Econet Nigeria Wins Legal Battle

The Federal High Court of Nigeria has ruled that it has the jurisdiction to appoint arbitrators in the ongoing dispute between shareholders of Vee Mobile, formerly Econet Wireless Nigeria. In making its ruling, the court dismissed an application brought by 14 of the 22 shareholders who claimed that the court did not have jurisdiction and should refer the matter to the State High Courts.

Nigeria is a Federation and has both Federal and State courts like the United States. The legal battle over which court had jurisdiction emerged after arbitrators appointed by the International Court of Arbitration (ICA) had ruled after hearing the case that their appointment should have been made by a Nigerian court and not the ICA.

The issue of jurisdiction has therefore been at the center of the arbitration battle which began after South African operator Vodacom offered to acquire 51% of Nigeria's second largest cellular operator, even though Econet, which is an existing shareholder in the company, wanted to exercise pre-emptive rights and buy the shares offered to Vodacom.

Some of the local shareholders in the company refused to allow Econet to exercise pre-emption, arguing that such a provision was not in the shareholders agreement. Econet then invoked the provision for dispute resolution which called for arbitration under the rules of the United Nations Center for International Arbitration (UNCITRAL).

The case has now been adjourned to 23rd November when the court will hear arguments from Econet's lawyers that the original team of international arbitrators that had been appointed by the ICA should be re-appointed so as to expedite the conclusion of the arbitration which started two years ago.

Econet Wireless founder and Chief Executive Strive Masiyiwa called the Federal High Court ruling "a major break through". He said the issue of jurisdiction had been the key stumbling block in the legal battle from the beginning. "Now we can get the merits of our case resolved," he said."

Posted to the site on 2nd November 2005