O3B Africa Ltd v Interactive E-Solutions JLT & Anor

“O3b” means “other 3 billion”, a reference to an estimate of 3 billion people worldwide who do not have access to mobile telecommunications. There is no question of the importance of that issue in Pakistan, the country with which this litigation is concerned.

The litigation concerns the particular, and quickly unsuccessful, dealings between two businesses to address the issue in Pakistan. The delivery of mobile telecommunications envisaged by the parties involved the use of satellite, an (earth-based) Hub and remote earth stations. Interactive described to me in opening written argument how its Pakistan registered subsidiary Diallog “was to establish a network of Remote Earth Stations on the ground in the remote rural areas whereby satellite broadband services would be disbursed to customers”, those customers including “major Cellular Mobile Network Operators in Pakistan”.

The Claimant (“O3b”, incorporated in Mauritius) operates in the satellite sector. The Defendants (“Interactive”, incorporated in Dubai) operate in the telecommunications sector. There are two Defendants but they have led the Court to understand that they are one and the same entity. They are part of what appears to be a substantial group of companies.

As at 21 September 2012 the parties entered into a Master Services Agreement (the “MSA”). This, with associated contract documents including three Service Orders numbered 00238 to 00240 and each signed by O3b and Interactive, has proved of crucial importance given the differences that have arisen between the parties.

The parties chose English Law to govern the MSA and the English Courts to resolve disputes under the MSA. The contract material is not lengthy but it is dense. It can help with gaining a full picture of the relevant terms to re-order and re-group them, as I do in the following paragraphs.

The recital to the MSA recorded that it “sets forth the terms and conditions under which satellite network services may be ordered [by Interactive from O3b] via a Service Order”.

By Appendix B to the MSA:

“Satellite System: Shall mean a constellation of Satellites utilized to provide Service

…

Service: Shall be as described in the applicable Service Order.”

The Service Orders described the Service as:

“Delivery of a beam of a bandwidth of 216 MHz (Forward) and 216 MHz (Return) from a Service Transponder (the “Service Beam”) to the Beam Location.”

The Beam Locations were Baluchistan North, Baluchistan South and Islamabad.

A link analysis was attached to each Service Order. In agreed Further Terms and Conditions the parties recorded that “a center of beam large terminal analysis was performed at 100% of capacity of the Service Beam at the Service Beam Location to demonstrate the performance of the Service Beam”.

Section 5 of the MSA included the provision that:

“Service is provided for [Interactive’s] own use solely for (i) transmissions of its own or its End-Users’ digital signals or (ii) the provision of value-added telecommunications services by [Interactive] to its End-Users.”

Appendix B to the MSA defined “Hub” as follows:

“Hub: Shall mean a teleport operated by O3b that is connected to a global fiber network and the internet and provides a radio-frequency link to a Satellite”

Section 7 of Further Conditions annexed to the Service Orders provided:

“7 Hub Location. [Interactive] acknowledges that O3b is currently considering locations for its network Hub. The Parties shall jointly investigate for a period of no more than three (3) months the regulatory viability of locating a Hub in [Pakistan]. In conducting such investigation, the Parties shall consider such factors as potential interference issues, other technical issues, frequency licensing issues (including licensing costs), regulatory constraints (including anticipated timing of licensing process), tax issues and other factors that may reasonably influence O3b’s decision as to where to locate a Hub, each as determined by O3b in its sole and exclusive discretion. Following the completion of the above due diligence phase, O3b shall provide [Interactive] with a written notice of its determination regarding Hub location (“the Hub Notification”). …”

Alongside the words “Service Demarcation Points” the Service Orders set out:

“1.

The space interface at one centimetre (1 cm) from the Customer antenna

2.

The O3b hub router that is connected to the Internet.”

Appendix B to the MSA defined “Customer Equipment” as follows:

“any equipment or facilities, including but not limited to antennas, which are provided, or required to be provided, by [Interactive] for use in conjunction with Service, whether located at an O3b, [Interactive] or third party facility.”

Section 4 of the MSA included the provision:

“[Interactive] is responsible for all Customer Equipment communicating with the Satellite System (unless otherwise set forth in the Service Order).”

