Uganda’s High Court has blocked Royal Dutch Shell PLC from proceeding with further negotiations about an intended $1 billion sale of its Ugandan unit until a case filed against it is heard, court officials said Wednesday.

An injunction was granted Tuesday after Shell Uganda Ltd. employees sued the company, contending that the sale of the unit without their consent is illegal and contrary to their contracts of employment, and that Shell’s actions render their future uncertain.

“The suit will be heard March 16, until then, the transaction is on hold,” a court official told Dow Jones Newswires.

The action could delay Shell’s plans to complete the sale of its distribution and retail business in the East African nation, according to trade officials.

But Ivan Kyayonka, chairman of Shell Uganda Ltd., said separately that the court action isn’t likely to delay the transaction because the main suit is expected to be expedited.

“We are continuing with discussions and we expect the transaction to be concluded very soon,” he said.

Shell plans to sell part of its retail and distribution business in 14 African nations to a partnership between Helios Investment Partners and Vitol Group, a Dutch international oil trader, for $1 billion. The deal also involves Shell’s units in Morocco, Tunisia, Egypt, Ivory Coast, Burkina Faso, Ghana, Senegal, Mali, Guinea, Cape Verde, Kenya, Madagascar and Mauritius.

Source: Dow Jones & Rigzone