Kenya Railways scores at the appeals court

October 1, 2012 7:29 am
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Justices Alnashir Visram, Martha Koome and Hannah Okwengu, at the same time directed that the proceedings at the High Court proceed “to its logical conclusion”/FILE
NAIROBI, Kenya, Oct 1 – Kenya Railways can now breathe a sigh of relief after the Court of Appeal lifted an order freezing some of its properties in Nairobi over a Sh26 billion dispute with a Chinese investor.

Three judges ruled that the appeal by the State Corporation was arguable and would be rendered useless if the stay order sought was not granted.

Justices Alnashir Visram, Martha Koome and Hannah Okwengu, at the same time directed that the proceedings at the High Court proceed “to its logical conclusion”.

“An arguable appeal is not one that must necessarily succeed, but one which ought to be argued fully before the court. We are satisfied that the intended appeal is arguable,” said the Judges.

The corporation through lawyers Cecil Miller and Peter Wena moved to the Court of Appeal after High Court judge Alfred Mabeya in May issued orders freezing a number of properties belonging to the company over the dispute with a Chinese company Erdemann Property Ltd.

Erdemann obtained orders against the corporation which blocked Railways from selling, transferring or disposing some 21 parcels of land mainly in Nairobi and Mombasa pending determination of the suit. The freezing order was later reduced to several properties in Nairobi.

But not satisfied, the corporation filed an appeal arguing that the order had paralysed its operations as it cannot deal with several of its properties. Miller argued that the order was unfair and unjust because some of the properties were not subject of the case before the court.

“The interim orders were issued in disregard of Section 88 of Kenya Railways Corporation Act and therefore ought to be urgently set aside to correct an irregularity,” Miller argued.

He said the High Court has no original jurisdiction to hear the dispute between Erdemann and the state bodies by virtue of the Public Procurement and Disposal Act 2005.

“The interim orders were issued in disregard of Section 88 of Kenya Railways Corporation Act and therefore ought to be urgently set aside to correct an irregularity,” Miller argued.

The Chinese company opposed the application. In the case, the investor wants to be compensated accusing KR of breaching an agreement in which the company was to construct a Sh40 billion golf city project in Nairobi.

The company won the 2009 tender to convert the current Railways Club golf course into a golf city with a five-star hotel on a 63-acre piece of land along Haile Selassie Avenue and Uhuru Highway.

But the project never started as contemplated as a dispute arose between the company, Kenya Railways and trustees of the Kenya Railways Staff Retirement Benefit Scheme which co-owns the property. The developer then moved to court for protection.

The project was to comprise a 100-room five star hotel, a 600-room four star hotel, a nine-hole golf course and a golf club house with a modern leisure, business and shopping facilities.

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