Econet arbitration continues, despite appeal

Johannesburg, 08 Dec 2003

For the second time in as many weeks, the courts have rejected an appeal by Econet Wireless Nigeria (EWN) in respect of its shareholders dispute with Econet Wireless International (EWI) rejected by the courts.

Just over a week ago, EWN objected to the removal of the chief judge of the Nigerian Federal High Court as the appointing authority for the arbitrators.

This was rejected by the UN Permanent Court of Arbitration (PCA), which confirmed the appointment of the International Court of Arbitration (ICA) as the new authority.

This week, EWN launched another appeal directly to the ICA in France, arguing that the PCA had made an error in appointing it, since it did not have the authority to do so.

The initial dispute between the companies came after EWN`s shareholders accepted an offer from Vodacom to purchase equity in the company, despite EWI having first option on the equity, according to that company`s CEO, Strive Masiyiwa.

Masiyiwa says EWI had an agreement with the EWN shareholders that stated that EWI would purchase the $150 million worth of equity that was available, but that this agreement was broken when they chose to accept Vodacom`s deal.

Following this, EWI instituted legal action against EWN, leading to the present arbitration procedure and EWN`s latest attempts to stop the process.

The most recent letter sent to the ICA from EWN`s lawyers states: "We urge you to discountenance the said designation, and to resist the temptation of appointing arbitrators as the same would be an exercise in futility."

In its reply, the ICA acknowledges receipt of the appeal letter, but advises all parties to the dispute that it is proceeding to appoint the arbitrators.

"The rules in this process are really quite clear, and we are totally perplexed by these frantic efforts to get the process stopped," says EWI spokesman, Kevin Kachidza.

"The fact is that when EWI went to the chief judge of the Federal High Court of Nigeria, it was seeking to obtain interim relief through an injunction to prevent EWN shareholders from proceeding with further action, which we feel would violate EWI`s rights.

"With respect to arbitration, the chief judge was only required to act in her administrative capacity. The two issues are completely separate," he says.

According to Masiyiwa, the judgement of the arbitration panel cannot be appealed against and its decision is binding on all parties.

"We are confident the arbitration panel will hand down a judgement favourable to EWI, which will hopefully be sometime before Christmas," says Masiyiwa.