Telkom wins another round in Telcordia dispute

By Tracy Burrows for Telkom
Johannesburg, 27 Nov 2003

The Pretoria High Court has decided to set aside the arbitrator`s partial award made in Telkom`s dispute with Telcordia. This follows the hearing of an extensive six-week review application that started in August.

Telcordia has also been ordered to pay Telkom`s costs, including the costs of three counsel.

In terms of the court order, the previous arbitrator, Boswood QC, was removed. The case will now be heard by a panel of three retired judges of the Supreme Court of Appeal in SA.

The dispute first arose in 2000, when Telkom terminated its agreement with Telcordia for the delivery of an integrated, end-to-end customer activation and assurance system.

Telkom said it had cancelled the contract because Telcordia would not be able to deliver what it had promised, a statement the company flatly denied.

Telcordia initiated arbitration proceedings under the auspices of the International Chamber of Commerce during the first quarter of 2001. In response to Telcordia`s claims for outstanding amounts and certain out-of-scope services of approximately $130 million, Telkom counter-claimed against Telcordia for in excess of $300 million, including a claim for the refund of money paid by Telkom to Telcordia.

A partial award was made by the arbitrator in favour of Telcordia on 27 September 2002. Telkom says this was "despite a pending Section 20 application by Telkom in the South African High Court to resolve pertinent legal issues on the matter".

"The High Court decision vindicates Telkom`s view that the partial award was vitiated by serious irregularities. We are delighted that Telkom`s exposure to contingent liabilities will be significantly reduced for now, and indeed, we can look forward to recovering some of our expenses," says Mandla Ngcobo, Telkom`s legal services group executive.