BY SAM ALFAN.
The Nairobi city county government now stands liable to pay the KCB Sh4.3 billion following a fierce court tussle which has been determined against the county.
High Court has allowed KCB to demand Sh4.3 billion from Nairobi County government, a move that exposes city hall’s assets to seizure if it does not pay the billions.
“Leave is hereby granted to the applicant to enforce and execute the Third Interim Award dated November 12,2019 and published on December 17,2019 and the Final Award published on May 14,2020”, ruled Judge Mwita.
High Court also recognized and adopted the Final Award dated and published on May 14,2020 as judgement of the court.
High Court Judge Chacha Mwita faulted the county for failing to settle the loan which it had received from the bank.
In this regard, the court argued that the application filed by the county seeking to stop the payment lacked merit and should therefore be dismissed with costs.
The county had sought to challenge the award granted by an arbitrator in November 2019.
The bank through lawyer Emmanuel Wetangula moved to court in 2020 seeking recognition of the amount, which was awarded by Phillip Bliss Aliker, an arbitrator who was chosen by both parties.
The debt was as a result of a longstanding loan dispute the lender took over from Equity Bank.
KCB inherited the loan from Equity Bank in September 2014 and offered City Hall a grace period of six months before it could start servicing the debt over eight years.
The defunct Nairobi City Council was loaned Sh5 billion by Equity in 2011 to pay statutory deductions, among other financial obligations.
But the county government opposed the award arguing that the arbitrator used a procedure, which had not been agreed by the parties.
“In the circumstance, therefore, having considered the application, the response and submissions as well as the law and the decisions relied on by parties, and upon giving due consideration to all those, the conclusion I come to is that the Application dated 2nd October 2020 has merit,” the judge said.
The Judge said there is no dispute that parties agreed to go for arbitration, settled on the sole arbitrator and proceeded before him.
The Judge dismissed the county’s application to set aside the award saying there is no good or plausible explanation why it took City hall to challenge the award yet it was aware of the publication of the award.
The amount published in November 2019 and confirmed in May 2020 includes Sh4.29 of the award and costs of Sh6 million.
KCB bank lawyer Wetangula has urged the court to dismiss the county government application.
In his submission Lawyer Wetangula stated that there was no obligation or demonstration that The Third Interim Award or Final Award was inconsistent with any provisions of the Constitution.
“We therefore submit the bank has satisfied the requirements under the Act for The Third Interim and Final Award to be recognized and enforced as sought. Further, the county government has not satisfied the requirements under the Act for the refusal of the said recognition and enforcement by the court”, KCB lawyer Wetangula submitted.
He further added that County government was barred under section 35(3) of the Act from filing the Notice of Motion application dated March 10, 2021 as it did.
“No request for the correction or interpretation of The Third Interim Award or Final Award was made before sole Arbitrator and no request for an additional Award was made before sole Arbitrator all pursuant to section of the Act”, added lawyer Wetangula.
Lawyer Wetangula termed application by the county government as incompetent and urged the court to dismiss it.
