Nairobi Dealer Mobitel Loses Fight to Keep Safaricom Deal

A five-year legal fight between Safaricom and Mobitel Express has ended decisively for the telecoms giant.

The High Court ruled that Safaricom did not unlawfully terminate Mobitel’s dealership agreement.

Instead, Justice Josephine Mong’are found that the agreement had already expired before Safaricom acted.

The judgement, delivered last week, turns on a deceptively simple distinction.

Safaricom was not terminating the dealership; it was declining to renew it.

That distinction ultimately dismantled Mobitel’s case and its demands for damages.

The ruling came in a commercial case filed by Mobitel in December 2021.

The Contract Expired

The dispute began with a dealership agreement between Mobitel and Safaricom.

The agreement was later extended through a notice dated July 26, 2021.

That extension ran for three months, ending on November 1, 2021.

No fresh agreement or additional extension followed that expiry date.

Safaricom subsequently wrote to Mobitel on December 2, announcing non-renewal.

Mobitel challenged that decision, insisting the relationship remained contractually alive.

Its argument rested partly on what happened after the agreement’s formal expiry.

Mobitel continued distributing Safaricom products and providing merchant services during November.

Safaricom continued receiving benefits from those activities, according to Mobitel.

The dealer argued that this conduct effectively created a continuing contractual relationship.

It also invoked Clause 3.1(b), concerning retrospective application after expired agreements.

But Justice Mong’are found that argument unconvincing and legally unsustainable.

The court noted that Clause 3.1(a) gave Safaricom sole discretion over future extensions.

The judge also found Clause 3.1(b) contemplated an actual subsequent agreement between parties.

No such agreement existed between Mobitel and Safaricom after November 1.

The judge therefore rejected the argument that continued dealings automatically revived the expired contract.

The court’s conclusion was blunt: the agreement had lapsed by effluxion of time.

Safaricom’s December letter was therefore a notice of non-renewal, not termination.

That finding became the foundation upon which every subsequent issue collapsed.

Audit Battleground

The dispute nevertheless had another important dimension: Safaricom’s performance audit.

Safaricom said Mobitel had failed to satisfy its Dealer Operating Standards, known as DOSA.

The company produced assessments covering four Mobitel outlets.

Their recorded compliance scores were 31%, 8%, 44%, and 89%.

Only one outlet therefore achieved the required compliance standard.

Mobitel disputed those findings and attacked the audit process.

It alleged that Safaricom’s auditor had failed to inspect several shops properly.

It also claimed that meetings with the auditor had failed to take place.

But evidence presented during trial seriously weakened those allegations.

Safaricom showed that Mobitel had received advance notification about the audit.

The assessments were conducted between August 20 and August 25, 2021.

The auditor was identified as Isaac Okello in Safaricom’s evidence.

More damagingly, Mobitel itself acknowledged that Okello had visited its shops.

Its December 7 appeal letter expressly referred to those visits.

Mobitel director Ismael Ibrahim Durow also admitted the visits during his testimony.

Justice Mong’are said those admissions fatally undermined Mobitel’s challenge against the audit.

Mobitel produced neither an alternative audit nor convincing documentary evidence.

It also failed to demonstrate that alleged meetings had actually been missed.

The court consequently accepted Safaricom’s audit evidence as credible and sufficiently supported.

That left Mobitel facing an even steeper legal climb.

Discretion Held

Mobitel argued that Safaricom had exercised its contractual discretion unfairly.

It relied on the British Supreme Court decision in Braganza v BP Shipping Limited.

That decision recognises limits on contractual discretion where decisions become irrational or improperly motivated.

Mobitel argued that Safaricom could not hide behind its contractual discretion.

Justice Mong’are, however, found no evidence of irrationality, bad faith, or arbitrariness.

Safaricom had conducted a structured audit using defined performance requirements.

The evidence showed that Mobitel had been notified and assessed against established standards.

The judge therefore regarded the non-renewal decision as commercially rational.

More importantly, the dealership agreement expressly reserved renewal discretion for Safaricom.

Mobitel had accepted that contractual arrangement when it signed the agreement.

The court therefore declined to rewrite the bargain between the commercial parties.

Justice Mong’are reinforced a familiar principle: courts enforce contracts rather than renegotiate them.

Safaricom had therefore lawfully exercised its contractual discretion, the judge ruled.

The finding carried significant consequences beyond the audit itself.

Once the contract was found to have expired, Safaricom no longer needed grounds for terminating it.

The question became whether Safaricom was obliged to renew.

The answer was no.

Clause Couldn’t Revive

Mobitel’s final major argument centred on Clause 22.2(d) of the agreement.

That provision required parties to continue performing their subsisting obligations during disputes.

Mobitel argued Safaricom should therefore have continued trading while disagreements remained unresolved.

The court rejected that interpretation for two fundamental reasons.

First, the underlying agreement had already expired before the dispute crystallised.

Second, Mobitel had not issued the formal dispute notice required under the agreement.

Its December 7 appeal letter was therefore insufficient to activate the contractual mechanism.

Justice Mong’are warned that accepting Mobitel’s argument could produce an absurd commercial outcome.

Every dealer facing non-renewal could simply declare a dispute and demand continued business.

That would effectively neutralise Safaricom’s express contractual renewal discretion.

The court found such an interpretation inconsistent with the parties’ original bargain.

“Clause 22.2(d) does not serve to extend an expired contract,” the judge concluded.

There was another telling detail in Safaricom’s December communication.

The company said Mobitel would receive commissions due for work performed after expiry.

Mobitel did not allege those commissions remained unpaid.

The court therefore found that Safaricom had honoured its surviving obligations.

What Safaricom did not owe was indefinite continuation of the dealership relationship.

Mobitel had sought specific performance, injunctions, lost revenue, and general damages.

The court found none of those remedies justified after rejecting its contractual claims.

Justice Mong’are consequently dismissed the suit in its entirety, with costs awarded to Safaricom.

The ruling offers a sharp lesson for businesses negotiating fixed-term contracts.

Continued commercial dealings do not necessarily resurrect agreements already expired.

Nor can dispute clauses automatically transform expiry into an ongoing contractual relationship.

For Safaricom, the decision preserves its contractual freedom over dealer renewals.

For Mobitel, it closes a lengthy legal battle with its central argument rejected.

The judgement’s broader message is simple but powerful: expiry is not termination, and renewal cannot simply be presumed.

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