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Ahmednasir accused of bias in Mumias Sugar arbitration case

By | March 12th 2012

By James Anyanzwa

Mumias Sugar Company (MSC) has applied for the withdrawal of a Nairobi lawyer Ahmednasir Maalim Abdullahi as an arbitrator in the financial dispute between the sugar miller and its outgrowers firm, Moco.

This comes after the arbitrator indicated that a third party, Kenya Sugar Board (KSB), pays for the costs of the eventual winner of the arbitration proceedings, rather than the losing party.

Through its lawyer Hamilton Harrison & Mathews, the sugar miller accused the arbitrator of being biased in favour of Mumias Outgrowers Company (Moco).

"These comments by the sole arbitrator mean that in the exercise of the judicial authority as conferred to him by the agreement of the parties, the arbitrator has already determined that Moco (1998) Ltd is the winner of the arbitral proceedings," said MSC, adding that, "The comments violate the cardinal principle in arbitration law and practice that requires the arbitral tribunal to be impartial and disinterested."

The disagreement between the two firms involves Sh4 billion that the sugar miller allegedly owes to Moco on account of cane development funds and other moneys managed by MSC as an accountant of Moco

No regard

Moco officials claimed MSC owed it money deducted from farmers’ earnings, but the country’s largest sugar firm denied the claims, saying it was the out-grower firm that actually owed it money.

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The arbitrator is, however, being seen as having no regard to the context of the dispute in a Kisumu High Court Misc. Application No 30 of 2012.

In this case, MSC filed a judicial review application to quash the decision of KSB —the sugar industry regulator and custodian of the sugar Development Levy — from paying the arbitration costs of Moco from the said levy.

And having considered the legal use of the levy as provided for in the Sugar Act 2001, KSB conceded that it could not use the proceeds from the Levy to pay Moco’s costs of the arbitration proceedings at all and revoked its decision.

"It is therefore unfortunate for the sole arbitrator to make a finding that MSC stopped a third party KSB from paying the costs of the eventual winner of the arbitration," said Hamilton Harrison & Mathews in a letter dated March 7.

" It is for this reason that MSC is apprehensive that the sole arbitrator is not impartial and may be biased against it."

Interested in matter

According to the copies of correspondences in our possession, MSC is calling upon the arbitrator to withdraw from his office because his (arbitrator) actions appear to suggest he has an interested in the matter.

The law Society of Kenya (LSK) appointed Ahmednasir close to two years ago to arbitrate the financial dispute between MSC) and Moco. The industry regulator, KSB, also agreed to facilitate the arbitration process as spelt out in the Arbitration Act. The Institute of Certified Public Accountants of Kenya (ICPAK) had also advised the wrangling firms to go for arbitration to solve the problem between them.

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