Judge blocks arbitration in Teleco, Haitel dispute

23 Dec 2014

Haiti’s Eastern District judge Jack Weinstein has blocked an arbitration demand relating to a licence dispute between Telecommunications d’Haiti (Teleco) and now defunct CDMA operator Haitel. According to the New York Law Journal, the dispute relates to the use of spectrum in the 1900MHz band.

TeleGeography notes that Teleco entered an agreement with Haitel in June 1998, under which Teleco agreed to lease its spectrum holding in the 1900MHz band to Haitel for 15 years; under the terms of the deal, Haitel agreed to pay USD14.5 million for the frequencies, in addition to 5% of its annual turnover. In November 1998 however, Teleco’s general director at the time – Julio Cadet – demanded that Haitel shares should be used as a guarantee for the USD14.5 million fee, and signed an agreement with Hainet founder Franck Cine and other shareholders, which set aside 15,000 shares in Haitel in lieu of the initial payment and provided for disputes to be resolved in Bermuda. In late 2006-early 2007, Teleco demanded payment of the initial fee and royalties from Haitel and subsequently initiated legal proceedings against the operator in the High Court. For its part, Haitel countered the legal challenge by demanding arbitration in Bermuda. Subsequently, Teleco filed a lawsuit against Franck Cine in the Eastern District asking for the November 1998 agreement to be declared null and void.

Judge Weinstein said that the Teleco official was indeed not authorised to enter into a second agreement that effectively compensated Teleco with shares instead of money. ‘No power of the board of directors of Teleco was delegated in writing, orally, or in any other way [to Julio Cadet]’, Weinstein said, adding: ‘Teleco has proven by clear and convincing evidence that the shareholders agreement of 24 November 1998 does not bind Teleco. Haitel has no right to arbitrate disputes it has with Teleco in [Bermuda].’

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