A dispute between Esat Telecom and Telenor International, which holds a 49.5 per cent stake in Esat Digifone, boiled over at the High Court yesterday when senior counsel for Telenor accused Esat chairman, Mr Denis O'Brien, of telling lies and abusing the court process.
The accusation was made by Mr Paul Gallagher SC, for Telenor, after Esat Telecom Holdings Ltd, which holds a further 49.5 per cent stake in Digifone, withdrew its application for an interlocutory injunction to restrain Telenor directors on the Esat Digifone board from exercising their rights as directors and also restraining them from access to the company's books. The remaining one 1 per cent of Esat Digifone is held by IIU Nominees, an investment vehicle owned by financier Mr Dermot Desmond.
Following the withdrawal of the injunction application, the dispute, in which Esat Telecom and Telenor have alleged breaches by each other of a 1996 Digifone shareholders agreement to which each is a party, will go to international arbitration for resolution.
Telenor's parent company, the Norwegian state phone and telecommunications company, Telenor, recently merged with its Swedish counterpart, Telia, to form an entity called Newtel. This new entity is currently attempting to buy Esat Telecom Holdings. In court yesterday, counsel for Esat Telecom Holdings, Mr Bill Shipsey SC, said his client was withdrawing the injunction proceedings and was agreeing to go to international arbitration proceedings in Luxembourg over alleged breaches of the shareholders agreement by TIAS.
Under that agreement, all parties had undertaken not to engage in any telecommunications activities, which would be in competition with Esat Digifone activities in Ireland, counsel said. They had also agreed not to disclose to any third party any financial, business or confidential information of its affairs.
Mr Shipsey said Newtel had a 14 per cent stake in Eircom, which, in turn, had 100 per cent ownership of Eircell, the only other mobile phone licensee in Ireland.
The EU Commission, in approving the Scandinavian companies' merger, required Newtel to divest certain of its assets and in Ireland, this meant either its stake in Eircom or Esat Telecom, counsel said. Reaching a decision on which of the two it was to sell would involve a confidential financial analysis of each. That would involve the provision of information on Eircom and Esat Telecom, he said.
On November 29th last, Telia had announced it was selling its 14 per cent stake in Eircom. KPN, its partner in Comsource, the vehicle through which it acquired the Eircom shareholding, will also sell its 21 per cent stake.
Last week, Newtel launched a takeover bid for Esat Telecom which was a publicly-quoted company. But that was rejected by the board and had now become a hostile takeover bid.
Because of the changed circumstances since the beginning of the legal proceedings, the need for interlocutory relief no longer had the compelling urgency it previously had, Mr Shipsey said. Esat was happy to accept assurances by Mr Arve Johansen, chairman of Telenor, that as long as it held its investment in Eircom (through Telia), commercial information of a confidential nature would not be passed other than in circumstances approved by the EU Commission.
Mr Paul Gallagher, for Telenor, described the application for an injunction as an abuse of the process of the court and said it had been brought forward for another motive. In correspondence, Mr Denis O'Brien had sought to deprive his clients of the benefits of the shareholders' agreement, counsel said.
Mr O'Brien had at first described a Telenor undertaking on confidentiality as "utterly meaningless" but was now, apparently, accepting it, Mr Gallagher said. The notice of motion to seek the injunction effectively meant his client could be removed from the company at a time when Mr O'Brien knew he was going to make a bid for Telenor's share of Esat Telecom. Mr O'Brien's Esat Telecom has made four attempts to purchase the Telenor stake.
Counsel said Mr O'Brien had given a one-sided, quite untrue and false version of what led up to these events and had "told lies on affidavit". While accusing Telenor of breaching its obligations, Mr O'Brien refused to acknowledge that he had leaked information to the media and, in alleging breaches of the shareholders' agreement, had made serious allegations which he knew were not the case, Mr Gallagher added.
Mr Gallagher said Telia's investment in Eircom was now held by trustees appointed by the EU. There could not be, therefore, any infringement or abuse of competition. This was something the court had not been told. While happy that the application for an injunction was being withdrawn, Telenor, in agreeing to go to international arbitration also wanted what they considered to be Mr O'Brien's breaches of the shareholders' agreement brought before that body, Mr Gallagher said. He added that Mr O'Brien had been reckless and improper in bringing this action.
Mr Justice O'Neill said he was happy that the parties had agreed to refer the matter to arbitration. Costs were reserved.
