Judge halts Sh1bn award to contractor in pay row

A court has stopped the payment of over Sh1 billion to a local company in an arbitration dispute with the government reached about three years ago.

Justice Francis Gikonyo also stopped Spencon Ltd from pursuing enforcement of the award through a court based in New York, ruling that they must file their application before a Kenyan court since the arbitration was done locally.

“The arbitration was as a result of a dispute between the company and the Kenyan government and to try to enforce the arbitrator’s award outside the country is an affront to the Constitution and Kenyan courts,” ruled Justice Gikonyo.

The suit was filed by the Attorney General and the Ministry of Devolution seeking the court’s intervention to revoke Sh1.2 billion awarded to Spencon by an arbitrator over a contract dispute.

The dispute started in 1997 when the Mombasa Municipal Council under the supervision of the Ministry of Local Government entered into a contract with Spencon Ltd for the repair and maintenance of sewerage plants.

The parties disagreed over payment after which the matter was referred to a Mr T. Thuo for arbitration.

In 2010, the arbitrator made two awards in favour of the company together with interest accumulated from the contract.

The firm did not file enforcement proceedings but in December 2013, it filed a suit at a New York court to enforce the payment.

The applicant was told to serve the firm and both parties to appear for a hearing on January 28.