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Local, Rwandan firms entangled in court battles over Sh2b gas deal

COUNTIES
By Wahome Thuku | July 13th 2015

Two firms are embroiled in a legal battle over a $20 million (about Sh1.9 billion) gas extraction contract.

The contract for extraction of methane gas in Rwanda is the subject of international arbitration in Switzerland and multiple suits in Mombasa, Kenya.

In Kenya, Kivuwatt Ltd of Rwanda and Civicon Ltd (Kenya) are fighting over Sh150 million worth of equipment being held in a warehouse in Mombasa.

The Kenya Law reported that Civicon was on May 31, 2010 awarded contracts by Kivuwatt to build a barge and install owner supplied and required equipment on the owners process engineering designed methane extraction facility on Lake Kivu in Rwanda.

But the relationship turned sour in 2013 and Kivuwatt terminated the contract.

Civicon claims its employees were kicked out of the site by Kivuwatt's security and were not given an opportunity to remove their assets including specialised equipment and machinery.

As a result, the Kenyan firm decided to hold the Sh150 million separator belonging to Kivuwatt at their warehouse in Mombasa. Civicon claimed the Rwandan company owed them a substantial amount of money.

The dispute was taken to the High Court which in July 2013 ruled that it had no authority to hear and determine it because that was a matter for arbitration. It referred the matter to the International Chamber of Commerce in Switzerland.

Kivuwatt hired another firm, Smart Cargo, to clear the separator from Civicon's warehouse. The warehouse is operated under the Kenya Revenue Authority (KRA)'s transit shed.

Civicon denied them access and Kivuwatt sued KRA in a bid to have the separator released and taken out of Kenya.

On November 15, 2013 Civicon applied to be enjoined in the suit, saying they had the machine. Through lawyer Philip Nyachoti, Civicon claimed that Kivuwatt owed them money over the terminated contract. The application was dismissed by the High Court.

On November 18, 2013 both Kivuwatt and KRA recorded consent in court for the release of the machine but Civicon appealed the ruling saying they should be enjoined in the case.

Nyachoti said since the High Court had in July 2013 ruled that it had no authority over the matter, it could not determine that Civicon did not have the equipment. He claimed Kivuwatt were abusing the court process, adding that the transit shed was private property owned by his client. Civicon then filed another suit in Mombasa, to stop the Rwandese firm from accessing performance guarantee funds from their bankers pending the outcome of the arbitration.

The company says they are not holding the separator because they are transit shade but because of the contract that is the subject of a case.

Part of the contract was to transport the equipment to Rwanda. The machine was still at the warehouse when the contract was terminated. The Court of Appeal in Mombasa has now directed that Civicon be enjoined in the case.

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