BY SAM ALFAN.
Safaricom PLC has moved to seeking court to suspend execution of a Sh930 million arbitration award to Popote Innovations limited.
The telco wants the High Court to block the enforcement of the award published on 29th November 2024.
“Execution or enforcement of the Arbitral Award dated and published on 29th November 2024 be stayed pending the hearing and determination of the Motion herein,” seeks the telecommunication giant.
Safaricom will be asking the court to quash the entire proceedings of the sole arbitrator.
The arbitrator had directed Safaricom to pay Popote Innovations ltd Sh. 39,250,000 inclusive of VAT, Sh. 902,750,000 inclusive of VAT and 2,553,865.50 VAT.
Safaricom PLC has faulted the arbitrator saying he dealt with a dispute not referred to arbitration or a dispute beyond contemplation of the parties.
“The determination is thus liable to be set aside in entirety,” says Safaricom PLC.
In addition, Safaricom said the Award was in conflict with the public policy as it seeks to validate violation of statutory provisions.
Safaricom PLC further claimed that Popote Innovations ltd was pestering the company by making incessant demands for payment.
“Given that the Motion herein has high chances of success and restitution will not be possible, it is right and just for interim orders to be issued to conserve the substratum of the dispute herein,” says Safaricom.
In supporting affidavit by Senior Legal Manager litigation Daniel Ndaba, Safaricom PLC is aggrieved by the award by the sole arbitrator and seeks to set it aside in its entirety.
Ndaba adds that the central issue that was submitted to arbitration is whether Safaricom PLC was obligated to pay the Popote Innovations ltd alleged “revenue share” emanating from a Partnership Agreement that was proposed in 2018.
According to Ndaba, by a letter dated 28 August 2017, Safaricom PLC proposed to Popote to enter into a partnership arrangement whereat the Popote’s payment smartphone application would be “white labelled for deployment” for the Applicants “captive market of heavy M-pesa Users (hustlers) and Lipa-na-M-pesa users Merchants)”.
“The revenue to be shared between the parties was to originate from the charges to be levied on the users,” Ndaba affidavit stated.
Ndaba claim that it was made abundantly clear that the intended partnership was specific to the white labelled payment smartphone application and the revenue share would only accrue once the applications are in use.
“After further discussions and correspondence, a Partnership Agreement was drafted and executed by the Popote Innovations ltd but was not executed by the Safaricom according to Ndaba
In the proposed Partnership Agreement, Safaricom and the software development company would have a payment operating management and expense accounting application known as “Popote Pay.”
Safaricom PLC further claimed that in the proposed Partnership Agreement the “Effective Date” was defined as the latest date on which a party to the Agreement will append its signature.
The “Launch Date” was the date that unreserved offering of the M-pesa plus service is effected.The two dates were critical as they would define when the service was to commence.
Safaricom PLC adds that under Clause 2.1 of the proposed Partnership Agreement it was expressly stated that the Agreement “shall come into force on the Effective Date and shall continue for an initial term of one (1) year from the Launch date August 2018”.
Accordingly, it was manifestly clear that the Partnership Agreement would be operative from the Effective Date and would be for an initial one (1) year from the Launch Date.
“As a consequence, thereto , Safaricom opted not to proceed with the proposed Partnership Agreement Nonetheless, as the Respondent had expended time and expense in developing the envisaged Application for integration with the Applicant’s Application, the parties mutually agreed to compensate the Respondent for the “Development Costs.” Such costs were anticipated and provided for in clause 4.2 in the proposed Partnership Agreement,” Ndaba claim.
Safaricom said by an agreement made on 11th September 2020, the parties agreed for the payment of the Development Costs on a “full and final basis” for all the costs envisaged and/or contemplated in the deal.
The sum envisaged by clause 4.2 in the proposed Partnership Agreement is the “development work” carried out by the Popote Innovations ltd preceding the Launch of the Application.
“Accordingly, upon ascertainment of all the sums due to the Respondent preceding the Launch date and the Applicant’s payment of that sum, the Applicant was discharged and freed from any liability arising from any work and/or expense incurred by the Respondent preceding the Launch Date as defined in the proposed Partnership Agreement,” Safaricom says.
The sum due as envisaged by Clause 4.2 was determined and paid to the Respondent in full and final basis. The payment was made on 15th October 2020 whereby the Applicant’s liability to the Respondent for the period preceding the Launch Date was extinguished and discharged.
Safaricom PLC argue that apart from the work carried out preceding the launch date and which is defined as “development costs”, the Respondent did not render and/or carry out any other work.
Prior to the payment of the sum , Safaricom had by a letter dated 5th August 2019 demanded a sum of Sh.46,323,789/=60 being alleged “actual costs” incurred by the Popote Innovations ltd.
