Tongan government is being sued in New Zealand for $US1.4 million remaining unpaid after linking to the Pacific-wide Hawaiki submarine cable. In October 2016, it guaranteed payment of the full $US2.8 million construction cost for a fibre optic submarine spur to Tonga from Hawaiki.
The Hawaiki network runs between New Zealand, Australia, Hawaii and mainland USA. Tonga Cable Ltd, majority owned by the Tongan government, agreed in 2016 to pay for a connection to Hawaiki. As majority shareholder, the Tongan government guaranteed payment. A first instalment of US$1.4 million was paid on signing. The connection was operational mid-2018. Tonga has defaulted on the final instalment due.
Tongan government said it could not be sued on its guarantee in the New Zealand courts; Tonga was the appropriate place to sue. In the New Zealand High Court, Associate judge Andrew ruled the case be heard in New Zealand. The fibre-laying contract stated New Zealand law was the ‘proper law’ of the contract; any dispute was to be heard in New Zealand courts. The guarantee did not have a ‘proper law’ clause, but the guarantee was inextricably linked to the fibre-laying contract, Judge Andrew ruled. The guarantee was ‘infected’ by the contract guaranteed. Claims under the guarantee came within New Zealand courts’ jurisdiction.
Tongan law allows decisions of New Zealand courts to be enforced in that country.
Hawaiki Submarine Cable LP v. Tonga Cable Ltd & Kingdom of Tonga – High Court (10.07.19)
19.126