Court bars company from seeking 150 million shillings against Nokia in contract dispute

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Court bars company from seeking 150 million shillings against Nokia in contract dispute


Judge Chacha Mwita during a previous hearing. FILE PHOTO | NMG

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Summary

  • A judge has dismissed a petition filed by a Kenyan company seeking 150 million shillings from Nokia Corporation for alleged breach of contract after the company was sold to tech giant Microsoft.
  • The judge noted that in September last year the parties had been referred to arbitration, in accordance with a clause in the agreement they had signed.
  • The Kenyan company went to court in 2020 seeking more than 150 million shillings from Nokia, accusing the multinational of breaching a 2006 partnership agreement.

A judge has dismissed a petition filed by a Kenyan company seeking 150 million shillings from Nokia Corporation for alleged breach of contract after the company was sold to tech giant Microsoft.

Judge Chacha Mwita rejected TechnoService’s claim, saying the courts should not interfere with the proceedings before arbitration.

The judge noted that in September last year the parties had been referred to arbitration, in accordance with a clause in the agreement they had signed.

“In these circumstances, leave to appeal will delay the resolution of the dispute that the parties agreed to avoid when they opted for arbitration,” the judge said.

The Kenyan company went to court in 2020 seeking more than 150 million shillings from Nokia, accusing the multinational of breaching a 2006 partnership agreement.

TechnoService alleges that Nokia sold its business to Microsoft Corporation in April 2014. The company is further seeking damages and lost profits after a number of Nokia Service Centers, which it allegedly jointly established, were taken over by Microsoft.

The company has appointed Nokia Corporation, Risto Siilasmaa – the Chairman of Nokia – Mr. Stephen Elop, who was the COO of Nokia between 2010 and 2014 and Nokia International OY – a company in Finland but registered in Kenya.

But Judge Mativo issued a ruling last year sending the case to arbitration. TechnoService returned to the High Court arguing that the relied arbitration clauses were unconstitutional.

In the litigation, TechnoService accuses Nokia of breaking a partnership agreement signed in 2006 and ended in April 2014.

TechnoService said it was forced to invest in the deal by establishing Nokia Care-branded service centers across the country. The centers, which were created jointly, were later transferred to Microsoft without its consent.

The company said it then launched a state-of-the-art service center at Gateway Business Park, to promote Nokia brands and products. In addition, Nokia reportedly used the center to train technicians from other business partners in the region instead of sending them to Dubai, the United Arab Emirates or South Africa, as was done previously.

The company added that the deals enabled Nokia’s Kenya business to grow from $10 million in revenue in 2006 to $150 million in 2013.

“Plaintiff asserts that the employees of the 1st Defendant and 4th Defendant admitted and acknowledged, through correspondence and letters, the Plaintiffs’ contribution to his success in Kenya,” the court documents state.

But the company later learned that Nokia had entered into a deal with Microsoft, a deal that was allegedly conducted clandestinely.

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