Kenya: Court Orders Nairobi Water Company to Pay IT Firm Sh58 Million

12 September 2020

Nairobi City Water and Sewerage Company has been ordered to pay an information and communications technology firm more than Sh58 million for breach of contract.

The High Court upheld a decision by an arbitrator compelling the company to settle the lump sum and accrued interest.

The water firm had contested the amount, arguing that Capture Solutions Limited, the supplier of water meter mapping system, only delivered two devices instead of the agreed 100.

Court documents show that Capture Solutions won two contracts for the supply, installation, implementation and commissioning of GIS-enabled system and meter census at a cost of Sh40 million.

The second contract was for the design, supply, delivery, development, installation and commissioning of the workforce management system at a price of Sh119 million inclusive of Value Added Tax.

The supplier stated that the total value of both contracts was Sh159 million, but it only claimed Sh58 million for the goods delivered.

The arbitrator, Prof Ike Ehiribe, found that the water company received the goods and services and directed that it pay the supplier Sh58 million inclusive of VAT at 16 per cent, being the cost of remedying the breach within 30 days.

The tribunal further ordered the water firm to pay accrued interest at 12 per cent per annum on the award from November 2018 and arbitrator's fees among other payments.

Arguments

But the company challenged the award stating that the supplier admitted at the hearing that it imported 20 devices but only delivered one, and by awarding it Sh58 million, the tribunal went outside the scope of the award.

The court heard that the enforcement of the award would amount to unjust enrichment, contrary to public policy, as the tribunal considered matters beyond the scope of the reference before it.

Justice David Majanja, however, dismissed the case, saying the water company failed to demonstrate that the tribunal exceeded the scope of its reference.

"This finding is sufficient to dispose of Nairobi Water's case, as the arbitrator found as a fact that Capture Solutions delivered goods which were not paid for," said the judge.

He noted that the case was one for the supply of goods, hardware and software, sold and delivered under the contracts.

Whereas Capture solutions said it supplied equipment and software and was not paid within 60 days of invoicing, Nairobi City Water justified the failure stating that the supplier had only provided a proforma invoice and failed to deliver all the items.

But Justice Majanja dismissed the case arguing that the ICT provider produced documentary proof of the items purchased in further execution of the contract and adduced documents to show that delivery notes were issued.

"I am satisfied that Capture Solutions has met the pre-condition for enforcement of the award as it has provided the certified copies of the contracts which contain the arbitration clause and a certified copy of the arbitral award," ruled the judge.

He observed that since the ICT firm had established a case for recognition and enforcement of the award, the burden was on Nairobi City Water to demonstrate that the court should not validate the award.

"For the reasons I have set out above, I find and hold that Nairobi City Water has not discharged the burden or indeed proved that the final award is contrary to public policy or that the tribunal dealt with matters beyond the scope of reference," the court ruled.

Pipeline case

Meanwhile, National Water Conservation and Pipeline Corporation has been ordered to pay a law firm more than Sh40 million for services rendered.

Nyandoro and Company Advocates billed the corporation Sh41.6 million but it disputed the figure and moved to the High Court.

The law firm bill of costs was taxed and by a ruling delivered on November 25, 2019 by the High Court Deputy Registrar.

Justice Majanja dismissed the corporation's case saying the court could not re-open the proceedings since the judgement had not been set aside, appealed or reviewed.

The corporation's application as it stands, said the judge, "is a collateral attack on a valid judgement of the court."

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