Lebanese firm sues to stop Safaricom cancelling deal

What you need to know:

  • The Lebanese firm claims it spent over Sh1 billion preparing to execute the contract.

A Lebanese firm has launched a legal battle against Safaricom over a software systems management contract worth millions of dollars just three months after the two firms struck the deal.

Mobinets SAL Limited wants the High Court to stop Safaricom from terminating the lucrative deal and instead refer a dispute over its execution to arbitration.

The Lebanese firm says the contract it signed with the mobile giant in June last year stipulated that any disputes that arise be referred to an arbitrator.

The Lebanese firm claims it spent over Sh1 billion preparing to execute the contract, which would all go to waste if Safaricom cancels.

Safaricom is yet to file a response to Mobinets’ suit.

“Mobinets has completed the functional specifications that Safaricom approved, purchased and shipped equipment worth $6.2 million (Sh558 million), and entered into contractual agreements with external hardware and software solution partners valued at $5 million (Sh450 million),” Mobinets says.

Justice Eric Ogola declined to certify the matter urgent, arguing that Mobinets filed the suit five months after it was allegedly aggrieved by Safaricom. He granted the telco up to February 5 to file a response.

“There is no evidence of irreparable loss that cannot be remedied,” the judge said. “Safaricom is granted 14 days to file and serve an affidavit in response. Mobinets will have another seven days to file a further affidavit if considered necessary.”

The matter will be mentioned on February 16 before Lady Justice Farah Amin for further directions.

The contract was to see Mobinets implement maintenance and support of a performance, network planning configuration and workflow management system. The two parties had signed a three-year deal that gave Mobinets an option for a two-year renewal if it met all the set out conditions of the deal.

Safaricom called off the deal through a letter dated September 1, in which it accused Mobinets of colluding with some of the telco’s staff to gain a competitive edge over other interested parties during the tendering process.

The Lebanese firm says in court papers that Safaricom pulled out of the deal before furnishing it with evidence of the claims.

It wants Safaricom stopped from awarding the contract to any other party until the dispute is resolved through arbitration.

“Mobinets requested for times, dates, names of staff colluded with and the undue advantage gained by the applicant. To date, Safaricom has not provided particulars requested for or substantiated its grave allegations,” the Lebanese firm added.

Mobinets’ advocate Kethi Kilonzo claims that the cancellation is likely to damage its business in other parts of the world.

“For instance, Vodafone Limited, a shareholder of Safaricom, has on the basis of the allegations terminated all future business with Mobinets. Safaricom’s unsubstantiated allegations of corrupt practices has reached well beyond the boundaries of Kenya,” added Ms Kilonzo.

The firm’s CEO Labib Shalak claims it has several similar contracts around the world which now risk cancellation. He added that Mobinets and Safaricom had tried to negotiate a way out of the standoff without success.

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