The Director General Engineer Kung’u Ndung’u led Kenya National Highways Authority (KeNHA) has suffered a major blow after the High Court dismissed application by the agency seeking to bar Sh1.8billion pay enforcement in favour of an aggrieved contractor, SBI International Holdings AG.
SBI moved to court seeking to enforce a Dispute Adjudication Board’s (DAB) decision made on June 4, 2021, but KeNHA filed an application arguing that the matter should be referred to arbitration as per the term of the contract.
KeNHA unsuccessfully tried to block enforcement of the award granted to SBI International Holdings AG two years ago by DAB
Through a ruling delivered on July 28, 2023, High Court judge justice Mwita said an interpretation of clauses in the agreement validated DAB decision is binding and must be enforced.
“This view agrees with the decisions, both local and from other jurisdictions, that the decision of the DAB, though not final, confers a positive obligation to the paying party to promptly give effect to the DAB decision, thus making the decision immediately enforceable for the benefit of the successful part.” Justice Mwita ruled.
The contractor told the court that the dispute arose from a contract for the rehabilitation of Kericho–Nyamasaria (A1/B1) Road on February 8, 2010.
DAB ruled in favour of SBI International on June 4, 2021, awarding $4,887,199 (Sh698.3 million) and a further Sh1.07 billion but the State agency refused to pay the amounts.
KeNHA objected to enforcement of the award claiming that the court lacks jurisdiction to determine the matter.
The authority informed the court that having issued a notice of dissatisfaction and intention to start arbitration following the DAB decision, the case should be suspended and the matter referred to arbitration.
KeNHA said the contractor bypassed the arbitration process which both parties had the right to invoke and filed the case. It was its argument that the suit before the court is premature.
The contractor on its part said the fact that a party has issued a notice of dissatisfaction and intention to commence arbitration, does not relieve one of the obligation to pay since he has an opportunity to contest the DAB decision through arbitration.