The High Court has ordered the Kenya Airports Authority (KAA) to pay part of Sh812 million to a contractor hired a decade ago to demolish buildings at the Jomo Kenyatta International Airport (JKIA).
Judge Alfred Mabia ordered KAA to pay Machiri Ltd Sh300 million and another $1,022,022 (Sh133.2 million) held in two bank accounts.
The court ordered the contractor to follow up on the balance by other means.
Justice Mapia made the decision in a ruling in which KAA dissented from the case, arguing that the contractor could only demand money under the Government Procedure Act, which requires litigants to notify the Attorney General before bringing claims against the government or its agencies.
The judge said there was no indication that KAA was exercising any sovereign power by any means to qualify as a government. He added that state companies are not automatically subject to the Governmental Procedures Law.
“Secondly, it did not appear and there is nothing on record that it (KAA) is a department of the Government of Kenya,” the judge said, adding that KAA is a body corporate with perpetual succession and has the power to sue and be sued in its own name.
The contractor and Kuwait Airways entered into a contract to demolish airport halls, baggage areas and multi-storey office buildings at Jakarta International Airport in June 2014. The value of the contract was Sh388.2 million.
Machiri Limited completed the work and left the site on 15 July 2016, after issuing a certificate of completion.
A dispute arose when KAA failed to make the necessary payments.
The matter was referred to arbitration, and the parties agreed that Mr Nyagah Boore Kithinji would arbitrate the case. The arbitrator published his award on April 6, 2023, directing KAA to pay the amount plus interest.
The contract stipulated that the contract stipulates interest on late payments, and the court calculated the late payments according to the documents presented to it.
But KAC erred in deciding that the project contract was governed only by the terms of the 1995 FIDIC design-build and first-issue turnkey contract.
KAA claimed that the ruling was clearly excessive, punitive and contrary to the law and principles of public finance and public policy.
It was also stated that the arbitrator erred in calculating the interest monthly and not according to the prevailing average commercial lending rates as set by the Central Bank of Kenya.
In his decision, the arbitrator ruled a compound interest of 3 percent above the discount rate set by the Central Bank of Kuwait.
But Judge Mabia dismissed the case in January.
The contractor returned to court saying the amount now stands at Sh812 million and that KAA has refused to pay.
The company sought to attach KAA's bank accounts at Citibank.
