Bank ordered to pay construction company from Somalia Embassy accounts
Business
By
Fred Kagonye
| Sep 26, 2024
A Kenyan bank has been directed to release Sh26 million to a construction company after it won a battle against the Somali government.
Kingsly Construction Limited, a Kenyan firm had proceeded to court over unpaid construction works at the Somalia Embassy in Nairobi.
The company had obtained orders to freeze the Somalia Embassy's three accounts at Premier Bank over unpaid work.
Through their lawyer Charles Madowo of CSA Advocates, Kingsly wanted the amount drawn from the accounts.
Claris Ogombo on behalf of the bank said that they held the subject accounts with one containing funds of USD 107,816 (Sh14 million) and the two others a total of Sh19 million.
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They signed an agreement with the embassy to renovate its premises in Kilimani, Nairobi County in 2016 in a deal worth Sh53.6 million.
Kingsly's operations manager Everlyne Nzilani said that the embassy abruptly stopped depositing money into their accounts and blocked their workers from accessing the site.
In his judgment, Justice Alfred Mabeya dismissed the Attorney General of Somalia's argument that they enjoyed immunity.
The judge said the contract between the two was commercial and therefore did not enjoy sovereign immunity.
"The application dated 16/5/2024 and 15/7/2024 are meritorious and are allowed. The garnishee order nisi issued herein is hereby made absolute against the garnishee for the sum of Sh25,670,555.33 together with costs of Sh60,000," he ruled.
He said the bank would recover its Sh60,000 costs from the Somalia accounts.
Justice Mabeya noted that the company had been unable to execute the decree from the court to get paid by the embassy for three years.
In the case, Somalia had sought to have the three bank accounts unfrozen and have the case dismissed due to lack of jurisdiction.
In an affidavit, its ambassador, Jabril Abdulle, said that Somalia and Kenya are sovereign equals in International Law and that his country, therefore, enjoys immunity to jurisdiction before Kenyan courts.
He said that the Privileges and Immunities Act and the Vienna Convention on Consular Relations safeguard a foreign state immunity of South Africa and its consular missions.
As a result, the High Court lacked jurisdiction over any legal proceedings against another state.
According to Abdulle, the court was deceived into enforcing the execution of bank accounts of the embassy of a foreign sovereign state.
He added that the said accounts contain funds from application and processing fees paid by individuals seeking passports and visas at the embassy.
They added that diplomatic accounts were protected from legal actions.
Madowo opposed the application saying that the dispute was commercial and was therefore excluded from the Vienna Convention on Diplomatic Relations.
He said that the issue had already been addressed and this was just an attempt to delay the court process.
Earlier the company had sought to auction property belonging to the embassy over the debt after Somalia failed to respond to the case.
This is after an out-of-court deal struck between the two failed after the embassy failed to fulfil its commitment to pay the outstanding balance.
Kingsly says they later learned that the Somalia government through the embassy had planned to award the remaining 20 per cent of the work to another company.
The embassy allegedly was to have the company use the material that had been procured by Kingsly for the work.
Madowo said that the contract between Kingsly and the embassy was partly oral and partly written.
He said that contract termination without notice and denying his client's workers access to the premises was a contract breach.
"The defendant having been duly served with the summons to enter an appearance has not entered an appearance or filed its statement of defence within stipulated time as by law," he said.