TelstraClear loses battle to stop Kordia upgrade

Kordia has been cleared to pursue a unilateral upgrade of the fibre network it jointly owned with TelstraClear in New Zealand after the latter exhausted its appeal options late last month.

The two telcos had been locked in a three-year dispute over whether a revised contract between the parties in 2000 permitted Kordia to upgrade its share of the network.

The original agreement between the telcos had included a non-compete clause, but it was altered in 2000 as part of a different settlement.

"The arbitrator had to take into account the fact that the 2000 settlement agreement fundamentally altered the relationship between the contracting parties (i.e. from neutral joint developers/owners to competitor joint developers/owners) and removed from [Kordia] its own reserve capacity on the transmission network," Justice Brewer of New Zealand's High Court said in a judgment published overnight.

The contract also included a clause where "all disputes... would be decided by an
Arbitrator", according to the judgment.

Kordia had won the right to upgrade its part of the network during an arbitration process in June - but TelstraClear had sought to appeal.

"[The telcos] decided that the arbitrator's ruling would be final and that the review jurisdiction of this Court would be excluded," Justice Brewer said.

Brewer decided against allowing the appeal to proceed.

Kordia chief Geoff Hunt welcomed the ruling.

He said the upgrade would "be on the basis that it caused no detriment to TelstraClear's use of the joint network, and would require only reasonable co-operation from TelstraClear at Kordia's cost.

"The issue was around whether or not we could unilaterally upgrade to maximise our share of the capacity in the fibre, or whether TelstraClear was able to obstruct this.

"An upgrade will allow Kordia to get a similar cost base for capacity as TelstraClear, and enable us to compete effectively with them as well as others in the market, and provide a better return on our assets for the shareholder.

"Justice Brewer has found in our favour, so we will now be looking to maximize our share of the capacity in the joint fibre network for our wholesale business," he said.

Hunt said Kordia was "looking forward to putting the litigation behind it, and getting on with the upgrade."

The judgment was made public overnight; however, the court ruled that public access to other files in the case be locked.