Appendix A to the MSA at Article 3.0 added:

“[Interactive] shall be responsible for the provision, installation, operation, and maintenance of, and for securing all necessary licenses and other consents, permissions, concessions, permits and authorizations for, the Customer Equipment, unless otherwise stated in a Service Order. …”

The Service Orders also originally provided:

“[Interactive] Equipment (Remote Sites). O3b will make available as-is and free of charge to [Interactive] certain O3b-approved remote site equipment that conform with the following configuration: two (2) 1.8m dual tracking antennas with control, two (2) 5w BUC/LNB assemblies, two (2) low-speed SCPC modems, one (1) ethernet hub, one (1) cable set, two (2) power supplies and any other equipment determined necessary by O3b to meet the Service Specifications (collectively the “Remote Sites”). The total number of such remote sites to be provided to [Interactive] pursuant to [the Service Orders] shall be limited to an aggregate purchase value of US$750,000.00. The Remote Sites shall be made available ex-works vendor’s manufacturing facility as notified by O3b to Customer and shall be provided in accordance with INCOTERMS 2010. [Interactive] shall place orders for the Remote Sites no later than six (6) months prior to the anticipated Service Commencement Date (as the same may have been updated by O3b from time to time). [Interactive] shall be responsible for any charges related to transport of the Remote Sites, insurance , customs, duties, installation and site preparation to specifications provided by O3b. [Interactive] shall be responsible for preparing the earth station site to O3b specifications and for providing necessary space and power for each Remote Site.”

Service Specifications were defined as “The Available Throughput rate as set out in the link analysis or analyses attached as Schedule 1 to [the relevant Service Order]”

By an Amendment #1 to the Service Orders agreed on 18 December 2013 and 7 January 2014 the provision was amended and restated to read:

“[Interactive] Equipment (Remote Sites)” [Interactive] shall procure the remote site equipment set forth in Schedule 2 attached hereto (collectively the “Remote Site Equipment”), which is applicable to each of Service Orders 00238, 00239 and 00240. Provided [Interactive] is not in default of any of its obligations under the MSA or any Service Order, O3b shall place the order for the Remote Site Equipment on behalf of [Interactive] and pay the applicable vendors for the cost of such equipment, subject to the conditions below. [Interactive] shall accept delivery of the Remote Site Equipment EX WORKS at the relevant vendors’ manufacturing facilities (INCOTERMS 2010), and title to the Remote Site Equipment will pass directly from the relevant vendors to [Interactive].

The total cost for the Remote Site equipment is US$857,186.00. Subject to terms below, O3b will be responsible for US$750,000 of such cost, and [Interactive] will pay O3b the remainder in the amount of US$107,186.00 within 10 Days after receipt of invoice from O3b.

[Interactive] is responsible for the following activities (including any associated costs): transporting the Remote Site Equipment to [Interactive’s] earth stations (from the location where [Interactive] accepted delivery), any associated customers/duties and insurance, preparing [Interactive’s] earth station sites to O3b specifications, providing necessary space and power for the Remote Site Equipment, and for proper installation and commissioning of the Remote Site Equipment prior to the anticipated Service Commencement date using O3b-approved service providers. Delay in any of the foregoing will not delay the Service Commencement Date.”

Appendix B to the MSA provided:

“Service Commencement Date: Shall mean the date set forth in a notice from O3b to [Interactive] that the Satellite System has been successfully placed into commercial operation and is ready for Service to commence, or such other date as may be set forth in an applicable Service Order.”

The Service Orders provided for a Service Commencement Date by specifying a Service Commencement Window Date of 1 July 2013 and a Service Commencement Window of 12 months commencing on that date. Agreed Further Terms and Conditions annexed to the Service Orders provided:

“2.2

… the Service Commencement Date shall occur within the Service Commencement Window. …”

By an Amendment #2 to the Service Orders signed by the parties on 7 March 2014 and 13 May 2014 the Service Commencement Window Date was changed to 1 July 2014.

Section 2.2 of the Further Terms and Conditions annexed to the Service Orders included provision that:

“O3b may terminate this Service Order prior to the Service Commencement Date if the Network Facilities cannot be placed into commercial operation, as determined by O3b in its sole and absolute discretion

Appendix B to the MSA defined “Network Facilities” to mean:

“… collectively, the Satellite System and the terrestrial or earth station facilities operated by O3b, other members of the O3b Group, or third parties under contract to O3b or a member of the O3b Group.”

