By Standard Reporter
The High Court has stopped a Tanzanian government agency from attaching or selling property worth more than Sh1 billion belonging to a Kenyan construction firm until the parties in the dispute subject the matter to arbitration.
"I hereby direct the parties to ensure that the arbitration process is finalised within the next 90 days from today," said Justice Muga Apondi at the Milimani Commercial courts.
The Tanzania National Roads Board (Tanroads) has also been stopped from demanding payment for the same from the Kenya Commercial Bank, which had provided bank guarantees for the firm — Kundan Singh Construction Limited, which was undertaking road development project in Southern Tanzania.
The dispute is centred on a contract won by Kundan Singh Construction to build a 36 kilometres bitumen road in Mabea, Tanzania, worth more than Sh500 million. The row arose under the contract pertaining to wrongful non-certification by the contract engineer, and delay in payments of certified sums by the firm, which lead to its suspension.
Hearing date
In the event that the arbitration process is not concluded within the three months specified by the judge, the case would come up for mention on January 18, next year to fix a hearing date.
"This court has noted that there are weighty legal issues which have been raised by both parties. In the event that these issues cannot be resolved by the arbitrator, then it will be incumbent on the court to give each party an opportunity to ventilate their case before an impartial and fair judgement is delivered," said the judge in his ruling.
The firm's lawyer, O P Nagpal, argued that the Tanzanian Roads Agency had ignored an injunction issues by a Tanzanian court, which had also ordered that the dispute be taken for arbitration. He also said Tanroads wanted to rely on parts of the contract that it thinks works to its advantage.
KCB, which is the second defendant in the case, says that it is ready to honour its contractual obligations.
Suffer injury
The bank's lawyer, Philip Nyachoti, said the bank would suffer injury to its regional banking obligations were it to breach its undertaking under the Bank Performance Guarantees.
On the other hand, Tanroads argued that the Kenyan High Court has no jurisdiction to rule on the case and that Tanzanian courts should handle the dispute.
However, Justice Apondi said that the construction firm had raised an arguable case and that the High Court has jurisdiction over the matter even though it involves a Tanzanian government agency.
Source: The Standard | Online Edition
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