US delays ruling on MTN $4.2bn Iran suit

2012-10-14 14:52

Johannesburg - A US court has delayed ruling on a $4.2bn suit by Turkish mobile operator Turkcell against South African rival MTN Group, pending a Supreme Court decision on a separate case, the two companies said.

Turkey’s largest cellphone operator sued MTN in a US federal court in March, alleging the Johannesburg-based company used bribery and attempted trafficking of political influence to win a mobile licence in Iran that was first awarded to Turkcell.  

MTN has asked for the case to be dismissed, saying the suit has no legal merit and a US court does not have jurisdiction over the case.

The court has put the suit on hold, the two companies said in separate statements late on Friday, to await a Supreme Court decision on a different case using the Alien Tort Statute - the human rights law on which Turkcell’s suit is based.

This month the US Supreme Court heard oral arguments in Kiobel v. Royal Dutch Shell, a high-profile case where 12 Nigerians accuse the Anglo-Dutch oil company of complicity in human rights abuses in the African country.

The Supreme Court will decide in the Kiobel case whether the Alien Tort Statute - an 18th century law that has usually been reserved for human rights abuses - can be used to sue foreign corporations in US courts.

Whether or not the Turkcell can proceed in its US lawsuit is likely to be dependent on the ruling in the Kiobel case, legal experts have said.

Welcomes decision

Turkcell said in a statement it welcomed the decision, adding it believed US courts had clear jurisdiction over the case.

MTN said it expected Turkcell’s claim to be disposed of after the Supreme Court issues its decision in Kiobel.

It was not immediately clear for how long the suit would be put on hold. Turkcell said the suit would be pushed back by several months, while MTN said a decision in Kiobel was likely to happen by the end of June 2013.

Several US legal experts have told Reuters that Turkcell may not get much further with the suit because the case has only tenuous links to the United States.

Turkcell was originally awarded a mobile licence in Iran in 2004 before a disagreement over the terms of the deal prompted an about-face by Tehran, which awarded MTN the licence in 2005.

Turkcell says MTN lobbied the South African government to support Iran’s nuclear programme in exchange for winning the contract, and bribed officials from both governments.

MTN has denied the charges.

MTN now draws nearly 10% of its revenue from Iran, although it has been unable to get money out of the country for months due to tightening US sanctions.

The company has said it is in talks with South African and US officials about moving money out of Iran. Washington is putting increasing pressure on Iran over its nuclear programme, which Tehran says is for peaceful purposes.

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