Section 3 of the MSA was in these terms:

“3.

Compliance with Laws. The location and operation of the Network Facilities and O3b’s obligations under this MSA and any Service Order are subject to all applicable laws, regulations, decrees, licences and authorizations in any applicable country or jurisdiction. [Interactive] acknowledges that coverage of a country or territory by the Satellite System does not imply that Service is permissible or authorized to or from earth stations located in a particular country or territory. [Interactive] shall obtain, and O3b shall have no responsibility for providing, all necessary concessions, licenses and landing rights and/or licenses related to Service. [Interactive] shall comply and shall cause others (including its End Users) to comply with all applicable legal, governmental and regulatory requirements including any prohibitions or restrictions on Customer’s or End User’s use of Service or the transmission and/or receipt of Service applicable in any jurisdiction in which [Interactive] uses Service, including any restrictions and requirements as to patent, copyright, trademark or any other intellectual property rights, hours of availability, encryption, age verification and other restrictions as to access, labelling of content, defamation, obscenity and any other content or information-related laws, and privacy and data security or protection laws.”

Section 5 of the MSA added, among other things:

“… On the request of O3b at any time [Interactive] shall promptly provide O3b with written certification signed by an authorized officer of [Interactive] that the use of Service by [Interactive] or by others authorized or permitted by [Interactive] to do so complies with Sections 3, 4 and 5 of this MSA, together with such information as O3b may reasonably request to satisfy itself as to [Interactive’s] compliance (e.g., copies of relevant licences or authorizations). [Interactive] shall also provide such information and/or documentation to enable O3b to respond to any request for information made by any governmental or regulatory agency in relation to Service or [Interactive’s] or any End User’s use of Service. …”

Section 4 of the MSA provided in part:

“Operational Requirements. [Interactive] shall comply with the Operational Requirements. …”

Appendix A (“Operational Requirements”) included:

“1.0

Non-Interference and Use Restrictions. [Interactive’s] transmissions to and from the Satellite System shall comply with all applicable governmental laws, rules and regulations. …”

The Service Orders provided for Service Fees of US$331,040 per month “with a ramp-up in payments during the first 2 years of the Service Term” from US$13,793 in Month 1 to US$331,040 in Months 24-120.

By Section 6 of the MSA, Interactive was required to pay Service Fees in advance and without offset. By Section 8 (b), in the event that Interactive failed to pay any amount when due then O3b had the right to elect to terminate the Service Order and any other Service Order under the MSA immediately upon notice to Interactive.

Section 8(d) of the MSA provided:

“(d)

Acceleration of Service Fees. If a Service Order is terminated pursuant to [Subsection 8(b)] of this MSA, then [Interactive] shall pay O3b a termination fee equal to the Service Fees due for the remainder of the Service Term (such remainder, the “Remaining Term”). After Customer has paid the termination fee, O3b shall use reasonable efforts to re-market the Service and in the event that O3b subsequently reaches an agreement to provide to a third party that Service that would have previously been provided to [Interactive] during the Remaining Term, O3b shall remit to [Interactive] any service fees it actually receives from such third party with respect to such Service during the Remaining Term, up to the amount of the termination fee paid by [Interactive], less (i) any amounts owed by [Interactive] to O3b under this MSA or any Service Order; (ii) any reasonable costs (including reasonable attorneys’ fees) incurred by O3b in attempting to collect such amounts from [Interactive]; (iii) any other damages incurred by O3b in attempting to collect such amounts from [Interactive]; (iv) any reasonable costs (including reasonable attorneys’ fees) incurred by O3b in marketing such Service to, or negotiating a service agreement with, third parties; and (v) any costs reasonably incurred by O3b in providing related services and equipment (not provided to [Interactive]) that may be associated with the provision of such service. …”

The Further Terms and Conditions to the Service Orders provided:

“8.

Maximum Termination Liability. Notwithstanding anything to the contrary in section 8(d) of the MSA (Acceleration of Service Fees), Customer’s maximum aggregate liability for Service Fees in the event of a termination of Service Orders 00238, 00239, and 00240 shall be US$1,500,000.00; provided however, that the foregoing shall not relive [Interactive] of any payment obligations that may have arisen prior to such termination including liability for any unpaid Service Fees relation to any period of the Service Term prior to the effective date of termination.”

