Juba vs. Vivacell Telecom: South Sudan Ordered to Pay Vivacell $2.7 Billion by Arbitration Court
Political Fallout Surrounds Controversial Ruling by the Swiss Federal Supreme Court that awarded Vivacell $2.7 Billion.
By PaanLuel Wël Media Ltd.
Tuesday, 5 September 2023 (PW) — In a landmark decision with far-reaching political implications, the Swiss Federal Supreme Court has upheld an arbitration award ordering the Republic of South Sudan to pay $2.7 billion to Lebanese-owned mobile operator Vivacell Telecom. This decision has sent shockwaves through the nation and the international community, highlighting the intricate relationship between politics, business, and justice in the world’s newest nation.
The dispute between South Sudan and Vivacell Telecom dates to a contentious period following the December 2013 civil war. It has been alleged that the South Sudanese government, led by then-President Salva Kiir, took the drastic step of shutting down Vivacell Telecom as a punitive measure against Pagan Amum, former Secretary-General of the Sudan People’s Liberation Movement (SPLM), who was rumored to have had a stake in the company.
The government’s initial claims revolved around a demand for $66 million in taxes and license fees from Vivacell. However, this dispute soon escalated into a multi-billion-dollar legal battle that has captured global attention.
A leading law firm established in 1830 AD was initially approached to defend the South Sudanese government at the International Chamber of Commerce (ICC). However, their request should have been addressed, and the government needed adequate legal representation. This oversight would prove costly.
The arbitration case centred on a license agreement entered into in the 2000s between Vivacell and a ministry within the Government of Southern Sudan, which was then an autonomous region within Sudan. This agreement included an arbitration clause stipulating that any disputes would be resolved through ICC proceedings in English and seated in Geneva, with the parties waiving the right to appeal any award.
Despite South Sudan gaining independence in 2011, Vivacell continued to operate under the license. In 2018, Vivacell and another telecom company owned by Lebanon’s Fattouch Investment Group initiated ICC arbitration proceedings after South Sudan’s telecoms regulator suspended Vivacell’s license and demanded $66 million in fees and taxes.
In a partial award in November 2022, the sole arbitrator, Jason Fry KC, ruled that he had jurisdiction to hear the dispute, and the license was valid and binding when it was concluded. Fry also found South Sudan liable for various breaches of contract. The arbitration case proceeded, and the companies sought nearly $2.7 billion in damages, which included approximately $1.15 billion in interest up to August 2021.
The recent decision by the Swiss Federal Supreme Court has been met with mixed reactions. Lenz & Staehelin, the law firm representing Vivacell, hailed the court’s “remarkable efficiency” in delivering a 17-page decision just three months after the last parties’ submission. However, it has been a severe blow to the South Sudanese government, which must now honour the arbitration award and pay $2.7 billion to Vivacell Telecom.
The political ramifications of this decision are hard to ignore. Critics argue that the initial shutdown of Vivacell Telecom and the subsequent legal battle were driven by political motivations and emotions rather than sound legal reasoning. In the aftermath of the December 2013 civil war, the shutdown’s timing has fuelled suspicions of political retribution against Pagan Amum, further polarizing South Sudan’s already fragile political landscape.
South Sudan has faced numerous challenges and controversies throughout its short history as an independent nation. From joining the East African Community (EAC) to taking loans and signing international agreements without proper scrutiny, the country has often made decisions with significant consequences without adequate due diligence.
The ruling also raises questions about South Sudan’s handling of international agreements and business relationships, as it continues to face legal challenges related to loans from a commercial bank part-owned by Qatar’s sovereign wealth fund, which lent hundreds of millions of dollars to the country during its civil war.
In the wake of the Swiss Federal Supreme Court’s decision, many South Sudanese citizens expressed their concerns and frustrations. They argue that the country’s leadership has made numerous decisions driven by emotions rather than rational, evidence-based decision-making. They point to a long list of past actions, including military decisions, economic policies, and international agreements, as evidence of this trend.
The ruling has also ignited debate within South Sudan’s business community. Some argue that Vivacell did not follow the country’s laws when registering as a telecom operator, potentially opening the door for legal action against Vivacell and the government for engaging in an allegedly illegal venture. However, others view the court’s decision as biased, suggesting that Vivacell had a legitimate claim to renew its license with South Sudan.
As South Sudan grapples with the political fallout from this contentious decision, the international community will closely watch how the government responds and whether it will honour its financial obligations. This case is a stark reminder of the intricate intersection of politics, business, and justice in a nation struggling to find its footing globally.
Political Backlash and the Ramifications
The ruling by the Swiss Federal Supreme Court has sent shockwaves through the political landscape of South Sudan. While some political analysts argue that the decision serves as a reminder of the country’s complex and sometimes questionable decision-making processes, others see it as a direct consequence of the government’s actions.
One prominent figure at the centre of this controversy is Hon. Michael Makuei Lueth, who serves as South Sudan’s Minister of Information and Communication Technology. Makuei, known for his outspoken and sometimes controversial statements, has come under intense scrutiny for his role in the initial shutdown of Vivacell Telecom and the subsequent legal battle.
