The Lagos Division of the Court of Appeal has dismissed an appeal filed by MTN Nigeria Communications Limited, affirming a ₦5.1 million compensation awarded to its former Procurement Manager, Theodore Nwabueze Ikpa, over what the court found to be an unreasonable post-employment restraint of trade clause.
The unanimous judgment was delivered by a three-member panel led by Justice Danlami Zama Senchi, with Justices Boloukuromo Moses Ugo and Paul Ahmed Bassi concurring. The appellate court upheld the decision of the National Industrial Court in Lagos, delivered on June 13, 2018.
The dispute stemmed from the termination of Ikpa’s employment in December 2008. Following his dismissal, he approached the National Industrial Court through his counsel, Adetunji Adedoyin-Adeniyi, alleging that MTN failed to provide him with one month’s notice or salary in lieu of notice as required.
Ikpa also challenged a four-year restrictive covenant contained in his employment contract, arguing that it effectively prevented him from securing alternative employment until he reached retirement age. He sought payment of salaries up to his retirement in October 2010, retirement benefits, or, alternatively, ₦10 million in damages for restraint of trade.
Although the National Industrial Court dismissed most of his claims, it ruled that the four-year non-compete clause was unreasonable. The court consequently awarded him ₦5,101,674 in compensation and ₦100,000 in costs.
Dissatisfied with the ruling, MTN, through its counsel, Solomon Mbadiwe, appealed the judgment on four grounds. The telecommunications company argued that the lower court lacked jurisdiction to entertain Ikpa’s alternative claim and maintained that the restrictive covenant was reasonable and necessary to safeguard its confidential information and trade secrets.
MTN further contended that Ikpa failed to establish any actual loss, voluntarily complied with the restrictive clause, and did not prove that the company prevented him from obtaining other employment.
In response, Ikpa argued that the covenant effectively rendered him unemployable. He relied on evidence alleging that MTN had previously instituted legal action against former employees who breached similar clauses, creating fear among prospective employers.
In the lead judgment, Justice Senchi rejected all the grounds of appeal, holding that the National Industrial Court properly exercised jurisdiction over the employment dispute. The Court of Appeal also found that the trial court correctly evaluated the evidence and rightly concluded that the four-year restriction was unreasonable and amounted to an unlawful restraint of trade.
The appellate court further ruled that there was no basis to interfere with the costs awarded by the lower court, noting that costs ordinarily follow the outcome of a case.
Having found the appeal lacking in merit, the Court of Appeal affirmed the National Industrial Court’s judgment in its entirety and awarded an additional ₦500,000 in costs against MTN Nigeria in favour of Ikpa.
In his concurring judgment, Justice Ugo stated that he fully agreed with the reasoning and conclusion of the lead judgment and adopted it as his own. Justice Bassi likewise held that the appeal was devoid of merit, affirming the lower court’s judgment delivered in Suit No. NICN/LA/05/2016 on June 13, 2018.
... Court of Appeal Upholds ₦5.1 Million Compensation Against MTN Nigeria Over Non‑compete Clause ... Naijaonpoint.