Kenya wins Sh2.6b breach of contract case filed in UK

The Government has scored a victory after a London-based International Arbitration Tribunal dismissed a Sh2.6 billion claim by a British energy firm.

UK's Cluff Geothermal Company and its local partner had moved to London Court or International Arbitration (LCIA), accusing Kenya’s Geothermal Development Company (GDC) of breach of contract.

In 2013, GDC entered into a contract for provision of drilling services for 20 geothermal wells at its Menengai geothermal field for US$41,219,208 (about Sh4.2 billion).

However Cluff Geothermal and its local partner, Great Rift Drilling, stopped work on March 2015 and declared a dispute, accusing GDC of outstanding invoices.

By the time the case was referred to the tribunal on August 13, 2017, GDC had paid US$11,857,038.50 (about Sh1.9 billion).

On June 3, the LCIA ruled that GDC will pay the claimants the sum of US$2,259,680 (about Sh226 million) in respect of invoices issued for work done and a further US$593,497.33 (about Sh60 million) as interest.

This makes the total award Sh286 million, saving the tax payer more than Sh2.3 billion.

However, the amount due is likely to go up should Kenya delay in making the payments after the tribunal awarded a daily interest rate of about Sh46,000.

Kenya was represented by AG Paul Kihara, Solicitor General Ken Ogeto and a British lawyer, Michael Sullivan QC.

Geoffrey Mosoku

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