The latest court ruling may set the stage for the company change of name for the sixth time
Econet Wireless International remains a bonafide stakeholder in Airtel Nigeria, the Appeal court sitting in Lagos ruled on Monday.
The ruling appears to have dealt a blow on the quest by Bharti Airtel, the parent company of Airtel Nigeria, to get the rulings of two lower courts quashed over attempts by Econet Wireless International to reacquire its stakes in the company.
In its judgment on February 14, the Appeal Court in Lagos said Bharti Airtel failed in its bid to get the ruling of a lower court on the disposal of some shares the telecom firm set aside.
The court had held that an International Tribunal acted properly with its verdict that the sale of 65 per cent of the Nigerian business unit to its predecessor, Zain of Kuwait, was null and void, as it did not follow proper procedures.
In a separate, but related ruling, the Federal Appeal Court in Kaduna also ruled that Bharti Airtel should accept the reality that Econet Wireless was an existing minority shareholder in the company.
Bharti has always rejected Econet Wireless as the holder of five per cent equity stake in the Nigerian subsidiary of the company.
In an attempt to have its way, Bharti had always tried to get Econet removed from the register of shareholders, an act that has always been faulted by close watchers as illegal.
The Kaduna Appeal Court in its ruling, however, ordered Bharti to reverse any decision(s) taken since 2003 without prior notification of Econet Wireless as a bona fide shareholder.
Close watchers of the legal tussle said the court’s action would negatively impact on Bharti Airtel’s business across Nigeria, as it may result in a reversal to its former name, a decision that would see the company change its name for a record five times.
The crisis had resulted in the company changing its name first from Econet Wireless to VMobile Nigeria, then to Celtel Nigeria and Zain before the present Airtel Nigeria.
Bharti had bought the Nigerian business from Zain of Kuwait, as part of a $10 billion deal in 2010.
With the dispute between Zain and Econet over an earlier sale in 2006 already on, Bharti, which inherited the dispute, was entangled in a legal tussle that has dragged ever since.
In 2012, the Lagos High Court had heard an application by Bharti Airtel and others seeking to prevent an International Arbitration Tribunal from making its final assessment of the damages to enable it award an equitable compensation to Econet Wireless for violating its shareholder’s rights.
In December 2011, an International Tribunal constituted under the auspices of the United Nations Commission for International Trade Law, UNCITRAL, which comprised senior lawyers from Nigeria and England, found that there were multiple breaches of the shareholders agreement.
The breached stemmed from the decision by Celtel Nigeria, now Bharti Airtel, to acquire the control of 65 per cent of the shares in the company.
The tribunal ordered Celtel Nigeria to pay damages and equitable compensation to Econet Wireless for the violation on the company’s rights.
The court had said that the amount due to Econet would be set in the final stage of the Arbitral process, which Bharti was seeking to prevent from taking place.
The hearing of the Bharti Airtel application, which commenced in April 2012, was concluded on June 4, with the Judge adjourning the proceedings until October 4, 2012 for ruling.
In its written submission to the Court, Econet Wireless said that its experts believed the quantum of the equitable compensation and damages amounted to more than $3 billion.
In its judgment, the court dismissed the application by Bharti Airtel to set aside an award made by an International Commercial Arbitration Tribunal in favour of Econet Wireless.
The judgment paved the way for the matter to be referred back to the international tribunal to quash the damages and remove the compensation that Bharti must pay to Econet Wireless. Econet said it was submitting a claim valued in excess of $3 billion.
The judge had declared that the purchase of a 65 per cent shareholding in Nigeria’s second largest cell phone company, by Celtel, was in violation of the pre-emptive rights of existing shareholder, Econet Wireless. Celtel’s parent company, Zain of Kuwait, later sold the controlling stake to Bharti Airtel, the Indian telecoms operator.
In an extensive judgment, the Lagos High Court found that the International Tribunal was not only properly constituted, but also had the jurisdiction to act on all accounts before it.