BY SAM ALFAN.
National Oil Corporation of Kenya has been ordered to pay Total Kenya Sh38 million for breach of contract.
Justice Francis Tuiyott ordered Nock to pay the oil dealer for failing to deliver the commodity as agreed.
In his judgement, Justice Tuiyott directed Nock to pay USD 192,357.54 for breach of November contract, USD 38,197.8 for late delivery penalty, USD 2,566 for under delivery penalty and USD 94,973 for non-delivery penalty.
The judge ordered money shall be paid in US dollars or on conversion to Kenya shillings at the rates prevailing and set by Central Bank of Kenya on the date or dates of payment are made.
However, the court declined Total Kenya’s request to follow the conversion on special damages that interests shall be at court rates from the date of filing suit to full payment.
The court heard that the two company’s entered the deal in November 2010 for the supply of 7000MT of gasoil.
What was not agreed and falls for determination is whether or not the pricing in the contract was outside the Kenya Open System Tender (OTS) which was explained to be the tender under which the importation and sale of oil products in Kenya is operated.
However, the price was to be five days around the Bill of lading (dates) whereas all other lading charges were to be per the OTS cost buildup.
Aggrieved Total Kenya told the court that Nock unilaterally and arbitrarily abandoned the covenanted price mode and invoiced it at the price mean of USD 96,2562 bbl as opposed to the contractual price mean of 91.5420/bbl .
Total Kenya argued that as a result of the irregular and unilateral act, it overpaid by USD 192,357.54.
But Nock contends that the contract was structured in the same manner as the OTS terms and conditions in which the pricing clause covered the applicable Free on Bond (FOB) freight and premium components.
Nick explained to the court that at the time of tender, there was no certainty as to what as to what would be the FOB basis for cargoes arriving in November 2010 as the ministry of energy had not given clarification as the applicable basis that is whether to peg the pricing on the five days round the bill of loading date or no the whole month average.
Nock stated that in invoking clause 9(a) of the OTS, it choose and applied Deemed bill of lading date and denied overpayment