Section 6 of the MSA also provided:

“… If the cumulative amount of minutes of Confirmed Outages under a Service Order in a Measurement Period is more than 0.5% of the total number of minutes in such Measurement Period (the “Service Threshold”), O3b shall provide [Interactive] an Outage Credit for each minute of such Confirmed Outage in excess of Service Threshold. Outage Credits shall be applied against the payment of Service Fees due for a Measurement Period falling no later than the third Measurement Period from that in which the associated Confirmed Outage(s) occurred. Any Outage Credits provided to [Interactive] for Confirmed Outages that occur in the last two Measurement Periods of the Service Term shall be reimbursed to [Interactive] in U.S. dollars.”

Section 8(a) of the MSA added that if Interactive experienced a Confirmed Outage which did not cease within 30 days then Interactive (or O3b) would be entitled to terminate the relevant Service Order by giving written notice to the other party no later than 30 days after the right to terminate the relevant Service Order first arose. “Confirmed Outage” and “Measurement Period” and “Outage Credit” were defined in Appendix B.

The Service Orders also provided:

“Security. [Interactive] shall pay to O3b a cash deposit in the amount of US$750,000 (the “Deposit”) within 10 days after O3b notifies [Interactive] that O3b has selected the location for a Hub in Pakistan. The Deposit shall be applied in accordance with Section 4 (Security) of the Further Terms and Conditions below and will be held as collective security against [Interactive’s] obligations under [the] Service Orders…”

The Further Terms and Conditions to the Service Orders added:

“… Without prejudice to O3b’s right to terminate or Suspend Service under the MSA, if [Interactive] fails to pay O3b on its due date (or within any applicable cure period) any amount due under the MSA, this Service Order or any other Service Order, O3b or a secured party shall be entitled in its sole discretion to apply the Deposit to the satisfaction of the outstanding amount. …”

Section 9 of the Further Terms and Conditions to the Service Orders provided, after amendment by Amendment #1:

“Upon termination of this Service Order for any reason, in addition to the Parties other rights and obligations, [Interactive] shall, upon request from O3b, promptly (a) return to O3b (or reimburse O3b for) the Remote Site Equipment up to the value of US$750,000, and (b) provide 03b or its agents with access to, and otherwise facilitate the return of, the Remote Site Equipment. In such case title to the Remote Site Equipment will transfer to O3b when [sic] takes possession of the Remote Site Equipment. If the termination is as a result of default by [Interactive], then [Interactive] will be responsible for the cost of return; otherwise, O3b will bear such cost.”

Notice was in due course given of a Service Commencement Date of 25 April 2015.

No payments were made by Interactive. Arrears were put at US$1,944,862 by January 2016. On 7 January 2016 O3b gave notice of breach and again demanded payment.

Interactive replied on 13 January in these terms:

“1.

Pursuant to section 7 of the Service Orders, Interactive has been notified by O3b that the network Hub of O3b is located at … Karachi, Pakistan at the earth station (the Infrastructure Facility) of Trans World Infrastructure Services (Private) Limited (Trans World). We understand that O3b has entered into an arrangement with Trans World whereby it has appointed Trans World to provide O3b an interface facility for onward re-sale of the Service by Interactive (and/or its Pakistani affiliates) to the End-Users. We also understand that Trans World has been issued a telecom infrastructure license (the TI License) by the Pakistan Telecommunication Authority (PTA) to, amongst other things, establish, maintain, lease rent and sell telecom infrastructure facilities (the Infrastructure Services), subject to the terms and conditions contained in the TI Licence;

2.

Please note that Trans World may only provide the Infrastructure Services under the TI License subject to, inter alia, issuance of a ‘commencement certificate’ by PTA. While we are aware that PTA has issued the commencement certificate to Trans World, we are of the view and have strong reasons to believe that provision of the Infrastructure Services by Trans World is contingent upon procurement by Trans World of certain additional mandatory regulatory permits and compliance with further regulatory requirements, in the absence of which Trans World cannot legally provide the Infrastructure Services in Pakistan. And as a direct result, O3b cannot provide legally compliant Services to Interactive (and/or its Pakistani affiliates) from the Hub of O3b. We wish to apprise you that this matter is currently being scrutinized within PTA and conclusive findings will come to the fore in due course; and

3.

