By Sam Alfan.

Kenya National Highways Authority (KeNHA) has been ordered to pay over Sh1.3 billion to Israeli firm SBI International Holdings AG.

Justice Peter Mulwa ordered the road agency to pay the construction firm the amount plus additional US $3,575,728.60, after entering judgment against KeNHA.

KeNHA had challenged the decision of disputes adjudication board (DAB) made in June 2021, and which directed it to pay the Israeli subsidiary firm, the stated amounts.

The authority had disputed the decision, challenging the correctness of the board’s calculations, alleging anomalies and misinterpretation.

While agreeing with SBI International Holdings, Justice Mulwa said there was no evidence before court to suggest that the rates agreed by the parties, were illegal or unconscionable.

“Accordingly, the contractual interest is enforceable,” said the judge.

Judge Mulwa said it is therefore frivolous and vexatious within the meaning of Order 2 Rule 15(1) and amounts to an abuse of the court process.

He added that a pleading which seeks to reopen matters conclusively determined under contract does not disclose a reasonable defence.

“While the threshold for striking out a pleading is high, the Court will do so where it is plain that the pleading discloses no reasonable defence or triable issue. But where the pleading is a sham or plainly untenable, it must be struck out to prevent abuse of process,” said Judge Mulwa.

While striking out the defense, the Judge noted that KeNHA defence herein does not disclose any triable issue; rather, it challenges the correctness of the DAB’s findings, a jurisdictional overreach for this Court.

“I am satisfied that the defence is an abuse of the court process as the DAB’s decision has not been set aside, revised or superseded by an arbitral award, and it remains enforceable as a contractual obligation,” ruled the judge.

“I have perused the record and indeed find no evidence of arbitration having been initiated within the stipulated time,” judge said.

The judge added that KeNHA issued a notice of dissatisfaction but has not demonstrated that it referred the dispute to arbitration and prosecuted it to conclusion. In effect, the DAB’s decision remains binding and enforceable.

He noted the defence filed by KeNHA disputes the correctness of the DAB’s calculations, alleging anomalies and misinterpretations. In substance, these are grounds for challenging the DAB decision before an arbitral tribunal, not before this Court.

The court decision is after SBI International Holdings moved to High Court Commercial Division seeking judgment be entered in the sum of USD 3,575,728.60 and Sh. 1,356,180,186.16 as per the decision of the dispute board on 4 June 2021 and KeNHA defence struck out.

The suit instituted in November 2021 seeking enforcement of the DAB’s decision made on 4th June 2021 pursuant to Clause 20.4 of the General Conditions of Contract.

SBl International Holdings argued that the contract makes the DAB decision binding upon the parties unless revised through amicable settlement or arbitration. It is asserted that the Defendant has not initiated arbitration to overturn the decision, and therefore, the DAB’s decision remains binding and enforceable.

The company further contended that the Statement of Defence is, in substance, an appeal against the DAB decision.

The company submitted that disputes on alleged anomalies, miscalculations or misinterpretations fall within the arbitral process, not before this Court.

“The Defence is therefore described as a collateral attack on the DAB’s decision, disclosing no reasonable triable issue,” company told the court.

It was the company position is that no arbitral proceedings have been commenced to revise the decision of the DAB.

KeNHA relied on a replying affidavit sworn on 16th September 2024 by Eng. Samuel O. Gee. He deposed that this Court, by its Ruling of 28th July 2023, dismissed KeNHA’s application to stay the proceedings and refer the dispute to arbitration.

It is argued that the National road Agency was thereafter compelled to file a Defence.
According to KeNHA, there is no limitation on what constitutes a defence, and the defence filed raises bona fide triable issues, particularly regarding anomalies and miscalculations in the sums awarded by the DAB.

KeNHA further urged that unless such issues are ventilated at trial, KeNHA will suffer substantial prejudice.