O3B Africa Ltd v Interactive E-Solutions JLT & Anor, Court of Appeal - Commercial Court, August 02, 2018, [2018] EWHC 2072 (Comm)

Resolution Date:August 02, 2018
Issuing Organization:Commercial Court
Actores:O3B Africa Ltd v Interactive E-Solutions JLT & Anor
 
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Neutral Citation Number: [2018] EWHC 2072 (Comm)

Case No: CL-2016-000456

IN THE HIGH COURT OF JUSTICE

THE BUSINESS AND PROPERTY COURTS OF ENGLAND & WALES

COMMERCIAL COURT (QBD)

Royal Courts of Justice

Strand, London, WC2A 2LL

Date: 02/08/2018

Before :

MR JUSTICE ROBIN KNOWLES CBE

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Between :

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David Cavender QC and Michael Clark (instructed by Milbank, Tweed, Hadley & McCloy LLP) for the Claimant

The Defendants appeared in person, with the permission of the Court, by their officer Mr Usman Yousuf

Hearing dates: 12, 16-19, 24-26 April, 1 May 2018

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Mr Justice Robin Knowles:

Introduction

  1. ``O3b'' means ``other 3 billion'', a reference to an estimate of 3 billion people worldwide who do not have access to mobile telecommunications. There is no question of the importance of that issue in Pakistan, the country with which this litigation is concerned.

  2. The litigation concerns the particular, and quickly unsuccessful, dealings between two businesses to address the issue in Pakistan. The delivery of mobile telecommunications envisaged by the parties involved the use of satellite, an (earth-based) Hub and remote earth stations. Interactive described to me in opening written argument how its Pakistan registered subsidiary Diallog ``was to establish a network of Remote Earth Stations on the ground in the remote rural areas whereby satellite broadband services would be disbursed to customers'', those customers including ``major Cellular Mobile Network Operators in Pakistan''.

  3. The Claimant (``O3b'', incorporated in Mauritius) operates in the satellite sector. The Defendants (``Interactive'', incorporated in Dubai) operate in the telecommunications sector. There are two Defendants but they have led the Court to understand that they are one and the same entity. They are part of what appears to be a substantial group of companies.

    The contractual position

  4. As at 21 September 2012 the parties entered into a Master Services Agreement (the ``MSA''). This, with associated contract documents including three Service Orders numbered 00238 to 00240 and each signed by O3b and Interactive, has proved of crucial importance given the differences that have arisen between the parties.

  5. The parties chose English Law to govern the MSA and the English Courts to resolve disputes under the MSA. The contract material is not lengthy but it is dense. It can help with gaining a full picture of the relevant terms to re-order and re-group them, as I do in the following paragraphs.

  6. The recital to the MSA recorded that it ``sets forth the terms and conditions under which satellite network services may be ordered [by Interactive from O3b] via a Service Order''.

  7. By Appendix B to the MSA:

    ``Satellite System: Shall mean a constellation of Satellites utilized to provide Service

    ...

    Service: Shall be as described in the applicable Service Order.''

  8. The Service Orders described the Service as:

    ``Delivery of a beam of a bandwidth of 216 MHz (Forward) and 216 MHz (Return) from a Service Transponder (the ``Service Beam'') to the Beam Location.''

    The Beam Locations were Baluchistan North, Baluchistan South and Islamabad.

  9. A link analysis was attached to each Service Order. In agreed Further Terms and Conditions the parties recorded that ``a center of beam large terminal analysis was performed at 100% of capacity of the Service Beam at the Service Beam Location to demonstrate the performance of the Service Beam''.

  10. Section 5 of the MSA included the provision that:

    ``Service is provided for [Interactive's] own use solely for (i) transmissions of its own or its End-Users' digital signals or (ii) the provision of value-added telecommunications services by [Interactive] to its End-Users.''

  11. Appendix B to the MSA defined ``Hub'' as follows:

    ``Hub: Shall mean a teleport operated by O3b that is connected to a global fiber network and the internet and provides a radio-frequency link to a Satellite''

  12. Section 7 of Further Conditions annexed to the Service Orders provided:

    ``7 Hub Location. [Interactive] acknowledges that O3b is currently considering locations for its network Hub. The Parties shall jointly investigate for a period of no more than three (3) months the regulatory viability of locating a Hub in [Pakistan]. In conducting such investigation, the Parties shall consider such factors as potential interference issues, other technical issues, frequency licensing issues (including licensing costs), regulatory constraints (including anticipated timing of licensing process), tax issues and other factors that may reasonably influence O3b's decision as to where to locate a Hub, each as determined by O3b in its sole and exclusive discretion. Following the completion of the above due diligence phase, O3b shall provide [Interactive] with a written notice of its determination regarding Hub location (``the Hub Notification''). ...''

