Geothermal drilling firm moves to Court of Appeal over Sh280 million dispute

A geothermal drilling firm has moved to the Court of Appeal over a Sh280 million dispute.

In its petition, Great Rift Drilling Limited (GRD) argues that Commercial Court judge Chacha Mwita failed to hear their side of the story in a dispute with Cluff Geothermal Limited.

GRD claims that the justice Mwita declined to consider its submissions despite the same being filed in the judiciary's website.

GRD wants the Court of Appeal to block Cluff from relocating a drilling rig from the country, arguing that the machine is the only known asset that belong to the UK-based firm in Kenya.

"This being the respondent's (Cluff) only asset within the jurisdiction of the court, the appeal will be rendered a chasing after the wind if the respondents proceed with their intended course of action," GRD's lawyer Timothy Bryant argues.

The case between GDR and Cluff revolves around the government owned Geothermal Development Corporation (GDC).

Justice Chacha Mwita ruled that the fight between GDR and Cluff Geothermal Limited should be resolved in London as they had agreed.

Cluff is registered in the United Kingdom and owned by George Percy, while David Coulson and Carl Badenhorst incorporated GRD for drilling services in Kenya.

On February 15, 2013, Cluff entered a deal with GDC to provide top hole-drilling services for 20 geothermal wells in MenengaiCrater area, Nakuru County.

Three days later, Cluff contracted Great Rift Drilling (Mauritius) Limited (GDR-M) to provide equipment to facilitate drilling services.

It follows that GDR-M then assigned its Kenya's branch Great Rift Drilling (Kenya) Limited (GRD-K) to manage human resource, vehicles, procurement, sub-contracts, logistics and administration.

On the contract at the heart of the case, Cluff informed the state corporation that GDR-K would be the one to provide the services.

GDC and GRD-K then agreed that it would pay all the money from the contract to Co-operative bank as the latter had obtained an overdraft facility from the lender.

The court heard that drilling commenced in August 2013 but Geothermal Development breached the contract.

"The plaintiff (GRD) ceased drilling in 2015," GRD case filed by lawyer Timothy Bryant read in part.

According to the papers filed before Justice Mwita, the government corporation was already in arrears.

GRD sued GDC before the London Court of International Arbitration (LCIA) but it was not represented by a lawyer during the hearing.

It claimed that Cluff had committed to offer representation before the London based tribunal as it was impossible to hire lawyers, as the contract was the only one it was working on in the country.

According to GRD, it performed its part of the bargain but it was left with nothing as GDC failed to pay. It is then, it sought for Cluff's help to pursue GRD.

After hearing the case, the tribunal awarded GRD USD 2,259,680 (Sh280,979, 207) for three invoices it presented before it and USD 593,497.44 (Sh73.8 million) interest.

However, according to court papers, GDC remitted the money to Cluff instead of GDR. This is where the battle between GRD and Cluff started.

GRD in its case claimed that that Cluff allegedly declined to forward the money it received. The form lamented that it was left staring at Sh186 million debt to three companies, which had offered their services in the contract and Kenya Revenue Authority KRA).

Central to the case also is who between GRD and Cluff should pay KRA tax following the arbitration award. GRD insisted that Cluff should shoulder the tax burden while Cluff asserted that the responsibility to pay KRA was on GRD.

GRD asked the court to bar Cluff from removing or shifting its drilling rig from Kenya. It claimed that the rig was the only asset owned by Cluff in the country.

Cluff on the other hand argued that it owes GRD nothing.

In its reply, it urged Justice Mwita to strike out the case. According to Cluff, the Kenyan court had no jurisdiction to hear the case as GRD and itself had agreed that any case between them would be settled by the courts of England and Wales.

Cluff admitted that the arbitration claim between Geothermal corporation and GRD partially succeeded. It however asserted that the money received was used in accordance with its agreement with GRD.

It argued that only the England courts would settle any dispute arising from the agreement. Cluff accused GRD of seeking justice from a different forum from what they had agreed.

In the appeal,GRD alleges that the judge failed to record that he had directed that their lawyers reach a consent and appear before him.

The firm argues that they had an agreement which the court did not did not consider.

Bryant argues: "The handwritten proceedings do not accurately record the request of Justice Mwita to both Counsels to reach a consent and return to Court at a specified time on the same date, where despite the consent achieved by counsel, the Learned Justice Mwita proceeded to issue Court Orders with no regard to the counsel agreed, which parties were instructed to reach."

Meanwhile, Court of Appeal has certified the case as urgent. It ordered GRD to serve Cluff with the application. Cluff is to respond within three days.