In view of the foregoing, we are of the considered opinion that given the Service cannot be legally provided by O3b to Interactive due to reasons beyond Interactive’s control and directly attributable to O3b’s counterpart Trans World, the Service Commencement Date has not been achieved by O3b under the Service Orders and, therefore, Interactive is not, at present, under an obligation to pay the Service Fees to O3b.

Therefore, please retract the letter and ensure that provision of the Service to Interactive (and/or its Pakistani affiliates) is legally compliant to ensure that the commercial relationship envisaged between O3b and Interactive pursuant to the Agreement is sustained cordially for the Service Term and beyond.

We also wish to reiterate our commitment to comply with our obligations under the Agreements and are confident of reciprocity from O3b.”

This letter acknowledges that the Hub location had been determined by O3b. The letter asserts that Trans World required a “commencement certificate” from the PTA but acknowledges that this had been issued. Interactive then refers to its view that based on (unspecified) “strong reasons” it believed (unspecified) “additional mandatory regulatory permits and compliance with further regulatory requirements” were required.

The letter offers no contractual foundation for Interactive not paying O3b. It does not detail what else was alleged to be required and why. And under Section 3 of the MSA it was agreed that it was Interactive that had the responsibility to “obtain … all necessary … licenses” and that O3b had no such responsibility.

Interactive continued not to pay. On 10 February 2016 O3b terminated the MSA and Service Orders and declared the following sums due:

“…

•

US$2,266,937 for past due Service Fees;

•

US$1,500,000 for the termination fee (i.e. a sum equal to the Service Fees due for the remainder of the Service Term, subject to the maximum termination liability cap of $1,500,000 pursuant to Section 8 of the MSA and Section 8 of Service Order …); and

•

US$750,000 for the value of the Remote Site Equipment (unless Interactive chooses to return such equipment to O3b (at Interactive’s expense) up to the value of US$750,000), as required under Section 9 of the Further Terms and Conditions of each of the Service Orders.)”

The first figure is in fact understated by US$100,000 but nothing turns on that.

For the following short reasons it is clear Interactive is liable to O3b for these sums (once corrected):

Shortly before the commencement of the trial, Interactive dispensed with the services of its Solicitors and Counsel. In circumstances that I do not need to go into, the Court gave permission for Interactive to appear by its officer Mr Usman Yousuf. Mr Yousuf conducted Interactive’s case with skill and courtesy, drawing on some “in-house” legal support that was available to him.

The trial involved examination of a number of areas that Interactive said gave rise to a defence. None in fact do. I shall take these in turn below.

Interactive argues that the notice of the Service Commencement Date “was of no effect because its content was not true: the satellite system had not been placed into commercial operations”.

However the definition of Service Commencement Date agreed by the parties provided two alternatives. The first was “the date set forth in a notice from O3b to [Interactive] that the Satellite System has been successfully placed into commercial operation and is ready for Service to commence”. The second was “such other date as may be set forth in an applicable Service Order.” Whatever the argument over whether the Satellite System had been successfully placed into commercial operation, the second alternative was satisfied.

There is nothing uncommercial in the second alternative, for from the Service Commencement Date O3b was required to provide the Service for which Interactive was required to pay.

However even if the first alternative alone engaged, I find that it was satisfied. By no later than the notice of the Service Commencement Date, the Satellite System (as defined in Appendix B to the MSA, i.e. “a constellation of Satellites utilized to provide Service”) was in commercial operation and was ready for the Service (as defined in the Service Orders, i.e. “[d]elivery of a beam of a bandwidth of 216 MHz (Forward) and 216 MHz (Return) from a Service Transponder … to the Beam Location”) to commence.

Interactive argues that “the satellite system had not been placed into commercial operations and was not ready for service to commence because … [O3b] had not received the necessary regulatory approval from the Pakistan Telecom Authority”. Interactive’s argument centred on the proposition that what had to be put into “commercial operation and [made] ready to commence service” included the (earth-based) Hub.

However on 21 August 2014 the PTA had issued a commencement certificate to Trans World (O3b’s partners, and accepted as equivalent to O3b for all relevant purposes) for commencing service at the Hub. The terms of an earlier licence issued to Trans World on 4 November 2013 had made clear (by Clause 6.9.1) that the commencement certificate would evidence that the PTA was satisfied that the Hub was established.

