Oilfields Engineering & Supplies Limited has applied to the court to halt a liquidation petition filed by Lebanese construction group Zakhem International, saying the move is intended to block its claim of about KSh2.26 billion arising from unpaid dues on the Mombasa-Nairobi oil pipeline replacement.
Zakhem is seeking to liquidate Oilfields on the basis of an alleged debt of KSh75.86 million, despite an arbitral award in Oilfields’ favour of US$17.41 million (approximately KSh2.26 billion), which excludes interest, taxes and arbitration fees.
The application challenging the liquidation petition is scheduled for hearing on November 26.
The dispute stems from a subcontract dated November 17, 2015 under which Oilfields was engaged by Zakhem to carry out civil works for the 450-kilometre pipeline project that Zakhem was executing for Kenya Pipeline Company.
The parties fell out and the matter was referred to arbitration, resulting in a final award published on June 30, 2021 ordering Zakhem to pay Oilfields US$17,410,391.47.
Oilfields subsequently moved in the High Court to have the award adopted, while Zakhem filed an application to set the award aside; Oilfields says the award remains valid unless the court overturns it.
A High Court ruling on August 31, 2023 restrained Kenya Pipeline Company from releasing US$31.3 million held under the pipeline contract pending determination of the award-related applications, with the preservation orders intended to secure funds for Oilfields.
Director John Huba Waka of Oilfields says the company is solvent, its assets including the award entitlement exceed its liabilities, and that Zakhem has not shown inability to pay under Section 384 of the Insolvency Act 2015.
Oilfields also claims it was never served with the statutory demand, liquidation petition or hearing notice at its registered office or through its lawyers, disputing Zakhem’s assertion that a statutory demand was delivered to its postal address on June 11, 2025.
Zakhem maintains that Oilfields owes KSh75,866,678.67 arising from a certificate of costs issued after taxation proceedings, with the High Court order dated February 8, 2023 and a confirming certificate dated April 29, 2025.
Zakhem says it demanded payment of the amount on June 21, 2025, and that a statutory demand dated June 4, 2025 required payment; more than 21 days elapsed without settlement, making Oilfields eligible for liquidation under the Insolvency Act.
Oilfields warns that a liquidation order would irreversibly prejudice its interests and undermine its ability to recover the arbitral award, and it seeks the petition to be stayed pending the hearing of its challenge and dismissed on the ground of a substantial cross-claim that exceeds the alleged debt.
Alternatively, Oilfields asks the court to order Zakhem, a company incorporated in Cyprus, to deposit US$31.3 million as security for costs within 14 days, arguing that the amount is covered by the preservation orders.
Ibrahim Zakhem, director of Zakhem International, acknowledges the long-running litigation of more than five years and the existence of the arbitral award, but says the dispute over its adoption and possible setting aside remains before the court.
