KPC wins Sh4.7bn case involving Triton
What you need to know:
- Constitution can’t protect violation of the law.
- No court ought to enforce an illegal contract, rule Appellate judges.
Kenya Pipeline Company has won a multi-billion shilling dispute with a British oil marketer arising from the controversial Triton Oil scandal.
This was after the Court of Appeal overturned a High Court ruling that had ordered KPC to pay Glencore Energy (UK) Limited $40,330,379 (about Sh3.6 billion) for breach of contract for releasing 31,752 tonnes of gas oil.
Appellate judges Patrick Kiage, Stephen Gatembu and Kathurima M’Inoti ruled that it was wrong for the High Court to award the compensation when the contract between KPC, Glencore Energy and Triton Oil Company was illegal.
“No court ought to enforce an illegal contract where the illegality has been brought to its notice and the person seeking the court’s help is himself implicated in the illegality. The Constitution cannot protect rights acquired through violation of the law,” the judges ruled.
According to the judges, Glencore Energy was not justified in filing the claim against KPC when it had a secret scheme and used Triton as a cover to enter the Kenyan market without a licence.
The dispute started in 2009 when Glencore Energy sued KPC for breach of contract for transportation and storage of gas oil, which saw the British company incur losses of 31,752 tonnes of oil.
High Court Judge Eric Ogola had ruled that by releasing the oil to Triton without authorisation from Glencore Energy, KPC breached the terms of contract and ordered the state corporation to pay Sh3.6 billion plus interest, which brought the total amount to Sh4.7 billion.
KPC appealed against the ruling arguing that the judge made a mistake by not considering the facts of the dispute.
ILLEGALITY
The Appellate judges upheld KPC’s arguments, saying that the illegality and secret deals between Glencore Energy and Triton defeated all claims it laid against KPC.
“It was cynical for the company, upon burning its fingers in a scheme it consummated with Triton to turn around and sue KPC when the state corporation was not a party to the finer details of their dealings,” ruled the judges.
