The High Court dismissed National Water Harvesting and Storage Authority’s attempt to set aside the Turkana Peace Dam construction award to contractor J & K Investment Kenya.
The National Water Harvesting and Storage Authority has lost its bid to overturn a Sh517.4 million arbitral award related a Turkana dam project, locking in a payout that is more than double the project’s original Sh231 million contract price.
The High Court dismissed the authority’s attempt to set aside the award in favour of contractor J & K Investment Kenya, ruling there was no legal basis to interfere with the arbitrator’s decision.
The dispute stemmed from a 2020 contract for the construction of the Turkana Peace Dam at Naku’etum site.
The project aimed to foster peace between two warring border communities that had long clashed over grazing pastures and water for livestock.
After disagreements arose between the contractor and the State authority, the matter proceeded to arbitration, where a sole arbitrator awarded the contractor Sh397.4 million on August 25, 2022.
Following adjustments for interest, the final sum rose to Sh517.4 million.
In seeking to overturn the arbitrator’s decision, the authority argued that the award "significantly exceeds the original contract sum" and would result in unjust enrichment "at the expense of taxpayers."
It also contested the arbitrator’s jurisdiction, alleging the contractor failed to exhaust dispute resolution mechanisms, including referral to a Dispute Adjudication Board (DAB), before initiating arbitration.
However, the court upheld the arbitrator’s finding that the adjudication had become inoperable after both parties failed to appoint a board within contractual timelines.
"The failure of the DAB process thereby opened the way to arbitration, as the adjudication process was not mandatory," the arbitrator ruled, a position the court affirmed.
On public policy grounds, the court stressed that mere dissatisfaction with an arbitration outcome does not justify overturning it.
"Whether the arbitrator got it right or wrong is not grounds for intervention, much less on the basis of public policy," the court observed, adding that errors of fact or law do not warrant setting aside an award.
It found that the authority had made a "generalised claim" of unjust enrichment without proving illegality, fraud, or constitutional violations. It noted the authority failed to demonstrate how the variation amounted to unjust enrichment.
"The applicant has not shown how the award was contrary to the Constitution, written law, or defined moral or legal principles," the court said.
Additionally, the court dismissed allegations of bias and excessive fees, ruling that such complaints were either unsubstantiated or fell outside the grounds for annulling an award.
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