The High Court has blocked the immediate seizure of the bank accounts of the Kenya Electricity Transmission Company (Ketraco) in a Sh10 billion dispute with Spanish contractor Instalaciones Inabensa S.A., instead ordering the State agency to provide a Sh1 billion bank guarantee.
At the same time, the court permitted Ecobank Kenya to join the case, citing a prior consent order tied to a 2019 arbitration award under which the bank claims €3.8 million (Sh567 million) from the contractor.
The ruling suspends an earlier court decision freezing Ketraco’s accounts as the contractor sought to recover the debt. This follows Ketraco’s appeal against the December 11, 2025 order that had allowed the foreign firm to pursue garnishee proceedings.
The freeze originated from Inabensa’s enforcement of an arbitral award linked to a failed 2013 transmission line contract. Ketraco terminated the agreement in 2016, citing non-performance, including the contractor’s failure to mobilise and execute the project.
The court ruled that seizing the funds outright risked paralysing the operations of the State-owned electricity transmission utility. However, the suspension is conditional – Ketraco must deposit a Sh1 billion bank guarantee from a reputable Kenyan institution within 30 days as security for the decree in favour of the contractor.
Should Ketraco’s appeal fail, the guarantee will be paid to CA Infraestructuras T & I SLU, the Spanish firm that acquired Instalaciones Inabensa S.A.’s rights to the arbitral award after the latter entered insolvency proceedings. Once the guarantee is secured, banks must allow Ketraco to operate its accounts normally.
Public interest
The court emphasised the need to balance the contractor’s right to enforce the judgment with broader public interest concerns tied to electricity transmission.
“Ketraco is not an ordinary commercial entity; it is a State corporation solely responsible for Kenya’s high-voltage electricity transmission network,” the court said.
The court noted that freezing Ketraco’s accounts had already disrupted critical operations, including staff salary payments, loan servicing, procurement of essential inputs and national grid maintenance. In an affidavit, Ketraco warned that executing the garnishee orders could cripple its functions.
“The freezing of our operational accounts has hindered salary payments, loan servicing, and grid maintenance,” the company said.
The court underscored the gravity of potential disruptions. “An electricity blackout is not merely inconvenient – it threatens national security, public safety, the economy, and essential services like healthcare,” it said.
Case background
The latest ruling departs from the court’s December 2025 orders freezing 17 Ketraco accounts during enforcement proceedings.
At the time, the court permitted salary payments but barred withdrawals for maintenance and operational expenses, cautioning that unrestricted access could deplete funds meant for the decree holder.
The dispute stems from a July 30, 2019 arbitral award favouring Instalaciones Inabensa S.A., later adopted as a Kenyan judgment on February 12, 2021. The award relates to contracts for the 400kV Lessos–Tororo transmission line and the Lessos substation extension.
Ketraco terminated the contracts in 2016, citing poor performance and failure to mobilise works, triggering arbitration proceedings. With penalties, interest and costs, the claim has grown to about Sh10 billion.
When Ketraco failed to settle the award, the decree holder initiated garnishee proceedings targeting accounts held in several banks, including NCBA, KCB, Standard Chartered, Co-operative Bank and Citi.
Legal questions
The contractor’s rights under the award were later transferred to the Spanish firm CA Infraestructuras T & I SLU after Inabensa entered insolvency proceedings.
However, the court raised concerns about the legal capacity of the new claimant to execute the decree in Kenya. The court said the Spanish insolvency proceedings had not been formally recognised locally under Kenya’s Insolvency Act.
“The entity claiming title to the decree has not legitimised its status under Kenyan law,” the court said.
“The garnishee proceedings cannot validly proceed in favour of an entity whose legal capacity has not been duly recognised. Ketraco’s fear of double payment is not just legitimate, it is imminent. Paying the garnishee sum to an entity whose legal standing is procedurally irregular would expose Ketraco to significant risk and would be an act of this court in vain,” the court said.
The judge directed the firm to file an application within 21 days seeking recognition of the foreign insolvency proceedings, warning that failure to do so would automatically discharge the garnishee orders.
The court also allowed Ecobank Kenya to join the proceedings as an interested party after the bank claimed it had a secured interest in €3.8 million from the arbitration proceeds. However, the court declined to order direct payment to the bank, ruling that the claim must be pursued in a separate case where the consent order was issued.
The matter will be mentioned after 60 days to confirm compliance with the court orders and give further directions.
