The High Court has barred the Treasury from releasing contract payments to a firm awarded a tender linked to the State-run Integrated Financial Management Information System (Ifmis) due to a debt of Sh212.8 million due to its business partner.
Enforcing an arbitration-backed decree stemming from the technology tender, the judge ruled that while government assets cannot be seized, the law permits attaching debts owed by the government to third parties.
The court directed Principal Secretary at the National Treasury to comply with an earlier decree issued in favour of Kobby Technologies Limited against the government following a fallout with Kingsway Business Systems Limited during contract implementation. The court prohibited any release of funds to Kingsway Business Systems Limited until the debt is settled.
The dispute originated from a 2019 government tender for the provision of IFMIS services. The National Treasury had issued a tender for on-site support to enhance IFMIS e-Procurement and related financial systems across government and semi-autonomous agencies.
In February 2021, the tender was awarded to a consortium comprising Kingsway Business Systems, Kobby Technologies, and Inplenion Eastern Africa for three years, valued at Sh647 million.
Kobby Technologies’ share amounted to Sh303.9 million in professional fees. A disagreement later arose between Kingsway and Kobby over a March 2021 subcontract, resulting in arbitration.
The arbitrator ruled in Kobby’s favour in October 2022, and the award was adopted as a High Court decree in July 2024, granting Kobby Sh165.8 million plus interest and costs.
When Kingsway failed to pay, Kobby sought to garnish funds owed by the Treasury to Kingsway under the same tender. In February 2025, the court issued a garnishee order against the government for Sh212.8 million.
Despite being served the certificate order, payment was not made, prompting Kobby to seek judicial review orders against the Attorney General and the Treasury’s Principal Secretary.
In its ruling yesterday, the court affirmed that Kobby had met the legal threshold for garnishee orders, noting that the decree and garnishee orders remained valid and enforceable.
“There is no dispute that a certificate of order against the government, dated April 8, 2025, followed a decree arising from arbitration proceedings,” the court stated.
The court dismissed arguments by Kingsway and the Treasury alleging contract non-performance justified withholding payment, ruling that such matters had been conclusively settled in arbitration.
“This court lacks jurisdiction to revisit or review matters already determined in arbitration and adopted as a court decree,” the judgment read.
Permitting Kobby to recover its dues from funds the Treasury owes Kingsway under the same tender, the judge clarified that while government property cannot be seized, debts owed by the state to third parties are legally attachable.
“Although execution against government assets via attachment and sale is prohibited, debts owed by the government to third parties may be attached,” the judge stated, citing Section 23 of the Government Proceedings Act.
The court also issued a prohibition order, cautioning that releasing funds to Kingsway would violate final court orders. “Recovering an already adjudicated debt would necessitate further litigation,” the judge observed.
Additionally, the court ordered that the decretal sum, garnishee costs, and Sh80,000 in judicial review costs be paid to Kobby from funds owed to Kingsway before any remaining balance is released.