The commencement certificate made it clear that Trans World was not to provide a service to anyone who did not themselves have a licence. This affected Interactive’s ability to offer services to its intended customers. Interactive included in its reply to the Service Commencement Notice that:

“… as of late [the PTA] has yet to issue a permission to [Trans World] which happens to be O3b’s service provider, to offer these services. Which actually implies that [Interactive] cannot offer these service commercially to any of the clients. This is a major compliance issue that O3b still needs to look into, and has an impact on service commencement in Pakistan”.

This further reveals Interactive’s misunderstanding of the contractual position. O3b had not agreed to arrange regulatory permissions to offer services to onward customers (or for those customers to receive services). As between O3b and Interactive that was for Interactive. Under Section 3 of the MSA it was agreed that it was Interactive that had the responsibility to “obtain … all necessary … licenses”. It was also agreed that Interactive “shall comply and shall cause others (including its End Users) to comply with all applicable legal, governmental and regulatory requirements including any prohibitions or restrictions on [Interactive’s] or End User’s use of Service or the transmission and/or receipt of Service applicable in any jurisdiction in which [Interactive] uses Service”.

Permissions of the nature discussed by Interactive - to offer services to onward customers (or for those customers to receive services) - were not required for “the Satellite System [to have] been successfully placed into commercial operation and [to be] ready for” “[d]elivery of a beam of a bandwidth of 216 MHz (Forward) and 216 MHz (Return) from a Service Transponder … to the Beam Location” to commence.

Mr Jan and Mr Vardag, called by the parties as regulatory experts, agreed that a commencement certificate is “the PTA’s formal permission to commence commercial operations by the licensee, after it has satisfied itself of compliance by such licensee of all the applicable regulatory and legal requirements”. Mr Vardag considered that Trans World needed another certificate in order to provide services known as teleport services rather than simply establish and maintain its infrastructure. Mr Jan however suggests it is well understood that an infrastructure licensee is entitled to use the relevant infrastructure for its intended purpose – i.e. here the provision of teleport services – and so no separate certificate was required. I preferred the evidence of Mr Jan, who came with greater regulatory experience than Mr Vardag, a highly experienced lawyer.

Mr Vardag said that the certificate – if it could be called a certificate at all – was conditional because it was issued “subject to…” the prior satisfaction of various matters set out therein. However there is nothing on the face of the document to suggest that it will not take effect until certain conditions are met. Mr Vardag seemed to suggest that the words “subject to” must of themselves render the document conditional, but that neglects the difference between a document being issued subject to conditions that must be performed, and a document being conditional. The particular terms of the Commencement Certificate cannot realistically be construed as pre-conditions. They included that Trans World was required to communicate to the PTA any change in the list of its clients, prohibited from providing a non-licensee with any service and required to obtain a separate commencement certificate if it wished to provide a new service.

On 29 August 2014 the PTA “advised” Trans World “[i]n connection with [the] commencement certificate”, to register with the International Telecommunication Union (ITU). According to Mr Vardag, this letter “clearly shows that the Commencement Certificate was never final”, because the PTA still required certain steps to be taken by Trans World. Respectfully, I do not agree. As one might expect of a regulator, the PTA had an ongoing role after a licensee has commenced operations. It could issue advice or directions, and in case of non-compliance take action (which did not happen in the present case). There is no difficulty in the proposition that the PTA would have continued to raise issues, all while Trans World had its permission.

On the question of what, precisely, was permission being given to commence the experts’ disagreement was again based largely on contrasting interpretations of the key documents. The commencement certificate refers specifically to “commencing Earth Station & Satellite Hub under above referred license”. In Mr Vardag’s view, that phrase does not include the provision of teleport services; such services would instead fall under para. 1(c) which states that a separate commencement certificate is required to provide any “new” service. Mr Jan disagreed, and was in my judgment right to do so. He opined that the point of an infrastructure licence is to entitle a licensee to establish and maintain infrastructure for the provision of a service.

