Airtel wins Sh4 billion landmark case over distribution of phones

Airtel offices along Mombasa Road in Nairobi on Wednesday, September 29, 2021. [David Njaaga, Standard]

The Court of Appeal has thrown out a Sh4 billion landmark case pitting mobile service provider Airtel against a distributor, Nyutu Agrovet.

A five-judge bench composed of Justices Mohamed Warsame, Patrick Kiage, Lydiah Achode, John Mativo and Ngenye Macharia unanimously agreed to dismiss an application to appeal filed by Nyutu.

They felt that High Court Judge Kanyi Kimondo was right to deny Nyutu damages after Airtel which was then known as Celtel, cancelled the contract to distribute phones in Donholm.

The bench agreed with ="https://www.standardmedia.co.ke/article/2001252916/airtel-locks-horns-with-distributors-over-sh400-million-commission-contracts">Airtel’s lawyer Fred Ngatia< that there was no proof that Justice Kimondo erred or was wrong in setting aside the arbitration award.

Mr Ngatia told the court that Airtel terminated Nyutu’s contract as Nyutu allowed George Changa to use forged documents. Nyutu would have illegally earned a Sh594 million plus 16 percent per-annum interest from May 8, 2009.

“The appellant has failed to demonstrate that the High Court decision was so grave, so manifestly wrong and had completely closed doors of justice to either party,” the bench ruled.

Initially, the court’s decision on arbitration was final. However, the Supreme Court opened a limited window for parties to move to the Court of Appeal. The apex court noted that a party could move to the Court of Appeal if there was evidence of gross blunders by the High Court.

In their judgement, Justices Warsame, Kiage, Achode, Mativo and Ngenye asserted that the Supreme Court’s verdict was not an olive branch for everyone to appeal arbitration awards before the Court of Appeal.

“The appellant has totally failed to bring its ="https://www.standardmedia.co.ke/counties/article/2000131916/airtel-kenya-counts-on-partnerships-to-right-past-missteps">case within the court’s< circumscribed and narrow jurisdiction for granting leave, which should be sparingly exercised and only in the clearest cases,” they said.

The case has been in court for 17 years. It started in March 2009 when Nyutu’s agent George Changa presented two banking slips worth Sh11 million and collected mobile phones worth that amount. Airtel discovered that Changa had presented fake banking slips and terminated the contract. This is where the battle began.

Nyutu and the telco later agreed to have the dispute arbitrated by Senior Counsel Fred Ojiambo. After hearings, the lawyer awarded Nyutu Sh541 million in 2011. The amount had accrued interest to more than Sh4 billion.

Arbitration

Aggrieved, Airtel moved to ="https://www.standardmedia.co.ke/business/article/2000039997/airtel-goes-back-to-drawing-board"> the High Court, which set

Nyutu filed a case in the Supreme Court arguing that its right to appeal had been unjustly limited. Lawyer Kamau Karori for the Chartered Institute of Arbitrators, urged the top court to limit the right of appeal to “correcting grave and patent errors of the High Court which, if left to stand, will undermine the practice and benefits of arbitration”.

But then Chief Justice David Maraga gave a dissenting verdict. “Most parties, especially those engaged in commercial transactions, desire expeditious and absolute determination of their disputes to enable them to go on with their businesses. They require a final and enforceable outcome. The objectives of arbitration would be defeated and arbitration will be a precursor to litigation. This is because any court proceedings that render an award unenforceable affects the principle of finality,” ruled Justice Maraga.

But in the end, the majority ordered that Nyutu’s appeal, which was before the Court of Appeal, be heard and determined. However, the Court of Appeal dismissed the case.