The Supreme Court of Appeal (SCA) has ruled that the long-running bribery dispute between local telco MTN and Istanbul-based Turkcell can be heard in South African courts.
This, after in December 2022, the High Court of South Africa dismissed the $4.2 billion (R78 billion) Turkcell lawsuit against MTN, saying the Iranian courts have jurisdiction over the case, rather than the South African courts.
Turkcell then appealed the ruling at the SCA, saying South African law should be applied and the South African courts should also have jurisdiction over the matter since MTN’s headquarters is located in SA and the alleged unlawful acts were planned in this location.
Responding to the latest ruling, MTN says it is planning to approach the Constitutional Court to appeal the judgement handed down by the SCA yesterday, in which it upheld aspects of the appeal previously lodged by Turkish telecommunications company, Turkcell.
The court battle, which has raged since 2013, involves allegations of bribery and corruption against MTN, with Turkcell alleging MTN paid off Iranian and South African officials to overturn a public tender that it lost for a multibillion-dollar opportunity to run the Iranian GSM telecoms licence.
Turkcell and its wholly-owned subsidiary, East Asian Consortium (EAC), sought damages of $4.2 billion from MTN amid allegations of impropriety in the 2005 award of the first private mobile telecommunications licence in Iran.
The High Court had dismissed Turkcell’s case against MTN Group on the basis that the South African courts did not have jurisdiction, following which an appeal was lodged against the judgement.
Turkcell had previously claimed to have suffered losses because it had failed to convince a lower court in SA to hear the merits of its case locally, accusing MTN of masterminding a plot to oust it from the licence, which was originally due to Turkcell.
In the latest turn of events, the SCA set aside the judgement and decided that the South African courts do have jurisdiction.
In a statement, MTN notes: “The SCA, however, upheld the High Court ruling that Iranian law is applicable to key aspects of the dispute.
“The decision to uphold the appeal does not relate to the merits of Turkcell’s claims, or the allegations made against MTN Group, which have not yet been tested in court. MTN has always maintained that the Turkcell litigation was without merit and has expressed confidence that it would successfully defend these proceedings.”
Over the years, MTN has said the Turkcell litigation was without merit, arguing it had no provisions or contingent liabilities with regards to the lawsuit.
In 2012, the board of MTN Group appointed an independent special committee to investigate the allegations by Turkcell. According to MTN, the committee exonerated MTN. Details of the committee and its findings are available here.
In December 2022, the High Court of South Africa dismissed the Turkcell lawsuit against MTN, saying the Iranian courts have jurisdiction over the case, rather than the South African courts.
Turkcell then appealed the ruling at the SCA, saying South African law should be applied and the South African courts should also have jurisdiction over the matter, since MTN’s headquarters is located in SA and the alleged unlawful acts were planned in this location.
Cedric Soule and David Farber, Turkcell global counsel, previously told ITWeb via e-mail: “No court of law has ever examined the merits of its affiliate EAC’s claim against MTN about whether MTN did indeed commit acts of bribery and corruption to overturn the tender for the Iranian GSM telecoms licence that it had lost to Turkcell.
“If MTN wins before the SCA, it is unlikely that any court of law ever will examine MTN’s conduct. Moreover, if the lower court is not reversed, not only will MTN escape any hearing on the merits, but those bribing foreign government officials from South Africa will be immune from suit based upon sovereign immunity and Act of State principles.
“In turn, South Africa will become a haven for international bribery of foreign governments because companies and individuals engaged in such bribery and corruption will become ‘untouchable’ – they will be able to rely on the defences raised by MTN based on sovereign immunity principles and the ‘Act of State’ doctrine to argue that South African courts cannot hear bribery and corruption claims against them.”
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