Judge prefers arbitration in the Microsoft vs TechnoService contract breach case

by Wakili Liam

Justice Chacha Mwita dismissed the application by TechnoService, saying courts should not interfere with proceedings before arbitration.

Technoservice is seeking Sh150 million from Nokia Corporation over alleged breach of contract after the business was sold to tech giant Microsoft.

The judge noted that the parties were in September last year, referred to arbitration, as per a clause in the agreement they signed.

“In the circumstances, granting leave to appeal will delay the resolution of the dispute which parties had committed to avoid when they opted for arbitration,” the Judge said.

The Kenyan company moved to court in 2020 seeking more than Sh150 million from Nokia, accusing the multinational of breaching a 2006 partnership deal.

TechnoService alleges that Nokia sold its business to Microsoft Corporation in April 2014. The company further seeks damages and loss of earnings after a number of Nokia Service Centres, it allegedly established jointly, were taken over by Microsoft.

The company named Nokia Corporation, Risto Siilasmaa — the chairman of Nokia — Mr Stephen Elop, who was the chief operating officer at Nokia between 2010 to 2014 and Nokia International OY- a company in Finland but registered in Kenya.

But Justice Mativo made a ruling last year referring the case to arbitration. TechnoService went back to the High Court arguing that the arbitration clauses relied on were unconstitutional.

In the dispute, TechnoService accuses Nokia of breaching a partnership deal signed in 2006 and ended in April 2014.

TechnoService said it was coerced into investing in the deal by establishing Nokia care branded service centers across the country. The centers, which were jointly established, were later transferred to Microsoft without its consent.

The company said it later launched a state-of-the-art service center at Gateway Business Park, to promote Nokia brands and products. Further, Nokia allegedly used the center to train technicians from other business partners across the region instead of sending them to Dubai, UAE or South Africa, as was done previously.

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

“The plaintiff avers that the 1st defendants and 4th defendants’ employees admitted and acknowledged, by way of correspondence and letters, the plaintiffs’ contribution to its success in Kenya,” court documents stated.

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

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