Court to hear Sh26bn Railway, contractor case

A court has ordered the release of property of Kenya Railways that had been attached by an international investor over a Sh26 billion dispute.

The Court of Appeal lifted an order vesting Kenya Railways' property into the authority of Edermann Property Ltd.

It said that an appeal filed by Kenya Railways was arguable and should be heard up to conclusion.

Court of Appeal judges Alnashir Visram, Martha Koome and Hannah Okwengu lifted an order issued by a Commercial Division judge, Mr Justice Alfred Mabeya, on June 8, in favour of Edermann Property.

The appellate judges said that Kenya Railways would be compelled to breach its contractual and statutory obligations arising from its inability to deal with several of its properties that were injuncted by Justice Mabeya.

Justice Mabeya had allowed the properties of the parastatal to be under the control of the Chinese company.

As a result of the order, lawyers Cecil Miller and Peter Wena, acting for Railways, urged the appellate judges to suspend Justice Mabeya's order, since it had paralysed its operations.

Edermann filed the case in the High Court seeking damages after the eruption of a dispute over a contract to build the multi-billion-shilling Golf City at the Nairobi Railways Grounds.

The row involved the company, Kenya Railways and the Kenya Railways Staff Retirement Benefits Scheme. Justice Mabeya subsequently issued orders stopping Kenya Railways from disposing of some of its assets.

Kenya Railways' lawyers told the appellate judges that Mr Justice Mabeya "had made an error when he granted the orders because section 88 of the Kenya Railways Act prohibits confiscation of the corporation's assets".

The lawyers further told the court that the Act requires any dispute arising from any transaction to be referred for arbitration instead of filing a court case.

Edermann had entered into a contract to put up the Golf City for Kenya Railways at a cost of Sh40 billion. It accused Kenya Railways of breaching terms of the contract.

Posted by the DAILY NATION - Tuesday, October 2  2012