KCB wants Appeals court to overturn ruling on bank surety

Kenya Commercial Bank (KCB) wants the Court of Appeal to set aside a ruling in which the High Court ordered that the dispute between it and a Tanzania agency over bank performance guarantee should be determined by the latter court.

The bank's lawyer Philip Nyachoti yesterday told Court of Appeal that before his client lodged the appeal on June 2,2015, Justice Mary Kasango on March 15, 2015, found that the dispute between KCB and Tanzania National Road Agency over bank guarantee of Sh700 million the bank issued as a surety for Kundan Singh Construction company had not been fully determined.

“All issues surrounding the contract which was awarded to Kundan Singh Construction to build a road in Tanzania at a cost of Sh2.1 billion was resolved by an arbitration in Stockholm, Sweden in 2009,” said Nyachoti.

The lawyer told the court that Justice Kasango gave the order after the company applied for it at Nairobi's Milimani court, complaining that despite the dispute having been resolved by arbitration in Stockholm, the issue of bank performance guarantee had not been resolved.

Nyachoti told Justice Daniel Musinga, Justice Agnes Murgor and Justice Gatembo Kairo sitting in Mombasa that since issues in Milimani court were resolved after all parties consented that it be taken for arbitration in Stockholm, all issues touching on bank performance guarantee was also resolved.

He argued that since the arbitration had resolved the dispute, Justice Kasango should have not revisted the matter.

But Tanzania Road Agency lawyer Joseph Munyithya insisted that the dispute over the bank performance guarantee had not been resolved, saying the arbitration resolved issues relating to the contract of construction of the road.

“Yes it is true the issue concerning the contract had been resolved but the issue of bank performance guarantee has not be resolved” said Munyithya.

The Award

Nyachoti disclosed that even the award by the arbitration had not been enforced because a Mombasa court ruled it was against public policy to enforce an award from another country.

The lawyer explained before the dispute which was at Milimani court was referred to Stockholm the parties consented for the arbitration which awarded to both Tanzania Road and the company.

He explained that since it was a consent between the parties Tanzania Road Agency should not come around and start asking for determination of what had been determined.

He asked the Court of Appeal to set aside the ruling of Justice Kasango and order Tanzanian Road Agency to pay cost of the appeal.

Willis Oketch


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