  13. Alongside the words ``Service Demarcation Points'' the Service Orders set out:

    ``1. The space interface at one centimetre (1 cm) from the Customer antenna

  14. The O3b hub router that is connected to the Internet.''

  15. Appendix B to the MSA defined ``Customer Equipment'' as follows:

    ``any equipment or facilities, including but not limited to antennas, which are provided, or required to be provided, by [Interactive] for use in conjunction with Service, whether located at an O3b, [Interactive] or third party facility.''

    Section 4 of the MSA included the provision:

    ``[Interactive] is responsible for all Customer Equipment communicating with the Satellite System (unless otherwise set forth in the Service Order).''

    Appendix A to the MSA at Article 3.0 added:

    ``[Interactive] shall be responsible for the provision, installation, operation, and maintenance of, and for securing all necessary licenses and other consents, permissions, concessions, permits and authorizations for, the Customer Equipment, unless otherwise stated in a Service Order. ...''

  16. The Service Orders also originally provided:

    ``[Interactive] Equipment (Remote Sites). O3b will make available as-is and free of charge to [Interactive] certain O3b-approved remote site equipment that conform with the following configuration: two (2) 1.8m dual tracking antennas with control, two (2) 5w BUC/LNB assemblies, two (2) low-speed SCPC modems, one (1) ethernet hub, one (1) cable set, two (2) power supplies and any other equipment determined necessary by O3b to meet the Service Specifications (collectively the ``Remote Sites''). The total number of such remote sites to be provided to [Interactive] pursuant to [the Service Orders] shall be limited to an aggregate purchase value of US$750,000.00. The Remote Sites shall be made available ex-works vendor's manufacturing facility as notified by O3b to Customer and shall be provided in accordance with INCOTERMS 2010. [Interactive] shall place orders for the Remote Sites no later than six (6) months prior to the anticipated Service Commencement Date (as the same may have been updated by O3b from time to time). [Interactive] shall be responsible for any charges related to transport of the Remote Sites, insurance , customs, duties, installation and site preparation to specifications provided by O3b. [Interactive] shall be responsible for preparing the earth station site to O3b specifications and for providing necessary space and power for each Remote Site.''

    Service Specifications were defined as ``The Available Throughput rate as set out in the link analysis or analyses attached as Schedule 1 to [the relevant Service Order]''

  17. By an Amendment #1 to the Service Orders agreed on 18 December 2013 and 7 January 2014 the provision was amended and restated to read:

    ``[Interactive] Equipment (Remote Sites)'' [Interactive] shall procure the remote site equipment set forth in Schedule 2 attached hereto (collectively the ``Remote Site Equipment''), which is applicable to each of Service Orders 00238, 00239 and 00240. Provided [Interactive] is not in default of any of its obligations under the MSA or any Service Order, O3b shall place the order for the Remote Site Equipment on behalf of [Interactive] and pay the applicable vendors for the cost of such equipment, subject to the conditions below. [Interactive] shall accept delivery of the Remote Site Equipment EX WORKS at the relevant vendors' manufacturing facilities (INCOTERMS 2010), and title to the Remote Site Equipment will pass directly from the relevant vendors to [Interactive].

    The total cost for the Remote Site equipment is US$857,186.00. Subject to terms below, O3b will be responsible for US$750,000 of such cost, and [Interactive] will pay O3b the remainder in the amount of US$107,186.00 within 10 Days after receipt of invoice from O3b.

    [Interactive] is responsible for the following activities (including any associated costs): transporting the Remote Site Equipment to [Interactive's] earth stations (from the location where [Interactive] accepted delivery), any associated customers/duties and insurance, preparing [Interactive's] earth station sites to O3b specifications, providing necessary space and power for the Remote Site Equipment, and for proper installation and commissioning of the Remote Site Equipment prior to the anticipated Service Commencement date using O3b-approved service providers. Delay in any of the foregoing will not delay the Service Commencement Date.''

  18. Appendix B to the MSA provided:

    ``Service Commencement Date: Shall mean the date set forth in a notice from O3b to [Interactive] that the Satellite System has been successfully placed into commercial operation and is ready for Service to commence, or such other date as may be set forth in an applicable Service Order.''

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