Econet wins Supreme Court case against Trustco

In a victory for Econet Wireless, the Supreme Court of Zimbabwe has ruled that a contract between Econet and Namibian-based company, Trustco, to offer mobile insurance (EcoLife) had been legally terminated when Econet accepted the repudiation of the contract by Trustco in June 2011.

In August 2010, Econet, Trustco and First Mutual Life Assurance entered into an agreement to launch EcoLife, a product that provided free life cover to Econet customers with every airtime recharge in excess of $3 they made.

As part of the agreement, Trustco would provide the technical platform, in exchange for royalty fees from Econet calculated in terms of the agreement. However, in February 2011, a dispute arose after Trustco began demanding payment for subscribers who were not properly registered for EcoLife.

In May 2011, Trustco wrote to Econet threatening to physically terminate the  link between its system with Econet with Econet within 14 days of their letter if Econet did not pay the disputed amounts that Econet did not accept as owing.  This put Econet in a position where they had to pay the amounts that they did not agree with, or face the impending forced discontinuation of the Ecolife product.

Econet decided to accept the repudiation rather than succumb to demands they did not consider justified and thus proceeded to cut off all links to the Trustco system.

Trustco filed an urgent application in the High Court seeking restoration of all links to the system and declaring the agreement with Econet to be still valid. A ruling was made in Trustco's favour. Econet however appealed the High Court decision and a ruling has since been made in Econet's favour.

The Supreme Court was satisfied that the agreement ceased to exist following acceptance of Trustco's repudiation of the agreement in June 2011. The Supreme Court accordingly set aside the order of the High Court, and allowed Econet's appeal with costs.