Victory for EWL at PCA

JOHANNESBURG (11/26/2003) - The International Bureau of the Permanent Court of Arbitration (PCA) at the Hague Tuesday ruled in favor of Econet Wireless Limited (EWL) in its application for the designation of a new appointing authority to replace the current appointing authority, namely the chief justice of the federal high court of Nigeria.

The PCA accepted EWL's complaint that the Nigerian judge had "failed and/or neglected to appoint the arbitrators", and therefore replaced him as the appointing authority. The new appointing authority is the International Court of Arbitration (ICA) in Paris.

This means the ICA will now be responsible for appointing a three-member judicial panel to hear the shareholders dispute. In terms of the rules of UNCITRAL, which controls the Permanent Court of Arbitration, the designated Appointing Authority in Nigeria, who in this case was the chief justice of the Federal High Court of Nigeria, was required to appoint a panel of judges to arbitrate the matter within 60 days from notification of a dispute.

The Nigerian judge, Justice Rose Ukeje, did not do so, and, when she was asked by the PCA to explain why this had not been done, she argued that it was 'premature' to do so, as she first had to determine whether there was an actual dispute between the parties.

EWL, through its lawyers, argued to the PCA that the Nigerian judge's responsibility was an administrative one, and not a judicial function. It then asked the PCA to designate a new appointing authority.

In a letter dated November 25 the Secretary-General of the PCA said he had considered the arguments of all the parties, and had decided to designate a new appointing authority. The International Court of Arbitration, which is part of the International Chamber of Commerce, will now be responsible for setting up a three-member judicial tribunal which will hear the EWL case. The ruling of the tribunal will be final and binding on all parties.

EWL is asking the arbitrators to enforce an agreement between itself and Econet Wireless Nigeria in which the latter had undertaken to sell it additional shares to increase its stake and become the controlling shareholder. EWL claims that the Nigerian company breached the agreement and offered the same shares to SA cellular operator, Vodacom Pty Ltd.

EWL wants the judicial tribunal, if it finds in its favour, to reverse all decisions that have been taken to try to bring Vodacom into the company as a shareholder.

Strive Masiyiwa, CEO of EWL, says his company is delighted at the outcome of the PCA. "Although we have lost three months since we invoked the arbitration clause in the shareholders agreement, we have been pleasantly surprised by the speed and efficiency of the international arbitration process, and we are hopeful that this matter will be concluded quickly."

He adds that once the panel of judges is in place EWL will ask them to grant an interim injunction pending the outcome of the arbitration process.

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