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Court orders restrain sale of Shoprite

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Nigerian firm, AIC Limited, has warned potential investors against taking over the Nigerian subsidiary of Africa’s biggest supermarket chain, South African-owned Shoprite.

Shoprite last Monday said it was looking at selling all “or a majority stake” in its operations in Nigeria after 15 years. Shoprite said lockdown restrictions because of coronavirus had affected its operations in 14 African countries, with sales declining by 1.4% in those markets.

The retailer has also been battling currency-induced inflation surges – especially in Nigeria, where it has been hit hardest, saying it has been approached by potential investors willing to take over its Nigerian operations.

However, AIC Limited in a public notice published on Thursday called the attention of “unsuspecting” potentials about the litigation and Mareva injunction on Shoprite.

According to the notice, Justice Liman sitting at Federal High Court in Lagos on 23 July, 2020 granted Mareva injunction against Shoprite in “order to prevent Shoprite from hurriedly carting away its intangible assets, intellectual property and receivables from Nigeria in a manner which may render the judgment of the Lagos State High Court and Court of Appeal, nugatory.”

AIC Limited said the injunction means the “Shoprite lacks the capacity to transfer, assign, charge, dispose of its interest under the Administration and Technical Services agreement which it has with Retail Supermarkets Ltd. without the consent and involvement of AIC Limited.”

“The Mareva orders also prohibits the Registrar of Trademarks forthwith, from recognizing any sale or assignment of any trademarks, franchise or whatever kind reflecting any transaction by either Shoprite or Retail Supermarkets that would alter the corporate existence of either Shoprite or Retail Supermarkets,” it added.

Shoprite is involved in long-term litigation with AIC Limited.

In 2011, AIC issued a summons against Shoprite South Africa and its Nigerian subsidiary for an alleged breach of a joint venture agreement (the JV Agreement) allegedly concluded in 1998. The company took Shoprite Checkers (Pty) Limited and its Nigerian subsidiary Retail Supermarkets Nigeria Limited to court claiming a breached on an agreement to set up the Nigerian arm of the business.

AIC said in the public notice that ShopRite went to enter the Nigerian market without honouring the agreement reached between it and AIC Limited.

The Federal High Court then ruled in favour of AIC and awarded damages of $10 million and an interest of 10% per annum against Shoprite and Retail Supermarkets in 2017. In resolving the trial judge in a 57 paged judgment, held that there were business discussions between parties leading to meetings held in South Africa and Nigeria and reached a conclusion that the two meetings took place in 1998 prior to the establishment of Shoprite outlet in Nigeria in 2005.

While Shoprite’s appeal was dismissed by the Appeal Court, the Retail Supermarkets appeal was allowed as the court held that the transaction and its breach was before its incorporation.

Despite losing the appeal, AIC said ShopRite failed to pay the judgement fee and again filed an appeal in the Supreme Court and has also filed motion to stay execution of the payment judgement until the Supreme Court judgement on its appeal.

AIC’s appeal against Retail Supermarkets Nigeria Limited is still pending before the Supreme Court.

 

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