TransCentury-owned Civicon has suffered a blow after the High Court discharged orders blocking Equity Bank from releasing funds to Chinese firm Fuji Electric arising from a multi-million shilling contract for the construction of a geothermal power plant in Olkaria.
Justice Josephine Monga’re discharged the orders issued in June blocking Equity from effecting payment to the Japanese firm, pending the resolution of the dispute between the parties through arbitration.
The judge said after getting orders blocking the lender from paying the money signed through a performance bond, Civicon moved back to court, instead of referring the dispute to arbitration as directed on June 15, to seek new orders to be allowed to move to the Court of Appeal.
“In the circumstances therefore the ex-parte orders issued on June 15, 2023, in terms of prayer number 5 are hereby vacated and discharged forthwith,” the judge said adding that Civicon was at liberty to move to the appellate court and seek the same orders.
The dispute arose from a contract entered by KenGen and Marubeni Corporation for the construction of a geothermal power plant.
Marubeni then subcontracted Fuji Electric Co and Civicon to do the work and as part of the deal, Civicon issued a performance bond in favour of Fuji Electric.
The court was informed that Civicon later failed to perform its work, a move that allegedly compelled the Japanese firm to take remedial action to mitigate the risk of paying damages for any delay that might be imposed on the parties by the contracting firm.
The Japanese firm claimed it took over and performed Civicon’s work and in the process incurred costs that should be recovered from Civicon.
Further, it was alleged that Civicon was unwilling to pay the same, forcing Fuji Electric to call up the performance bond.
Civicon had initially obtained orders urging parties to maintain the status quo as the matter was being handled through arbitration as stipulated in the consortium agreement.
In the June 15 ruling, Justice Mong’are had ruled that all disputes, including the one regarding the performance bond ought to be resolved through arbitration. She then suspended proceedings and directed parties to refer the matter to arbitration.
It is Civicon’s argument that the decision to call up the performance bond was in breach of the agreements signed by the parties.
The firm further says the dispute involves parties who are involved in the dispute before the court and who are not privy to the consortium agreement.
The court was also informed that referring the dispute between Civicon and Fuji Electric to arbitration while the rest of the parties pursue their case before the High Court, would create a scenario where there are parallel proceedings over the same subject matter in two different forums with a possibility of conflicting outcomes.
Justice Mong’are said having suspended the proceedings in June and directed the parties to move to arbitration, the court’s mandate had ended until the arbitration process is finalised.
