An international tribunal has dashed the hopes of investors who were seeking to recoup their investment from Mayfair Insurance Company Limited after the Nakumatt Supermarket collapse.
At the heart of the battle lodged before the London Court of International Arbitration was whether the insurer ought to have paid Sh508 million which was at least 80 per cent investment, it had allegedly guaranteed the investors.
In a verdict that is a win for Mayfair, the arbitrators; lawyers Njoroge Regeru, John Ohaga and former judge Aaron Ringera agreed that the investors could not be insured as they did not produce evidence that they honoured their part of the bargain by paying the premiums and the commitment fees.
“Having found that there was no evidence of payment of any premium, and there being no evidence of the payment of the contractual commitment fees, the tribunal finds and holds that the insurance contract between the parties was not in force when the claimants submitted their claim.
“The tribunal having found that the claim must fail by reason that there was no valid contract of insurance in force at the time of the alleged loss by the claimants, it follows that the claimants are not entitled to the reliefs sought,” the arbitrators led by Regeru said.
The case was filed by lawyers Andrew Mwamuye, Alex Kimathi, and David Kimani. The three were trading as Mwamuye, Kimathi and Kimani Advocates but Mwamuye has since left the firm.
They told the arbitrators that on August 31, 2016, they were appointed by Nakumatt Holdings Limited as the note trustees for various investors in a commercial paper programme that Nakumatt intended to raise at least $5 million.
A commercial paper is a money-market security issued by large corporations to obtain funds to meet short-term debt obligations.
Meanwhile, the tribunal found that save for the non-submission of the security documentation, the note trustees did not breach the contract as had been claimed by Mayfair.
The programme was to be floated by the retailer’s transaction advisor and broker Dry Associates Limited.
The arbitrators heard that they took an insurance policy to secure investors in the programme for a sum of $4 million.
However, the three advocates stated that between July and November 2017, they informed Mayfair that Nakumatt had defaulted to pay the commercial paper notes that had matured. They argued that Mayfair failed to make good its end of the bargain.
Two months later, in October, Nakumatt filed an insolvency case before the High Court. It follows that Peter Kahi was appointed as the administrator.
Mwamuye, Kimathi and Kimani argued that they sent a claim notice to Mayfair for Sh508 million but the insurance firm declined to pay.
According to them, Mayfair said the policy had expired, there was no proof that they had tried to enforce the claim against Nakumatt and that the retailer had not provided security for the contract.
They asked the tribunal to order Mayfair to pay the amount plus 14 per cent interest from February 12, 2018, until payment in full.
The insurer opposed the claim. It denied issuing a cover. According to Mayfair, they were aware that Nakumatt was not in a position to pay its creditors and was trading illegally while insolvent.