The Memorandum of Understanding (MoU) between Aviation Services International Ltd (AHS) and its Nigerian partner, Precision Aviation Handling Company of Nigeria (PAHCOL), has been terminated by the Federal High Court in Abuja due to contract abandonment.
The court also mandated that AHS pay N2 million in damages to PAHCOL.
It was learned that the MoU signed by the two parties was intended to last for the first six months before evolving into a JVA, which required the parties to invest in equipment purchases to strengthen their operations in Nigeria.
However, in passing judgment, the court determined that the defendants had broken Federal Republic of Nigerian law and the Civil Aviation Act 2006, specifically the ground handling license’s Section 72.
The defendants in the case are Aviation Handling Services International Ltd, BVI, and Menzies Aviation (Africa) Ltd, while the plaintiffs are Precision Support Services Ltd, Merit Oil Ltd, and Precision Aviation Handling Company Ltd.
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 flagrant violation of the Federal Republic of Nigeria 1999 and the Civil Act 2006, according to Justice Justice Obiora Egwuatu in a 49-page judgment delivered on May 3, 2023 in Abuja in suit number: FHC/ABJ/CS/566/2021 and obtained by our correspondent.
The contract was deemed unenforceable by the court and should not be taken into consideration because it violated both Nigerian law and the Civil Aviation Act.
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The court also determined that the Memorandum of Understanding (MoU) signed regarding ground handling services for aircraft in Nigeria had become null and void as of June 30, 2017.
The Joint Venture Agreement (JVA) was also declared to be inchoate and subject to termination by the court because the plaintiffs and defendant did not sign it as intended.
“A declaration is made that the proposed Joint Venture between the claimants and the first defendant on aviation ground handling services in Nigeria and other subsequent agreements, in particular the share acquisition agreement and shareholders agreement both dated 16th August, 2016 are ex facie illegal for being in violation of the Federal Republic of Nigeria, 1999 constitution, the Aviation Act 2006, and the Foreign Exchange Act and therefore unlawful,” the judge continued.
“It is declared that the third plaintiff’s operations and advancement in Nigeria will be harmed by the failure to sign a management agreement as intended by the joint venture’s parties.
“It is declared that they have abandoned and have totally lost interest in the proposed joint venture in aviation ground handling services in Nigeria,” the declaration reads. “This conclusion is reasonable and inferable given the 1st defendant’s abandonment of its daily management role and funding of the 3rd claimant in accordance with the laws of the Federal Republic of Nigeria since 2018.”
The MoU was signed on June 22, 2016, but the court found that AHS had not demonstrated its commitment to it and had abandoned it since then.
