Blow to Joho family firm in tariffs battle with KPA

Former Mombasa Governor Hassan Joho addressing Mombasa residents during Eid Baraza at Treasury area in Mombasa County on May 3, 2022.  [Kelvin Karani, Standard]

The High Court has declined a petition by Portside Freight Service Limited to compel Kenya Ports Authority to reduce the tariff charged on cargo it handles at the port.  

Justice Ann Ong’injo directed Portside, a firm associated with the family of former Mombasa Governor Hassan Joho, to file a further affidavit and submissions within seven days.

She also directed KPA to file its documents within the corresponding period. “The petitioners are to serve further affidavits and submissions within seven days. The defendants are to file their documents within the corresponding period,” said Justice Ong’injo.

The petition is one of the protracted legal battles between firms associated with Joho’s family and state agencies.

Portside filed a case alleging that KPA has been overcharging it user tariffs contrary to the provisions of the agreement from July 4, 2023. 

According to Portside director Salim Sadru, KPA issued the firm with a licence to handle fertiliser at the port of Mombasa at sheds seven and eight.

The firm wants the court to stop KPA from charging it $4.40 (about Sh638) per tonne for stevedoring and $5.50 (about Sh798) per tonne for wharfage.

Portside claims

He said at normal rates, stevedoring attracts a tariff of $1.65 (Sh239) under Clause 11.7 of the tariff  book while Wharfage costs US$ 2.20 (Sh319) under Clause 15.5 of the book.

“From the July 4, 2023, the Defendant has been charging the plaintiff user tariff as follows: stevedoring, $4.40 under Clause 11.9 of the Book, Wharfage, $5.50 under Clause 15.4 of the Book contrary to and in breach of Clause 3(1)(i) and (ii) of the operational Licence Agreement,” said Sadru.

The charges are stipulated under Clause 11.9 and 15.4 of the KPA tariff book respectively.

Portside claims the charges are contrary to and in breach of Clause 3(1)(i) and (ii) of the license agreement entered on July 4, 2023.

Sadru claimed KPA has overcharged them to a tune of over Sh215 million (USD 215,372) for the stevedoring and wharfage.

“The defendant has from the month of July 2023, been overcharging the plaintiff, in its application of the user tariffs. This conduct of the defendant is contrary to the clear provisions of clause 3 of the agreement of 10th December 2020,” said Sadru.

He said in the month of July and early August 2023, the firm handled various vessels at the port in which KPA has allegedly overcharged the plaintiff in respect of user tarrifs in contravention of the license agreement.

Sadru said 3(1)(i) and (ii) of the agreement has provision for stevedoring and wharfage charges to be charged by KPA on the firm according to the port’ tariff book.

Portside lawyer Paul Buti filed a petition before Justice Olga Sewe who certified the matter urgent and directed that the same be served on KPA for further directions by the duty judge on August 30.

Buti said they have commenced arbitration proceedings pursuant to clause 17 of the agreement and were seeking interim protection to restrain KPA from charging Portside user tariffs of US $4.40 per tonne for stevedoring under Clause 11.9 of the KPA’ tariff book, and US$5.50 per tonne for wharfage under Clause 15.4 of the book. 

He noted this was in breach of Clause 3(1)(i) and (ii) of the licence agreement pending arbitration to avoid further over-charging from subsequent vessels expected to be handled by late this month and September 2023.

“An injunction be granted to restrain and prohibit the KPA, its agents, servants, workers or any other person acting under its authority, from charging the Portside Freight Terminal Limited (Plaintiff) user tariffs of US$4.40 (about Sh638) per tonne for stevedoring under Clause 11.9 of the Kenya Ports Authority tariff book, and US$ 5.50 (about Sh79) per tonne for wharfage under Clause 15.4 of the same tariff book, contrary to, and in breach of Clause 3(1)(i) and (ii) of the license agreement entered into between the plaintiff and the Defendant on December 10, 2020, until the hearing and determination of this suit,” said Buti.

He said on August 9, 2023, Portside invoked the provisions of clause 17:1 of the agreement and invited KPA to nominate four senior managers to deliberate on the dispute but they failed to respond within seven days.

The lawyer said on August 18, 2023, they served notice to KPA of its appointment of an Arbitrator to resolve the dispute but there was no response from KPA.

“The plaintiff has in these circumstances commenced the arbitral process by the letter of August 18, 2023. The arbitral process is now ongoing,” said Buti.