Friday, October 20, 2006

Syabas Breach of Contract

Didn't Syabas knows that all contract agreements are binding upon their successors-in-title unless any stipulations to the contrary are explicitly provided?

When Syabas refused to honour the agreement previously signed between PUAS and the nominated supplier for water pipes, JAKS-KDEB Consortium, the latter filed a civil suit against PUAS, Syabas and the Selangor state government on Oct 6, over the breach of the Supply Agreement dated Oct 25, 2001.

Before the privatisation of the Selangor-Putrajaya water concession contract to Syabas, the pipe supply contract was awarded to JAKS-KDEB Consortium by the Selangor government to supply pipes and fittings for the whole of Selangor, including Kuala Lumpur and Putrajaya.

JAKS-KDEB Consortium claimed that Syabas who was granted a concession for a period of 30 years commencing Jan 1, 2005, had assumed all management duties and functions of PUAS in the area of water supply and distribution of water to consumers to Selangor, Kuala Lumpur and Putrajaya.

Subsequent to the acquisition of PUAS by Syabas, PUAS for no apparent reason unilaterally stopped purchasing pipes and other fittings from JAKS-KDEB Consortium in projects in the three areas.

JAKS-KDEB Consortium is seeking damages, in particular loss of profit, abortive expenditure and loss of reputation following this.

It is also seeking an injunction barring PUAS and Syabas from getting their supply of pipes from other sources rather than JAKS-KDEB Consortium.

The High Court granted an ex-parte injunction to JAKS-KDEB Consortium preventing PUAS and Syabas to deal with other suppliers or contractors to get their supply of water pipes.

With this injunction and an expected protracted litigants that will ensue, Syabas may end up having to pay multi-millions in compensatory damages to the nominated supplier, JAKS-KDEB.

Didn't Syabas who had multiple legal advisors in their organization understand contract law? Tan Sri Rozali may have been wrongly advised. Well, the price is millions in damage claims.

BTW, JAKS-KDEB Consortium is a subsidiary of JAKS Resources Bhd and part of the JAKS Group of Companies.

1 comment:

bayi said...

I believe the reason is greed and avarice, which comes in sugar-coated legal reasonings that one is no longer obligated by previously entered contracts, as in this case.

Who wins at the end? The lawyers.

Who loses? Suckers, I mean, consumers. We are asked to pay extra when their profits don't match their projections.