Safaricom Wins Sh930 Million Court Battle Against Popote Innovations in Arbitration Dispute
Safaricom PLC has won a major legal victory after the High Court set aside an arbitral award requiring the company to pay Sh930 million to Popote Innovations Limited in a dispute over an unlaunched payments application.
Justice Peter Mulwa allowed Safaricom’s appeal and quashed the arbitral award issued on 29 November 2024 by arbitrator Paul Ngotho, ruling that the decision was based on an unsigned agreement, speculative damages, and assumptions inconsistent with public policy.
“I find that Safaricom’s Notice of Motion dated 20 January 2025 has merit… The Final Arbitral Award dated 29 November 2024 is hereby set aside in its entirety,” Justice Mulwa ruled.
Court: Arbitrator Acted Beyond His Jurisdiction
The judge held that the award violated foundational legal principles because it relied on a contract that was never executed and contained speculative assessments not supported by expert or factual evidence.
According to the court, the arbitrator’s findings were “inconsistent with the public policy of Kenya”, as they undermined contractual certainty and attempted to enforce obligations based on a non-existent agreement.
Justice Mulwa emphasized that Section 32A of the Arbitration Act on the finality of arbitral awards does not prevent courts from intervening where an award exceeds jurisdiction or violates statutory grounds under Section 35.
Popote’s Claim on App Similarities Rejected
Popote Innovations had argued that Safaricom’s M-Pesa Super App and M-Pesa Business App, launched in June 2021, incorporated features from a jointly developed project known as Popote Pay.
The court disagreed, finding no evidence—expert or technical—proving that the M-Pesa applications mirrored the Popote Pay concept. The judge described Popote’s damages computation as speculative and unsupported.
“The award, based on speculative financial assumptions and an unsigned agreement, offends public policy,” Justice Mulwa said.
Application to Enforce Award Dismissed
The judge also dismissed Popote’s application seeking recognition and enforcement of the arbitral award under Section 36 of the Arbitration Act.
The arbitrator had awarded:
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Sh39.2 million as damages
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Sh902.7 million in projected shared revenue
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Sh2.5 million as costs
Popote’s Position: Safaricom Abandoned a Valid Agreement
Popote Innovations maintained that the parties had executed a Partnership Agreement in April 2018 and that Safaricom confirmed the execution via email.
The firm argued that it delivered a customised Popote Pay Solution on 8 May 2018, and that Safaricom breached the agreement by abandoning the project and later releasing its own apps using similar concepts.
Popote further contended that:
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The agreement was binding and renewed automatically
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A 2020 Settlement Agreement addressed only reimbursement of development costs
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Safaricom became liable once it launched the M-Pesa Super and Business apps with overlapping features
Safaricom: Popote Pay Was Not Comparable to M-Pesa Apps
Safaricom disputed Popote’s claims, saying the envisaged Popote Pay app was designed to:
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Charge customers monthly subscription fees
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Charge special transaction fees
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Generate shared revenue between the parties
The M-Pesa apps, Safaricom argued, simply mirrored existing M-Pesa services on a smartphone interface, did not charge subscription fees, and therefore could not generate revenue in the way Popote Pay envisioned.
M-Pesa transaction fees are uniform regardless of whether the customer uses the Super App, SIM Toolkit or USSD menu, Safaricom told the court.
Outcome
With the High Court’s decision, Safaricom is no longer obligated to pay the Sh930 million awarded by the arbitrator, marking a significant precedent on:
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The enforceability of unsigned contracts,
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The limits of arbitral jurisdiction, and
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Speculative damages in technology partnership disputes.