Court of Appeal stops Sh250m case against Kenya Pipeline

The Court of Appeal has temporarily stopped a Sh250 million suit against Kenya Pipeline Company (KPC) emanating from a cancelled Information Technology consultancy contract.

The legal claim against the State Corporation had been instituted by Cybercom Ltd. The company, through its subsidiary, Datalogix Ltd, was seeking to stop the project or in the alternative it gets paid Sh250.31 million for breach of contract.

The dispute between KPC and Cybercom started in 2004 when the latter gave the IT firm a contract to work on its networks throughout Kenya and also survey, design, install and commission its Local Area Networks.

Contract termination

Cybercom then awarded the tender to its subsidiary, leading to differences that saw the contract terminated. KPC in its defense put a counter-claim that the two companies had already illegally obtained more than Sh100 million.

The IT firm had opted to have the case placed before an arbitrator. This is because it argued the contract had been signed but the prayer was dismissed by the court on grounds that it would create a multiple dispute resolution system, one before the High Court and the other before the arbitrator.

Cybercom then went to the High Court again, seeking to amend its statement of defense which would bear Sh80 million for breach of contract and expenses incurred.

However, the application was rejected by Justice Alfred Mabeya who noted that the counter-claim had already been passed by events imposed by the contract agreement.

Arguable case

The case then moved to the Court of Appeal which ruled that the company had an arguable case, adding that the same could not continue until the appeal is heard and determined.

 “We think the appeal, if successful, will be rendered nugatory should the proceedings in the High Court go on,” ruled Court of Appeal bench composed of Justices Roselyn Nambuye, Erastus Githinji and William Ouko.

The three judges noted that Cybercom will be disadvantaged if the case the case before the High Court continued without the counter claim being heard and determined by a higher court.

“From the three grounds contained in the draft memorandum of appeal and the submissions, the main question on appeal will be whether the cause of action in the counter-claim is statute-barred,” they ruled.

“That question, in our view, is not frivolous. High Court will make a decision without the counter-claim and any attempt to file a fresh suit will be met with the plea of res judicatas (claim preclusion or matter already judged).”