M-Pesa Academy disputes Sh143 million demand
Safaricom’s M-Pesa Foundation Academy is fighting to stop arbitration proceedings filed by a contractor it fired midway through construction of its sophisticated Sh3 billion school in Thika.
M-Pesa Academy has asked the High Court to stop the arbitrator, Mr Tom Oketch, from presiding over a dispute between it and Lalji Meghji Patel & Company, which is seeking Sh143 million for works it did on the school between January 2015 and June 2016.
After falling out in June 2016, the school terminated Lalji’s contract. M-Pesa Academy and Lalji did a joint inspection of the works that had been done but could not agree on how much was owed to the contractor.
The school took issue with some of Lalji’s works and ordered the contractor to stop and leave the site, then hired another firm to complete construction and rectify defects.
The school is registered as a company that is wholly owned by the M-Pesa Foundation. It sits on 50 acres of land in Albizzia Downs along the Thika road.
M-Pesa Academy opened its doors in February 2016, boasting of ultra-modern facilities and a technology driven syllabus. The school has a maximum capacity of 1,000 students.
The contract between the two provided for arbitration to be commenced within 90 days of a dispute notification.
Following the deadlock, Lalji notified M-Pesa Academy of a dispute to be referred to arbitration through letters in December 2016 then again in January and August last year. The two parties could, however, not agree on who to preside over the proceedings.
Lalji then sought the Architectural Association of Kenya’s assistance with the appointment of an arbitrator, which saw Mr Oketch appointed. In June, Mr Oketch dismissed M-Pesa Academy’s objection to the arbitration proceedings.
M-Pesa Academy argued that Lalji waived its right to pursue arbitration after agreeing to settlement talks, and that Mr Oketch’s appointment was irregular as the school was not given a chance to voice its opinion on the decision.
The school claims that Lalji played dirty by not mentioning that it intended to use arbitration during the seven months that negotiations between the parties took place.
“By reason of the matters aforesaid and/or in the alternative, Lalji was stopped from asserting any alleged right to proceed to arbitration and, in any event, the matters referred to the honourable tribunal for determination were neither referable to it, nor did they fall within the scope of the arbitral provisions of the agreement entered into between the parties," the school argued.
It added: “The tribunal already conducted a preliminary meeting held on June 18, 2018 and set guidelines and timelines within which the reference will be conducted.
"Unless this application is heard immediately and the orders sought granted, the tribunal will hear and determine Lalji’s claim and proceed to render a final award and M-Pesa Academy will have been subjected to nugatory arbitration proceedings if its objection to the tribunal’s jurisdiction is eventually upheld."
Lalji is yet to file a response to M-Pesa Academy’s suit.
Mr Oketch, while dismissing the school’s objection, ruled that M-Pesa Academy had been given an opportunity to participate in appointment of an arbitrator but it failed to do so.
He added that Lalji never made a promise to quit the arbitration route, hence it cannot be faulted for now doing something within its rights.
Mr Oketch also ordered M-Pesa Academy to pay Lalji’s legal bills incurred in defending the objection to arbitration.