The High Court has upheld an arbitrator award of Sh278.52 million to construction company N. K. Brothers Limited for a housing project it carried out in the 1980s for the National Youth Service (NYS).
The arbitrator awarded the company the amount in May 2021, plus interest of 12 percent and 70 percent of the arbitrator's fees and arbitration costs.
N.K Brothers claimed before the arbitrator that as a result of the payment breaches, it had suffered loss and expense amounting to Sh1.94 billion— comprising outstanding certificates, interest on delayed payment and interest on delayed certification.
The arbitrator, however, awarded it Sh278.52 million but included the interest of 12 percent and a further 16 percent on one of the certificates worth Sh33.91 million.
However, the Attorney-General filed an appeal at the High Court to get it to set aside the award, arguing it was in conflict with public policy on interest payments of debt, and the award was not provided for in the contract or proved as owed before the arbitration tribunal. The Court, however, upheld the award, but not the interest.
“The application to set aside the award succeeds only to the extent that the interest of 12 percent awarded in addition to the awarded sum of Sh278.52 million and the interest of 16 percent awarded in addition to the final account sum of Sh33.91 million in respect of the final certificate dated March 16, 2006, is hereby set aside as the same offend Kenya’s public policy on the award of interest,” said High Court judge David Majanja in his ruling.
The construction firm was handed a contract by the government in July 1987 to construct 29 blocks of flats, three maisonettes, three servants' quarters, two dormitories, two officers accommodation blocks and two kitchen and dining blocks for the NYS, for a consideration of Sh279.67 million.