Interactive ran a further regulation-based argument, concerning “legal intercept compliance”. It describes legal intercept compliance or “LI compliance” in Pakistan as follows: “… pursuant to proper and lawful authority, the Law Enforcement Agencies in Pakistan are able to obtain clear visibility of communications network operations for the purpose of analysis and monitoring … generally consist[ing] of signal[l]ing or network management information or, in fewer instances, the content of the communications”. Interactive argued that, over and above the commencement certificate, O3b or Trans World had, in relation to the Satellites and the Hub, to “acquire additional mandatory regulatory permits and compliance with regard, inter alia, to real-time lawful interception pursuant to the Pakistan Telecommunications (Re-Organisation Act 1996)”. Without this, the commencement of provision of commercial services would not be permitted, argued Interactive.

Expert evidence was tendered as to the location at which LI monitoring should take place, assuming (as is the case) that the PTA had not designated a specific place. Mr Lake and Mr Khan were called as technical experts in this connection. Mr Khan’s view, as I understood it, is that LI monitoring must be of all traffic within each licensee’s segment of the system, so there would need to be LI monitoring of traffic going through O3b’s part of the system, and separate monitoring of traffic going through other parts of the system. Mr Khan (who had no experience of designing legal intercept into networks) was not able to persuade me that he had a sound basis for his view.

On the regulatory side while Mr Vardag asserted that that place should be the O3b router, Mr Jan did not consider that to be required by any law or regulation. Ultimately Mr Vardag seemed to agree that no such rule existed.

On the expert evidence I heard, I find that legal intercept compliance was not required in relation to the Satellites. Indeed even Interactive confined its description of compliance visits by the Law Enforcement Agencies to the (earth-based) Hub. As regards the Hub, I find that it was a possible but not a necessary location for the purposes of legal intercept compliance.

However the most important points remain these. First, on the true construction of their agreement, the parties had agreed that it was for Interactive to ensure lawful intercept compliance as with other regulatory requirements. Second, the “commercial operation” required by the Service Commencement Date was of the “constellation of Satellites utilized to provide” delivery of the satellite beam.

In an apparent further attempt to try to meet the problem with its argument Interactive raised the further suggestion that “to the extent that [Trans World] acted on behalf of O3b, upon examination of the MSA and [a Teleport Services Agreement between O3b and Trans World] and factual rollout of operations there exists a clear implied agency …. O3b is liable for the agent and responsible to procure all approvals for the same [and] is accountable for the regulatory approvals of [Trans World]”.

Interactive did not persuade me that there was any implied agency. I cannot see that an implied agency would help it in any event. It is the case that in the Teleport Services Agreement to which Interactive refers there are arrangements between O3b and Trans World over licenses and permits. But as Mr Collar pointed out in evidence the existence of those arrangements does not contradict the point that as between Interactive and O3b the sole responsibility is that of Interactive.

Interactive argues that “in any event the claimant had not provided the full bandwidth as required by the agreement”.

Bandwidth was the subject of a link analysis attached to the MSA itself. In agreed Further Terms and Conditions the parties recorded that “[a] center of beam large terminal analysis was performed at 100% of capacity of the Service Beam at the Service Beam Location to demonstrate the performance of the Service Beam”.

The bandwidth specified in the Service Orders was 216MHz to and from each transponder. Interactive alleges that the maximum bandwidth provided at any material time was the equivalent of 52.26MHz; and therefore that the “Service” was never provided.

Interactive itself attributes the reason for the full bandwidth not being provided to what it says was the limited capacity of, and faults with, remote terminals which received the bandwidth. Mr Khan, the technical expert it called, said that “[t]he full contractual bandwidth was not provided because Interactive only had 5 Remote Terminals, which when combined were not capable of utilising the full contractual bandwidth” and that “the five terminals meant that (even if the system was fully operational) there would always be a meaningful shortfall in the bandwidth actually sent to the remote terminals”.

O3b says that the required amount of bandwidth was provided, regardless of the maximum amount of bandwidth that was actually used by Interactive. Mr Lake, the technical expert called by O3b, explained how each transponder on each Satellite constantly makes available 216MHz of bandwidth and that is not dependent on the number or specification of the Remote Terminals.

I find as a fact that O3b did provide, in the sense of make available, the full bandwidth. Even if O3b had not provided that bandwidth, Interactive was not automatically relieved from its obligation to pay under the MSA.

In its written closing submission Interactive blames issues over bandwidth for delaying the Service Commencement Window to 1 July 2014. However that that new date was expressly agreed between the parties by a signed amendment.

Mr Yousuf instanced an occasion (before the Service Commencement Date was designated) when an antenna fell off one of the ground installations. Installed in the premises of a defence organisation, the embarrassment was considerable.

