The Lower Eastern Times Opening The Third Eye
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The Kenya Pipeline Company (KPC) has asked the High Court to dismiss a fresh Sh10.9 billion lawsuit filed by contractor Zakhem International Construction, arguing that all disputes related to the Line 1 replacement project were conclusively resolved through a court-approved settlement and subsequent payments.
In its response, filed by Wekesa & Simiyu Advocates, KPC contends that Zakhem’s claim of $84.1 million—comprising $19 million in alleged unpaid contractual dues and $65.1 million in interest—has no legal basis because the issues were already settled through previous court proceedings, negotiated agreements and a consent judgment.
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The state-owned firm argues that Zakhem is attempting to revive matters that were resolved after negotiations held in early 2023 and later formalised in a consent judgment issued in September 2023.
According to KPC, the consent agreement stipulated that all claims arising from Contract No. SU/QT/032N/13 would be considered fully settled once both parties fulfilled the agreed terms, which the company says it has done.
KPC further argues that the latest suit is barred by the legal principles of res judicata, limitation of actions and estoppel, insisting that similar claims had either been determined or withdrawn in previous court cases.
The company also disputes Zakhem’s demand for $65.08 million in commercial interest, saying the contract only provided for interest on overdue payments at a rate of 0.5 percent per month and did not allow interest based on commercial bank lending rates.
KPC says it also cleared amounts arising from an earlier partial judgment, including payments made directly to the Kenya Revenue Authority under agency notices and through court-authorised garnishee proceedings, effectively settling any additional claims linked to extension-of-time requests.
According to the defence, negotiations conducted between January and February 2023 resulted in a comprehensive agreement covering all outstanding matters under the 2014 Line 1 replacement contract before both parties signed the consent judgment.
The company maintains that once the consent agreement was implemented, Zakhem could not file fresh proceedings based on the same contract unless the court first set aside the consent judgment.
KPC also notes that Zakhem withdrew the remaining claims in an earlier suit in September 2023 before filing another similar case in January 2026, which was also withdrawn shortly afterwards.
The pipeline operator insists it met all its contractual obligations during the project by paying the contractor hundreds of millions of dollars through interim payment certificates, material payments, variation orders and court-directed settlements.
Zakhem is seeking approximately $84.1 million from KPC, claiming unpaid contractual amounts and accumulated interest.
The High Court is now expected to determine whether the contractor’s claims remain valid despite the earlier consent judgment and settlement agreements.
