High Court compels GDC to pay tech contractor Sh2bn

The High Court has upheld decision by an arbitrator to compel Geothermal Development Company (GDC) pay an Information and Communication Technology (ICT) firm Sh2 billion for provision of maintenance services at Menengai Geothermal Project.

The firm, Lantech (Africa) Limited, had been awarded $18.2 million (Sh2 billion in current forex exchange rate) by the arbitrator, Kyalo Mbobu.

The dispute between the two parties started after the ICT firm finished its two-year contract for provision of maintenance services, but GDC failed to settle the amounts due.

Court papers indicated that on July 1, 2013, the ICT firm and GDC entered into an agreement for a fixed term of two years for the provision of maintenance services at Menengai Geothermal Project.

However, two years after the termination of the contract, a disagreement arose between the parties, where Lantech blamed the parastatal for financial loss arising out of Geothermal’s failure to observe its obligations under the contract.

Following the disagreement, a dispute was declared that led to the appointment of the sole arbitrator, Mr Mbobu who ruled in favour of Lantech in the final Award dated November 12, 2019.

The award resulted into the filing of two applications in court ­— one by Lantech seeking orders for the recognition and adoption of the award and the other by GDC seeking to have the award set aside.

Lantech chief executive Aquinas Wasike told court that Geothermal was indebted to Lantech in terms of the award but had failed, refused or neglected to settle the amounts due despite being served with a demand notice.

He said the GDC's application to set aside the arbitration award was founded on an ulterior motive and was based on grounds that were false, misleading and plainly unsustainable.

Justice Wilfrida Okwany, while striking out application by GDC to set aside the arbitrator's decision, concurred with the ICT firm that the application was statute-barred for being filed outside the statutory timelines.

The judge said according to the Arbitration Act, GDC was supposed to make the application within three months after the arbitrator Mr Mbobu delivered the decision on November 12, 2019 and notified the parties that the award was ready for collection.

She said a computation of three months from November 12, 2019 means that time lapsed on February 11, 2020 in which case, the GDC's application made under Section 34 of the Act on March 26, 2020 was made long after the three-month window had expired.

"My considered view is that the finality of arbitral awards and the expeditious nature of dispute resolution before an arbitral tribunal are the very reasons why parties opt to include arbitration clauses in their agreement," said the judge.

She said it would be “foolhardy” to have a law that provides for strict timelines and for parties to go for arbitration only to stall the process after notification of the delivery of the award on the basis that either the arbitrator’s fees has not been paid or that an application has been made under Section 34 of the Act.