Esat Telecom has been joined as a defendant in a High Court action over the conduct of the affairs of Esat Digifone. The action was instituted by Telenor Invest AS of Oslo, a Norwegian company which, like Esat Telecom, owns a 49.5 per cent shareholding in Digifone.

Telenor is objecting to IIU Nominees Limited, a company which has a 1 per cent shareholding, holding two directorships on the board of Digifone.

It has asked the court to restrain Dermot Desmond and Michael Walsh, directors of IIU, with registered offices at the International Financial Services Centre, Dublin, from attending Esat Digifone's board meetings or participating in the management of the company.

IIU, in a counterclaim, is seeking an order staying the Telenor proceedings and remitting the issue between the parties to arbitration.

After hearing legal submissions yesterday, Mr Justice O'Sullivan joined Esat Telecom as a defendant in the proceedings.

Mr Lyndon McCann, for Esat Telecom, said his client had no axe to grind with either Telenor or IIU. But it would be a matter of concern if any court order was to be made which would have a significant impact upon Esat Telecom.

Mr Richard Nesbitt, SC for IIU Nominees, said his client and its directors on the board of Digifone had no axe to grind with either of the two shareholders, Telenor and Esat Telecom. It was with the deepest regret that the differences which had arisen should be held up to public scrutiny in what was a public forum.

His client was a substantial and respected company which was in good standing. Its directors on the Digifone board were well known for their good acumen in business affairs.

IIU asked the court to stay the proceedings in favour of the differences between the parties being put to arbitration as provided for in the Shareholders' Agreement.

The hearing continues today.