Court declares proposed joint venture between aviation coys illegal
Justice Obiora Egwuatu of a Federal High Court sitting in Abuja has terminated the memorandum of understanding (MoU) between Aviation Services International Ltd (AHS) and its Nigerian partner, Precision Aviation Handling Company of Nigeria (PAHCOL), over abandonment of contract.
The judge, while delivering judgement in the suit marked number, FHC/ABJ/CS/566/2021, instituted by the Precision Support Services Limited, Merit Oil Limited and Precision Aviation Handling Company Limited held that the proposed joint venture was in gross violation of the Constitution of Nigeria and the Civil Act 2006.
The plaintiff had filed the suit against the Aviation Handling Services International Limited, BVI and Menzies Aviation (Africa) Limited as first to third respondents in the suit.
Justice Egwuatu held that the defendants contradicted the laws of Nigeria and the Civil Aviation Act 2006, particularly Section 72 of the ground handling licence.
The judge said that the MoU signed on June 22, 2016 between the third plaintiff and the first defendant, which was the preliminary understanding of the parties to a proposed joint venture was in gross violation of the 1999 and the Civil Act 2006.
The court also declared that the contravention of the Nigerian Laws and the Civil Aviation Act, made the contract unenforceable and should be disregarded.
Justice Egwuatu held that the MoU signed in respect of aviation ground handling services in Nigeria had expired by effluxion of time on June 30 June, 2017. He noted that since the plaintiffs and defendants did not sign the Joint Venture Agreement (JVA) as contemplated, the proposed agreement was therefore inchoate and liable to be terminated.
He, therefore, ordered that, “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 Nigeria, 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.”
The court further declared that, “the reasonable and inferable conclusion arising from the abandonment by the first defendant of its daily management role and funding of the third claimant in accordance with the laws 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 MoU entered into by both parties was supposed to be for initial six months and later metamorphosed into JVA. Under the JVA, the parties were to invest in equipment acquisition to beef up their operations in Nigeria.
But, the court held that AHS did not show commitment to the MoU and rather than abide by the agreement, it abandoned it since it was signed on June 22, 2016.
The court therefore ordered AHS to pay the sum of N2 million to PAHCOL as damages.