Court Ruling Ends AHS's Legal Battle with Nigerian Partner, Precision Aviation Handling

AHS DEFEATED

After an extensive two-year legal battle, Aviation Services International Ltd (AHS), a British ground-handling company, has suffered a major setback in its dispute against Precision Aviation Handling Company Ltd (PAHCOL), its Nigerian partner previously known as AHS Aviation Handling Services Nigeria Ltd.

On May 3rd, 2023, the Federal High Court in Abuja issued its verdict, bringing an end to the agreement between the two companies and mandating AHS to compensate Precision Support Services Ltd, the plaintiff, with damages totaling N2 million. This ruling represents a significant outcome in favor of Precision Support Services Ltd and marks a significant development in the ongoing legal proceedings.

BACKGROUND INFORMATION 

Precision Support Services Ltd, Merit Oil Ltd, and Precision Aviation Handling Company Ltd took legal action as plaintiffs, initiating a case against Aviation Handling Services International Ltd, BVI, and Menzies Aviation (Africa) Ltd as defendants. The Nigerian partner accused the British company of breaching the contract and failing to comply with the agreements established on July 22, 2016. On that date, both parties signed a Memorandum of Understanding (MoU) regarding their investment.

It is worth noting that the parties initially intended for the Memorandum of Understanding (MoU) to last for a period of six months, after which it would be expanded into a Joint Venture Agreement (JVA). The JVA specifically outlined AHS's responsibility to invest in acquiring equipment to enhance its operations and those of its Nigerian partner within the country.

Nevertheless, the court's verdict conclusively established that AHS did not exhibit any indication of dedication or adherence to the terms and conditions explicitly outlined in the Memorandum of Understanding (MoU). Instead of honoring the mutually agreed provisions, the company consciously chose to forsake the contractual obligations right from the moment it was officially signed, marking the date as June 22, 2016.

THE VERDICT

According to the ruling delivered by Justice Obiora Atuegwu Egwuatu, it was determined that the defendant had violated the laws of the Federal Republic of Nigeria, specifically the provisions outlined in the Civil Aviation Act 2006, particularly Section 72 of the ground handling license. Additionally, the court noted that as the plaintiffs and defendants did not formally execute the Joint Venture Agreement (JVA) as originally intended, the proposed agreement remained incomplete and susceptible to termination. This decision emphasizes the legal implications of the defendant's actions and highlights the significance of adhering to regulatory requirements and contractual obligations.

What the Judge had to say:

“A declaration is made that the proposed Joint Venture between the claimants and the 1st defendant on aviation ground handling services in Nigeria and other subsequent agreements particularly the share acquisition agreement and shareholders agreement both dated 16th August 2016 are ex facie illegal for being in contravention of the constitution of the Federal Republic of Nigeria, 1999, the Aviation Act 2006 and the Foreign Exchange Act and therefore unenforceable.”

“A declaration is made that the non-signing of a management agreement as contemplated by the parties to the joint venture is injurious to the operations and progress of the 3rd plaintiff in Nigeria.”

“A declaration is made that the reasonable and inferable conclusion arising from the abandonment by the 1st defendant of its daily management role and funding of the 3rd claimant in accordance with the laws of the Federal Republic of Nigeria since 2018 is that they have abandoned and have totally lost interest in the proposed joint venture in aviation ground handling services in Nigeria.”

The comprehensive 49-page judgment pronounced that the Memorandum of Understanding (MoU) executed on June 22, 2016, between the third plaintiff and the first defendant, flagrantly disregarded the provisions outlined in both the 1999 Constitution and the Civil Act 2006, rendering it invalid and without legal effect.

Furthermore, the court decreed that the MoU pertaining to aviation ground handling services in Nigeria had reached its expiration on June 30, 2017, by the passage of time. This ruling solidifies the legal stance on the validity and duration of the MoU, highlighting the importance of adhering to constitutional and statutory frameworks.