Companies

KeNHA bid for arbitration in Sh1.3bn row with Israeli firm flops

kisumu

A road under construction. FILE PHOTO | NMG

Summary

  • The High Court has declined a request by the Kenya National Highway Authority (KeNHA) to refer to arbitration a case filed by an Israeli contractor seeking to be paid Sh1.3 billion following termination of a contract.
  • KeNHA wanted the proceedings of the case filed by SBI International Holdings AG (Kenya), which was undertaking dualling of Kisumu Boys Roundabout – Mamboleo Junction, suspended to allow the arbitration process.
  • In the case, the contractor is seeking court’s order to enforce decision of the Disputes Board (DB) issued in April 2019 awarding it Sh1.3 billion following termination of the agreement.

The High Court has declined a request by the Kenya National Highway Authority (KeNHA) to refer to arbitration a case filed by an Israeli contractor seeking to be paid Sh1.3 billion following termination of a contract.

KeNHA wanted the proceedings of the case filed by SBI International Holdings AG (Kenya), which was undertaking dualling of Kisumu Boys Roundabout – Mamboleo Junction, suspended to allow the arbitration process.

In the case, the contractor is seeking court’s order to enforce decision of the Disputes Board (DB) issued in April 2019 awarding it Sh1.3 billion following termination of the agreement.

The contractor abandoned works on the eight-kilometre dual carriage in December 2018 citing unpaid arrears and delayed completion.

The Board had directed KeNHA to pay the Sh1.3 billion within 14 days and that the contractor be extended time of 360 days from January 5, 2019 to complete the project that was being jointly financed by the World Bank and the national government at Sh2.6 billion.

Upon moving to court to enforce the Board’s decision, KeNHA filed an objection stating that the contractor had breached provisions of dispute resolution provided for in the contract.

KeNHA argued that since it had filed Notice of Dissatisfaction against the DB decision, the matter should have been referred to arbitration for resolution.

It argued that considering the contract had been terminated, the urgency of enforcement envisaged under the contract document does not apply.

But Justice David Majanja found that a decision of the Disputes Board was “binding on the parties”.

“The filing of Notice of Dissatisfaction does not in any way discharge the party from its obligation to promptly give effect to the decision,” said the judge.