High Court dismisses Telcordia appeal application

By Tracy Burrows for Telkom
Johannesburg, 04 May 2004

The Pretoria High Court has dismissed an application by Telcordia for leave to appeal against a High Court judgment made in favour of Telkom last year, that set aside a partial award made earlier by an arbitrator in a long-standing dispute between the parties.

The dispute arose in 2000, when Telkom claimed more than R2.6 billion from US-based Telcordia in a dispute over the nature of the contract for an end-to-end customer activation and assurance system. Telcordia responded with a claim for damages around R1 billion.

When the parties failed to resolve the dispute, Telcordia initiated arbitration proceedings under the auspices of the International Chamber of Commerce (ICC) in 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 an amount in excess of $300 million, including a claim for the refund of monies paid by Telkom to Telcordia.

Telkom reports that the arbitrator handed down a partial award in favour of Telcordia in September 2002, effectively settling the merits of the dispute between the parties and notwithstanding a pending Section 20 application (in terms of the Arbitration Act) in the South African High Court to resolve pertinent legal issues in the matter. However, Telkom applied to the Pretoria High Court to review and set aside the partial award.

In November 2003, the High Court handed down judgment in favour of Telkom following the hearing of an extensive six-week review application. In terms of the court order, the partial award was set aside and the Court ordered that the matter be heard by a panel of three retired Judges of the Supreme Court of Appeal in South Africa. Telcordia then applied for leave to appeal.

After hearing the application for three days last week, the High Court found that there was no prospect that another Court would arrive at a different conclusion from the one that the judge found in his judgment in the review application on 27 November 2003. The Court also granted a cost order in favour of Telkom, including costs for two counsel.