Nokia Siemens vs Vodafone Oz: the legal games begin

Missing millions and contractual woes

Nokia Siemens Networks is taking legal action against customer Vodafone Australia following a tussle over compensation issues regarding network performance.

The "Vodafail" network woes that have dogged Vodafone Australia and its disgruntled customers appear to have been passed on to network supplier Nokia Siemens Networks in a messy legal wrangle.

In April 2010, the parties signed a seven year managed services agreement; within six months consumers had begun complaining of widespread network performance issues. Vodafone is now facing a class action from thousands of customers, and has become the Telecommunications Industry Ombudsman’s poster child of how not to handle network performance issues.

According to the Sydney Morning Herald, the latest legal action instigated by Nokia Siemens Networks, in early November, Vodafone Australia withdrew $AU8 million from a Performance Bond which was part of a Managed Services Agreement between the carrier and the vendor. At the time both parties were involved in mediation over performance issues.

Vodafone also demanded that Nokia Siemens Networks place a further $AU8 million into the combined account.

According to documents filed in the NSW Federal Court by Nokia Siemens Networks, the vendor has sought legal action to stop Vodafone from asking for more money to be placed in the Performance Bond and seeking that until December 9, Vodafone will cease attempting to extract or demand any money due under the MSA.

Nokia Siemens Networks described Vodafone’s actions as “misleading, deceptive and unconscionable” by withdrawing a bond the subject of mediation ... in circumstances in which there was no entitlement to demand payment by reason of the want of any liability", and by requesting more money.

Nokia Siemens Network has also sought that Vodafone ensures that the combined credit account balance for all bank accounts operated by it will not drop below $AU10 million.

In a hearing on November 4, Justice David Yates granted that Nokia Siemens Networks not be required to top up the performance bond and that Vodafone maintain $AU10 million in its joint bank account until the matter is heard on December 7. That hearing will be before Justice Robertson. ®