Court orders Sh1bn awarded to firms in SGR case put in joint account

Construction of the Sh327 billion the Mombasa-Nairobi railway on a disputed parcel of land in Mombasa will remain suspended until compensation awarded to two firms is deposited in a joint account, a court ordered on Thursday.

Environment and Land Court judge Ann Omollo ordered that Sh995,400,462 awarded to African Gas Oil Company Ltd and Miritni Free Port Ltd as compensation be deposited in a joint escrow interest-earning account.

Justice Omollo directed the account to be opened in the joint names of lawyers for the two companies and those of Kenya Railways Corporation and the National Land Commission within 21 days.

The construction of the standard gauge railway is one of the flagship projects of President Uhuru Kenyatta's administration .

The judge said the respondents would only be free to continue with the construction work once they comply with her orders.

“Should there be a default in order one (depositing money), there shall remain conservatory orders pending the hearing and determination of the petition,” said Lady Justice Omollo.

LETTERS NOT ANSWERED

Through lawyer Michael Oloo, African Gas and Oil Company and Miritini Free Port sought to have the construction halted pending the hearing and determination of their petition.

Mr Oloo said since the awards for compensation were issued, his clients have written several letters to the respondents without response.

In the case of African Gas and Oil Company, Mr Oloo argued that prior to the acquisition of the land by the government, the firm had planned to put up a container freight terminal on it and the State had no reason to refuse to compensate it.

Through lawyer Cecil Miller, Kenya Railways opposes the application, telling the court that it was losing approximately Sh38 million daily following the suspension of construction work.

Mr Miller added that the corporation and the government had entered into multiple contracts for the construction of the railway, saying stopping the exercise would lead to a breach of contract whose penalty would be borne by taxpayers.

CASH REMEDY

“The petitioners claim is compensation, all they want is money, there is no need for conservatory orders to be granted, they have a remedy in terms of money,” said Mr Miller.

China Road and Bridge Corporation Kenya Ltd (CRBC), which is building the railway, said the orders stopping the work have been issued on a property acquired by the government and which does not belong to the company.

The government wanted the conservatory orders issued in favour of the companies set aside.

Charles Mutinda, a senior principal litigation counsel at the Attoney-General’s office, argued that the government can take possession of land for public purposes even when payments have not been made.

Mr Mutinda told the court that the law allows charging of interest on the award until payment is completed.

In the petition, the companies are seeking, among other things, an injunction barring Kenya Railways and CRBC from carrying any construction works on the disputed land until it is compensated in accordance with the law.

The court directed that the petitions be fixed for a hearing on a priority basis.