term loan facility of US$700 million. Such amounts were to be used to refinance credit given for the acquisition of goods to aid South Sudan’s development and support the management of the balance of payments of South Sudan.
“Under the Facility Agreement, the repayment of the amounts provided to South Sudan was anticipated to be spread over a 15 year- period.”