The incident was referenced in Interactive’s letter to 03b reacting to the designation of the Service Commencement Date. It concerned what was defined in the contract documentation as “Customer Equipment” (see Appendix B to the MSA).

Section 4 of the MSA provided for Interactive to be responsible for “all Customer Equipment communicating with the Satellite System (unless otherwise set forth in the Service Order)”. Appendix A at Article 3.0 added that Interactive was to be responsible for the installation of Customer Equipment, unless otherwise stated in a Service Order.

The same letter from Interactive reacting to the designation of the Service Commencement Date criticised equipment listed in a schedule to Amendment #1 to the Service Orders agreed in December 2013 and January 2014. Yet it was agreed that Interactive was to procure the remote site equipment set forth in Schedule 2. O3b agreed to place the order for that equipment, but on behalf of Interactive, and pay the applicable vendors for the cost of such equipment. It was Interactive who agreed to accept delivery of the equipment and to be responsible for transporting it to Interactive’s earth stations and for its proper installation and commissioning albeit using O3b-approved service providers.

Interactive also said that Ufone, a prospective customer, “immediately backed out after a failed attempt due to synchronization issues”. Correspondence is referred to concerning outages. But outages are addressed separately under the MSA. Further the correspondence appears to include reference to the outage being fixed.

Of course it was inevitable that there would be faults in a project of this ambition. O3b maintained a log of faults. These were examined at trial and were shown (including on the evidence of Mr Nawaz which I accept) to be minor in context. Interactive itself did not maintain any log. Interactive relied on 29 alleged faults in a spreadsheet enclosed in its Response to O3b’s Request for Further Information. This spreadsheet provides only a brief description of each alleged fault, and so regard must also be had to an O3b logbook, which though itself imperfect is the only contemporaneous engineering record of the alleged faults. The experts agreed that between 17 and 22 of the 29 alleged faults occurred at the remote terminals, the remainder occurred at the Gateway, and none occurred at the O3b satellite constellation.

This was an ambitious initiative for both parties. Interactive spoke of its “backing 03b with a USD 100,000,000 commitment”. It would have been naïve for any party seriously to expect things to proceed without complication or difficulty. In that context their commercial agreement on where responsibilities lay in the challenging venture ahead had particular importance.

Yet I found at many points Interactive did not give that agreement the attention it required. As a result when cooperation between the parties was called for the chances of achieving it were complicated by the fact that each party had a quite different level of knowledge and attention to the contractual responsibilities involved.

In a difficult environment, Interactive was quickly struggling to cope. I accept the account given in evidence by Mr Steve Collar, then CEO of O3b, of his experience that Interactive was not able to deliver on its business plans.

Two witnesses were called by Interactive and cross examined by O3b. I found in the first, Mr Shahid Mahmud, a proud man and one not very willing to examine whether he was correct or incorrect. Mr Mahmud, the Chairman and CEO of the Interactive Group, was the decision taker, yet he “never looked” at the MSA. Before I saw and heard Mr Mahmud and appreciated further his involvement in Pakistan I wondered why the parties would agree through the MSA (admittedly an O3b standard form) to put so much responsibility on the shoulders of Interactive rather than O3b, but then I appreciated how much Interactive rested on its view that it, Interactive, had considerable influence within Pakistan. Whether it was right or wrong in that assessment, influence was never going to be enough.

I found in Mr Yousuf, the second witness, a sincere man, but not one who had been behind the key decisions for Interactive and someone with large gaps in first-hand knowledge of relevant events. In his separate capacity conducting the trial he has done his best, but the task by then, in the events that had already happened, could fairly be described as trying to make bricks out of straw.

Both parties have come to see this matter quite differently; O3B focuses on the agreement the parties entered into; Interactive focuses on a project that did not succeed for them. On what I saw at trial, Interactive has lost sight of its own share of responsibility for the project not succeeding, and of the actual terms of the agreement that it entered into.

It is the agreement that the parties entered into that provides the answers in law to the situation the parties ultimately found themselves in. Save that I shall deal with costs and consequential matters separately with the benefit of argument after this judgment is handed down, including the costs of an attempt by Interactive to litigate in Pakistan when it had agreed to litigate in England, O3b succeeds and Interactive fails.