Companies

Dubai firm claiming Sh1.6bn from State gets nod to file more legal papers

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The Supreme Court has allowed a Dubai-based firm, which is seeking a compensation of Sh1.6 billion from the government for breach of contract, to file further documents in the legal dispute.

The company, Geo-Chem Middle East, took the dispute to the Apex Court after the Court of Appeal overturned decision of the High Court to endorse an award of Sh1.6 billion made by an arbitration tribunal.

The company had been contracted by Kenya Bureau of Standards (Kebs) in 2009 to inspect and test imported petroleum products for quality assurance and quantity determination.

Following an agreement dated June 5, 2009, the inspection commenced in August the same year but the exercise was suspended by government in March 2010 following a disagreement over Geo-Chem’s fees.

At the time of suspension the contract had only run for seven months. The firm had already established a petroleum inspection facility at the Port of Mombasa, which was officially launched by the Minister for Industrialization on August 27, 2009.

The government finally terminated the contract in July 2013, a decision that forced the company to file a case at the arbitration tribunal and got awarded $15,401,504.70 (Sh1,669,677,124 at current exchange rates).

The tribunal, comprising Collins Namachanja, Njeri Kariuki and John Ohaga, in a ruling dated July 29, 2016 held that by suspending the deal, Kebs was in breach of the contract.

Geo-Chem later moved to the High Court to have the arbitration award adopted as a judgement. However, Kebs also filed an application urging court to set aside the award arguing that it was erroneous and that it lacked merit. But Justice Fred Ochieng, in determining the two applications dismissed the one by Kebs and entered judgment in favour of the Dubai firm and directed the award be adopted as judgment of the court.