Pattni renews legal fight for duty-free shops

Controversial billionaire businessman Kamlesh Pattni has re-ignited a long- running legal battle over exclusive rights to operate duty-free shops in Kenya’s airports.

Mr Pattni has filed a fresh suit in the High Court seeking to stop the Kenya Airports Authority (KAA) from contracting Swiss concessionaire Dufry International to run duty-free shops at Jomo Kenyatta International Airport (JKIA) in Nairobi and Moi International Airport in Mombasa.

World Duty Free Company Limited, a firm associated with Mr Pattni, wants the court to quash the contract awarded to the Swiss firm on October 15, as it claims that the contract it was awarded to exclusively operate duty free shops in the Nairobi and Mombasa airports is active, making the KAA-Dufry one illegal.

The firm, which trades as Kenya Duty Free Complex, also claims that there is an existing court order issued in 2008 stopping KAA from awarding any other party a contract to run the duty-free shops.

It now wants the contract Dufry International signed on October 15 declared null and void.

It claims the lease agreement is still active despite KAA last year claiming that it had expired in July.

“In gross breach of Kenya Duty Free’s sole and exclusive rights to operate duty free shops, KAA granted another exclusive concession agreement to Dufry. The said agreement was entered into in contravention of the court order issued by this court in September 2008,” the firm says.

Justice Fred Ochieng’ on Wednesday declined to issue any orders, but certified the matter as urgent. The judge directed Kenya Duty Free to serve KAA and Dufry International—the respondents, with the suit papers and appear before him on February 11 for further directions.

Dufry was awarded the contract after a failed legal challenge by Suzan General—another firm associated with Mr Pattni. Justice George Odunga ruled in October that KAA had followed public procurement procedures to the letter in awarding Dufry the contract.

Kenya Duty Free further claims that Dufry’s contract is also in breach of arbitration findings by retired Ghanaian judge Edward Torgbor.

Justice Torgbor found that KAA had breached the 1989 contract in evicting KAA from the Nairobi and Mombasa aerodromes, and awarded Mr Pattni’s firm $21.1 million (Sh1.9 billion) as compensation.

The firm’s general manager Sanjay Mashru holds that KAA further breached the terms of the contract Kenya Duty Free signed with KAA in 1989 by awarding Dufry the duty-free tender.

“The original agreement dated April 27 1989 is still subsisting and Kenya Duty Free has the sole and exclusive rights to carry on duty free operations at JKIA and Moi International Airport.

“The award (of Sh1.9 billion) remains unsatisfied to date and the grant of another exclusive concession agreement by KAA to Dufry with impunity despite the findings by Justice Torgbor that KAA breached the agreement with World Duty Free amounts to contempt of court,” Mr Mashru said.

The dispute saw KAA demolish the duty free shops operated by Mr Pattni’s firm in a bid to evict it.

Mr Pattni had in September 2013 announced that he would withdraw all the suits Kenya Duty Free had filed against KAA after he surrendered the concession shops back to the State Corporation.

Kenya Duty free has however in suit papers said that there are three cases still pending between it and KAA regarding the duty free shops. The firm adds that KAA’s breach of the 1989 contract is likely to cause it irreparable loss.