Airtel Faces Potential Sh10 Million Fine Over Alleged Contract Breach with Pesapal

In a legal tussle that has caught the attention of the telecom world, Airtel Networks Kenya Limited finds itself on the brink of a hefty Sh10 million fine. The alleged breach of contract with payment service provider Pesapal has triggered a legal showdown, with the matter scheduled to be mentioned before Justice John Chigiti on February 14, 2024.

The intricacies of the dispute unfold in documents filed before the Milimani Law Courts. Airtel, along with Pesapal Limited, Mawingu Airtime Limited, Interintel Technologies Limited, and Okazaki Limited, entered into distributorship agreements spanning from December 5, 2012, to July 2019. These agreements entrusted the Interested Parties (IPs) with the task of selling and distributing Airtel’s products.

Integral to these agreements was a dispute resolution clause, mandating that any conflicts between the parties be settled through arbitration. However, the narrative takes a twist as we fast forward to September and October 2023, when Airtel receives notifications of investigations from the Communication Authority (CA).

The CA’s notifications reveal ongoing investigations into complaints lodged by the IPs, citing alleged abuse of buyer power. If proven true, the consequences for Airtel could be severe – ranging from a minimum fine of Sh10 million to 10 percent of the preceding year’s gross turnover.

Airtel, however, raises a valid concern, asserting its inability to respond to the complaints without access to their particulars. In response to the CA’s directive to file responses by December 6, Airtel contends that being denied access to individual complaints hampers its ability to formulate a robust and comprehensive response.

“The investigations and potential penalties likely to be imposed by the CA require as a bare minimum that CA does furnish us with the individual complaints to enable us to file a robust and comprehensive response,” Airtel states.

The telecom giant argues that sustaining investigations and imposing penalties without providing access to the complaints would result in the CA acting as investigator, judge, and jury. Seeking judicial intervention, Airtel requests the court to suspend the ongoing investigations and proceedings related to the complaints.

As the legal drama unfolds, all eyes turn to the upcoming court session before Justice John Chigiti on February 14, 2024. The outcome of this case could not only impact Airtel’s financial standing but also set a precedent for how contractual disputes in the telecommunications industry are handled. Stay tuned as the legal saga continues to unfold in the heart of Kenya’s legal arena.

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