The Court of Appeal has issued an interim order stopping the execution of a KSh1 billion payout to German contractor Strabag International GmbH while an appeal is considered.
The order follows a High Court judgment in 2024 that awarded the claim after dismissing the National Irrigation Authority’s (NIA) bid to overturn five decisions of the contract dispute resolution board.
NIA challenged four of the five board decisions, arguing that its defence raised issues that required a full hearing, which the appellate judges said made the appeal arguable.
The Thiba Dam, completed in April 2022 at a contract price of KSh8.2 billion, supplies water to the Mwea rice irrigation scheme in Kirinyaga County; the State agency reports the dam is in use and irrigated land has grown to 30,600 acres, serving 14,850 farmers.
Strabag filed a court suit in May 2023 seeking payment under the five board decisions, stating they were binding and payable promptly unless revised through settlement or arbitration; NIA issued notices of dissatisfaction in 2021, contending that amicable settlement was required before arbitration.
The High Court rejected NIA’s defence in a ruling dated April 19, 2024, finding the authority had failed to invoke the arbitration agreement when entering appearance and had raised no other triable defence, quoting that “the defence did not therefore raise any triable or reasonable defence to merit a full-blown trial.”
NIA later sought to stop enforcement of the judgment, alleging the High Court overlooked its notices, while Strabag opposed, citing the contract’s “pay now, argue later” mechanism and asserting it held assets in Kenya, including land and buildings in Nairobi, that could meet repayment if the appeal succeeds.
The Court of Appeal said there was a real risk that execution of the decree could make recovery of the full amount difficult if the appeal succeeds, and therefore granted the interim order to preserve the efficacy of the appellate process.
Judges examined Strabag’s valuation of Kenyan assets at KSh425.3 million and concluded the valuation did not show the assets were unencumbered, would remain in Kenya, or could fetch the stated value; claims about Nairobi land and buildings lacked property details, title documents and valuations.
The court also rejected Strabag’s proposal that the Authority deposit the decree amount in a joint interest-bearing bank account, stating it would tie up public funds while the appeal is pursued.