Critics argue that Makuei’s decision to close Vivacell Telecom was driven more by political emotions and a desire to silence perceived adversaries rather than sound economic or legal reasoning. The decision to demand $66 million in taxes and license fees from Vivacell, which eventually led to a multi-billion-dollar arbitration case, is seen by some as a costly and poorly thought-out move.
South Sudanese citizens have been quick to voice their concerns, with many expressing frustrations over the consequences of political decisions without proper consideration of the long-term effects. The ruling has also prompted questions about government officials’ competency and transparency when handling complex international agreements and business relationships.
This controversy is not an isolated incident in South Sudan’s tumultuous history. The nation has faced a series of challenges and controversies, both domestically and internationally, since gaining independence in 2011. Some of these challenges include joining the East African Community, taking loans without proper oversight, and signing international agreements without comprehensive scrutiny.
In addition to the Vivacell Telecom case, South Sudan is also dealing with an ongoing ICSID claim from a commercial bank that lent substantial sums of money to the country during its civil war. The outcome of these legal battles will further test the government’s ability to manage its financial and legal obligations.
The political landscape in South Sudan remains highly polarised, with deep divisions among various political factions. The Vivacell Telecom case has added another layer of complexity to an already fragile situation, as it has raised questions about the government’s commitment to the rule of law and the protection of private business interests.
International observers closely monitor how South Sudan will respond to the arbitration award. Honouring the financial obligations set by the Swiss Federal Supreme Court is not only a legal necessity but also a test of South Sudan’s credibility on the global stage. Please comply to avoid further isolation and damage to the country’s international reputation.
As South Sudan navigates the aftermath of this high-stakes legal battle, it faces critical decisions about addressing the underlying issues that have led to such controversies. The need for transparency, accountability, and informed decision-making in political and economic matters is more evident than ever.
In conclusion, the Vivacell Telecom case is a stark reminder of the interplay between politics, business, and justice in South Sudan. The political nature of the initial decision to shut down the telecom company and the subsequent legal battle has raised concerns about the government’s ability to navigate complex international agreements and protect the interests of private businesses. As South Sudan grapples with the fallout from this decision, it faces significant challenges in rebuilding its reputation and fostering an environment conducive to economic growth and stability.
Calls for Reform and Lessons Learned
The controversial ruling by the Swiss Federal Supreme Court in the Vivacell Telecom case has ignited a passionate debate within South Sudan about the need for political and economic reform. As the nation reflects on the consequences of past decisions and grapples with the fallout from the arbitration award, there is a growing consensus that change is imperative for the country’s future stability and prosperity.
Transparency and Accountability: One of the central demands emerging from this controversy is a call for greater transparency and accountability in government decision-making processes. South Sudanese citizens are increasingly vocal about the need for elected officials to make well-informed, evidence-based decisions that prioritise the interests of the nation rather than political or personal agendas.
Strengthening the Legal System: The Vivacell Telecom case has highlighted the importance of a robust and independent legal system. Critics argue that the initial shutdown of the telecom company and the subsequent legal battle were marred by political interference and a lack of impartiality. As South Sudan seeks to rebuild its legal institutions, there is a growing consensus on insulating the judiciary from political pressures.
Business-Friendly Environment: The case has also raised questions about South Sudan’s attractiveness to foreign investors. To attract international businesses and foster economic growth, the country must create a business-friendly environment characterised by stable regulations and the protection of property rights. The controversy surrounding Vivacell has underscored the importance of upholding contractual agreements and providing businesses with a fair and predictable legal framework.
International Reputation: South Sudan’s international reputation is at stake, particularly considering the arbitration award. The country’s ability to honour its financial obligations and adhere to international legal standards is closely monitored by the global community. South Sudan must demonstrate its commitment to upholding international agreements and abiding by the rule of law to regain trust and credibility on the global stage.
Political Reconciliation: The polarisation of South Sudan’s political landscape has been exacerbated by controversies like the Vivacell case. There is a growing recognition that political reconciliation and dialogue among various factions are vital to the nation’s stability. The need for a cohesive, united front in addressing the country’s challenges has never been more apparent.
International Engagement: South Sudan’s interactions with the international community have played a significant role in this case. The country’s ability to navigate international agreements, negotiate effectively, and protect its interests is essential. Lessons learned from the Vivacell case underscore the importance of competent diplomacy and legal representation on the international stage.
As South Sudan embarks on a path of self-reflection and reform, there is hope that these lessons will guide the nation toward a more stable and prosperous future. While the Vivacell Telecom case has exposed weaknesses and challenges, it has also allowed South Sudan to address long-standing issues and chart a course toward political and economic transformation.
Ultimately, the controversy surrounding Vivacell Telecom is a cautionary tale for nations emerging from conflict and striving to establish themselves globally. It highlights the importance of sound governance, transparent decision-making, and the rule of law in building a robust and resilient nation. South Sudan now faces the task of turning these lessons into tangible reforms that will shape its future for future generations.
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