Court Awards N14bn Damages Against NITEL in Nigeria

Telecoms

Nitel’s rather arbitrary attitude to service on SAT3 got its come-uppance in the Nigerian courts this week. The court ordered NITEL to pay N14 billion as damages to Interstella Communications Limited for breach of contract between the two parties.

The court granted the claims of Interstella, as endorsed in the plaintiffs' statement of claim to wit the following, a declaration that the defendants' conduct is a breach of contract by failing, refusing or neglecting to provide the services contracted by the defendant when it leased out its 36 E1 switched ports, 9 E1 transmission links and half STM1 circuit on SAT 3 to the plaintiff.

The court also ordered the defendant to immediately provide the plaintiff with half STM1 circuit on SAT3, which the plaintiff had paid for, since October 2006. It further ordered payment by the defendant to the plaintiff of N1.944 billion per annum as revenue accruable to the plaintiff per annum from its investments on the 36 E1 switch ports and 9 transmission E1 beginning from 2002 and continuing thereafter until the accumulated sum is paid in arrears.

Other costs awarded by the court included the cost of medical treatment of the second plaintiff, the Chief Executive Officer of the first plaintiff amounting to $150,000, as well as payment by the defendant to the plaintiff US$2,480,000 per month from April 2007 till date until all accumulated arrears are paid, being the monthly revenue accruable to the plaintiffs' investment on half STM circuit on SAT3 since October 2006.

NITEL was also ordered to pay Interstella N2 billion as exemplary damages inflicted on the plaintiffs' business, the corporate goodwill, image and integrity reputation, financial losses occasioned and flowing directly and being reasonably foreseeable as direct consequences of the defendants' conduct at a 30 per cent interest rate until judgment, and thereafter at 25 per cent until the liquidation of judgment debt and N250,000 being the cost of litigation in favour of plaintiff.

Apart from the declaratory orders and the interest accruing to the judgment debt, the immediate financial implication of the judgment is that as at the 6th day of November 2007, NITEL is liable to pay N11.72 billion and $14,150,000 to Interstella.