Government agrees to confidential agreement with internet provider over multi-million dollar contract payment due four years ago

A multi-million dollar dispute between the Tongan government and a Vanuatu-registered internet provider has ended with a confidential agreement.

Kacific Broadband Satellites Group (Kacific) had been pursuing the Tongan Government for nearly US$6 million owed for an agreement made in 2019.

The Prime Minister’s office issued a statement yesterday saying the settlement was in the best interests of Tonga.

“We are delighted to have resolved our differences with the Government of Tonga and are excited about the prospect of working together,” Kacific CEO Christian Patouraux said..

“We believe that this agreement represents a significant step forward in our relationship and look forward to building a strong and mutually beneficial partnership with the Government of Tonga, for the benefit of all the people of Tonga.”

In 2019 Kacific Broadband Satellites Group signed a 15 year agreement with Tonga Satellite Ltd (TSL), a Tongan government company, to provide high speed broadband via satellite to the kingdom.

The company said the service would connect communities in 89 remote outer islands with high-quality internet. In the case of a fibre cable outage, similar to the one experienced in January 2019, the satellite internet bandwidth could be redistributed and shared with Tonga’s main centres.

In January 2019, the international fibre cable connecting Nukuʻalofa to high speed internet was severed, leaving most of Tonga’s people and organisations without access to the internet or international phone calls. During the 12 days in which the cable was repaired, satellite technology was used to provide bandwidth to the nation.

The then Minister for Commerce, Consumer, Trade, Innovation and Labour Dr Tevita Tui’Uata said the Kacific system met the needs of Tonga to provide full broadband access to all residents of Tonga.

The Kacific contract was based on a single upfront payment of US$5,760,000 due on June 15, 2019. This was never paid. In January 2021 Kacific began arbitration in Singapore against Tonga Satellite and the Tongan government.

Cabinet attempted to de-register and remove Tonga Satellite from the Register of Companies after those proceedings had started. Kacific took the government to the Tongan Supreme Court which ruled that TSL had to be re-registered. This meant Kacific could continue its legal efforts against the government.

In his summing up of the court case, Lord Chief Justice Whitten said he was satisfied that there was a sufficient basis to support an inference,that the Government proceeded to “engineer the removal of TSL from the Register for the clear purpose of frustrating the arbitral proceeding against TSL.”

The judge said attempting to remove TSL from the register of companies “had likely done little to enhance, and may even have damaged, the Government’s reputation for being a responsible and reliable international trading.”

Any issues between Kacific and TSL would be determined by the law of Singapore, under which arbitration had commenced.  In any case, TSL had no assets.

For more information

Tongan government signs deal with Kacific for remote island connectivity and fibre back-up

Kacific succeeds in its application to Supreme Court to restore Tonga Satellite to Register of Companies

Application to restore Tonga Satellite Limited to the Register of Companies. Judgement.

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