The High Court in Nairobi has overturned an arbitral award that had exposed Safaricom PLC to more than $8.5 million in potential damages, ruling that the claim was founded on an unsigned partnership agreement and speculative revenue projections.
Justice Peter Mulwa of the Milimani Commercial and Tax Division found that the 2018 agreement relied on by Popote Innovations Ltd. was never executed by Safaricom and therefore could not generate a binding arbitration clause or any enforceable commercial obligations.
Popote had accused Safaricom of abandoning a co-developed digital payments platform known as Popote Pay before later launching the M-Pesa Super App and M-Pesa Business App, which it argued contained features derived from their joint concept. The company initially sought $358,000 in compensation before escalating its demand to include a monthly revenue share of roughly $357,000, calculated over a fifteen-month period. That claim totalled about $5.4 million.
During arbitration, however, the sole arbitrator expanded the revenue period to twenty-four months—a figure Popote had not pleaded—implying projected losses of more than $8.5 million.
He later issued what he called a “conservative” award equivalent to one year of projected revenue, which based on Popote’s own assumptions would still have exceeded $4.2 million. The court said the arbitrator’s approach not only exceeded the scope of reference but was grounded in speculative financial forecasts unsupported by expert testimony.
Justice Mulwa said the case failed as there was no valid agreement between the two firms as Safaricom had never signed the partnership contract. Under Kenya’s Arbitration Act, he noted, consent to arbitrate must be in writing, and a draft agreement cannot create jurisdiction merely through conduct or inference. “Without mutual assent, there can be no valid arbitration agreement,” he said, concluding that the entire arbitral process was a nullity.
The judge also described the damages model used in the award as inconsistent and based on hypothetical revenue streams rather than verifiable losses.
The court set aside the arbitral award in full and dismissed Popote’s bid to have it recognized as a judgment of the court. Each party was directed to bear its own costs. The ruling, delivered virtually, eliminates what would have been one of the largest arbitration-based payouts ever imposed on Kenya’s biggest telecommunications company.