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Company dealt blow in Sh1.5bn Mombasa fish complex contract dispute
Ceer Processing Ltd had argued that the arbitration process is incapable of being performed because the respondents have frustrated it by taking possession of the Liwatoni site.
A fish processor has suffered a setback after the High Court dismissed its application to reinstate a case where it was challenging the termination of a Sh1.49 billion contract for a proposed ultra-modern fish hub at Liwatoni in Mombasa.
The case had been referred for arbitration in accordance with a clause under the conditions of the contract.
Ceer Processing Ltd had sued the Principal Secretaries in the State departments for Blue Economy and Fisheries and Public Works over a contract dated March 29, 2022.
The contract was for the proposed hazard analysis critical control point-compliant ultra-modern tuna hub, which was terminated on December 31, 2023. Court records show that the contract was for a sum of Sh1,498,169,658.
In declining to reinstate the case, the court ruled that there exists a valid and subsisting order referring the parties to arbitration, and the court was functus officio (having completed its duty in a case) on the question of jurisdiction.
“The applicant has not demonstrated that the arbitration agreement has become null, void or inoperative within the meaning of the Arbitration Act,” ruled the court.
It added that there was no basis for reinstating the case. The court also said the case was closed after it had exercised its jurisdiction to refer the parties to arbitration to inadvertence or error, but by design and in compliance with the parties’ contractual bargain.
“To reinstate the suit is to undermine the finality of the court’s earlier determination and to render nugatory the arbitration clause, which this court has already upheld,” part of the ruling states.
According to the court, while Ceer Processing Ltd raises concerns about the respondents’ conduct, such issues are properly within the province of the arbitral tribunal once constituted.
“This court cannot revive proceedings that have been conclusively referred to another forum unless the arbitration agreement is first declared inoperative by competent judicial pronouncement, which has not happened,” ruled the court.
Ceer Processing Ltd had argued that the arbitration process is incapable of being performed because the respondents have frustrated it by taking possession of the Liwatoni site.
However, the court noted that Ceer Processing Ltd has not shown any concrete attempt to commence arbitration that was rebuffed or rendered impossible.
“There was no request for an arbitrator nor any communication involving the arbitral clause that failed,” ruled the court.
The court further ruled that it cannot sit on appeal of its own earlier order referring the dispute to arbitration.
It ruled that the proper course for Ceer Processing Ltd would be to move under the Arbitration Act for appropriate directions or relief, not to seek reinstatement of the case already referred.
