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Are debt, arbitration clauses a shield against insolvency proceedings?
Genuine disputes on substantial grounds must be resolved through appropriate forums like arbitration or full trial. Form defects in statutory demands will not invalidate proceedings unless actual harm is proven.
Can a contractor pursue insolvency proceedings where the debt is disputed and an arbitration clause exists? This was the central issue before the Court of Appeal in Kwale International Sugar Company Limited versus Epco Builders Limited and two others [2025] KECA 227 (KLR), a case with implications for contractors, employers and legal practitioners navigating construction disputes.
In 2012, Kwale Sugar contracted Epco Builders (Epco) to build a factory under a Sh2.22 billion engineering, procurement and construction agreement.
