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Post Reply: Kenya Pipeline Company Urges Court to Dismiss Sh500m Claim by Lebanese Firm

<blockquote><div class="quotetitle">Quote from <a class="profile-link highlight-moderator" href="https://lawguide.co.ke/understanding-law/legal-forum/profile/lawyer/">Lawyer</a> on June 20, 2025, 10:01 am</div><div id="pl-6516"  class="panel-layout" ><div id="pg-6516-0"  class="panel-grid panel-no-style" ><div id="pgc-6516-0-0"  class="panel-grid-cell"  data-weight="1" ><div id="panel-6516-0-0-0" class="so-panel widget widget_sow-editor panel-first-child panel-last-child" data-index="0" data-style="{&quot;background_image_attachment&quot;:false,&quot;background_display&quot;:&quot;tile&quot;,&quot;background_image_size&quot;:&quot;full&quot;,&quot;background_image_opacity&quot;:&quot;100&quot;,&quot;border_thickness&quot;:&quot;1px&quot;}" ><div
			
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	<p dir="ltr" data-pm-slice="0 0 []">The Kenya Pipeline Company (KPC) has petitioned the High Court to dismiss a new Sh500 million claim filed by Zakhem International Construction Limited, a Lebanese firm, in an ongoing legal dispute over a multi-billion-shilling pipeline construction contract. The state-owned corporation argues that the claim is an attempt to revisit issues already addressed in prior court rulings, describing it as an abuse of the judicial process.</p>
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<p dir="ltr">The legal battle stems from a 2014 contract in which Zakhem was tasked with constructing a pipeline from Mombasa. The project, valued at USD 126 million (approximately Sh16 billion at current exchange rates), has been mired in disputes over payments and contractual obligations. Zakhem claims that KPC owes it significant sums, including the newly filed Sh500 million claim, for work completed under the agreement.</p>
<p dir="ltr">According to court documents, Zakhem has previously sought to attach KPC’s bank accounts to recover a separate debt of Sh926 million. In a ruling on June 6, 2025, High Court Justice Wayua Mong’are dismissed Zakhem’s application to freeze KPC’s accounts held at Standard Chartered Bank, Equity Bank, and Stanbic Bank, citing that the firm had raised similar arguments in a prior case (HCCOMM No. E322 of 2019). Justice Mong’are emphasized that allowing the same claims to be re-litigated would undermine judicial consistency, stating, “Zakhem cannot expect this court to make a dissimilar finding to that in HCCOMM No. E322 of 2019, as this would be akin to sitting as an appellate court on the findings of a court of concurrent jurisdiction, which the law frowns upon.”</p>
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<p dir="ltr">KPC’s legal team, in their latest filing, argues that the Sh500 million claim is a rehash of previously rejected demands and should be dismissed with costs. They contend that Zakhem is attempting to circumvent earlier court decisions by repackaging old claims under a new filing. KPC further asserts that it has complied with prior court orders, including a January 6, 2021, directive by Justice Ngenye Macharia to release Sh485 million to Zakhem in US dollars. The corporation maintains that it has fulfilled its financial obligations and accuses Zakhem of using delaying tactics to extract additional payments.</p>
<p dir="ltr">KPC’s defense also highlights payments made to the Kenya Revenue Authority (KRA) on Zakhem’s behalf, including Sh3.09 billion on October 22, 2020, and an additional Sh915 million on January 8, 2021, which they claim reduced the outstanding debt. The state corporation argues that Zakhem’s calculations of the alleged Sh500 million debt are inaccurate and fail to account for these payments.</p>
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<p dir="ltr">Zakhem International Construction Limited, led by Managing Director Ibrahim Zakhem, insists that KPC remains indebted to the tune of USD 7.1 million (approximately Sh926 million), part of which includes the Sh500 million claim. The firm argues that despite multiple court orders, KPC has consistently failed to honor its contractual obligations. Zakhem’s legal team, led by Senior Counsel Ahmednasir Abdullahi, has accused KPC of employing “tactics, maneuvers, or attempts to delay or frustrate the execution of the decree.” They further claim that KPC’s bank accounts hold sufficient funds to settle the outstanding amounts.</p>
<p dir="ltr">The Lebanese firm has faced setbacks in its efforts to recover funds. In addition to the June 2025 dismissal, a separate attempt to secure Sh4.1 billion was blocked by the Court of Appeal in August 2024. The appellate court, presided over by Justices Daniel Musinga, Kathurima M’inoti, and Mwaniki Gachoka, froze the case pending an investigation by the Directorate of Criminal Investigations (DCI) into allegations that Justice Patrick Otieno was approached by Oilfields Engineering and Supplies Limited’s lawyer, Tom Ojienda, to influence the outcome of a related case.</p>
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<p dir="ltr">The dispute has been further complicated by subcontractors, including Oilfields Engineering and Supplies Limited, which sought to freeze Sh4.1 billion meant for Zakhem in 2024. Oilfields claimed it was owed money by Zakhem, leading to a contentious legal battle that prompted allegations of judicial interference. Another subcontractor, Ruhpumpen Global Limited, had previously sued KPC for allegedly inducing Zakhem to favor another company, Ebara Corporation, though that case was dismissed.</p>
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<p dir="ltr">The ongoing legal tussle has raised concerns about the management of public contracts in Kenya and the financial burdens imposed on state corporations like KPC. The pipeline project, intended to enhance Kenya’s oil infrastructure, has instead become a lightning rod for litigation, with multiple parties alleging non-payment and contractual breaches. The case also underscores the challenges of resolving complex commercial disputes involving international firms, particularly when large sums of public funds are at stake.</p>
<p dir="ltr">Analysts suggest that the repeated court battles could deter foreign investment in Kenya’s infrastructure sector, as investors may perceive heightened risks in dealing with state entities. The construction sector, already reeling from political and economic uncertainties, faces additional strain, as highlighted in a related report by <em>The Standard</em> noting investor retreat due to political heat.</p>
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<p dir="ltr">The High Court is expected to hear KPC’s application to dismiss the Sh500 million claim in the coming weeks. Zakhem’s legal team has indicated it will vigorously oppose the motion, arguing that the claim is distinct from prior cases and merits consideration. Meanwhile, KPC has called for a swift resolution to avoid further financial and reputational damage.</p>
<p dir="ltr">The outcome of this case could set a precedent for how similar disputes are handled in Kenya’s judicial system, particularly regarding the principle of res judicata, which bars re-litigation of settled matters. For now, both KPC and Zakhem remain locked in a high-stakes legal standoff, with millions of shillings hanging in the balance.</p>
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