The High Court in Nairobi has directed the preservation of Sh68 million in a contractual dispute between Automated Entrance Systems Limited (applicant) and China Railway Construction Engineering Group Limited where Trademark Africa was brought in as an interested party.
In the ruling, Justice Freda Mugambi (pictured) ordered Trademark Africa to withhold payment of the money pending the hearing and determination of the arbitration.
“I am aware that the validity of the agreement is in dispute, with the respondent (China Railways) presenting a forensic document examiner’s report and passport records of its managing director as evidence in opposition. However, such contested factual matters can only be fully resolved through a comprehensive hearing before the arbitrator, where evidence will be thoroughly presented and examined. Moreover, it is evident that the subject of the arbitration is currently at risk,” the court has said in its December 20, 2024 decision.
The case is centred on a finder’s fee agreement tied to a tender for constructing a one-stop border post in Zambia.
Automated Entrance Systems told the court that it entered into an agreement in February 2024 to act as the China Railway’s agent in the tender process for a $5,255,424.29 (Sh689 million) contract awarded by Trademark Africa.
Automated Entrance Systems argues that it fulfilled its role by coordinating the tender process and assisting with documentation, which led to the construction company securing the tender in June 2024.
According to the applicant, the fnder’s fee agreement entitled it to a 10 per cent commission of the contract value, amounting to Sh68 million. However, the company alleges that the construction company has failed to honour the payment, prompting it to seek arbitration.
Concerned that China Railways, a foreign entity with no known assets in Kenya, might dissipate the funds, the Automated Entrance Systems sought temporary orders from the court to bar Trademark Africa from paying the construction company 10 per cent of the contract value.
China Railways denied the existence of a valid finder’s fee agreement, labelling it fraudulent. In an affidavit, the company’s general manager argued that the applicant had no legitimate claim and that the matter should proceed solely through arbitration. It also contended that the tender, performed outside Kenya, was unrelated to the court’s jurisdiction.
Trademark Africa, on its part, opposed the application stating that it was not a party to the agreement and could not be compelled to withhold payments.
Justice Mugambi ruled that the High Court had jurisdiction, as the finder’s fee agreement was executed in Kenya and related to activities performed locally. The court found that the applicant had demonstrated a prima facie case (having enough evidence to support a case) and that the risk of irreparable harm justified the issuing of temporary orders.
The judge directed Trademark Africa to preserve the claimed Sh68 million pending the outcome of arbitration.
