Ecobank Kenya Wins Court Order for Sh549m Payment from Ketraco

Ecobank Kenya has secured a court order directing the Kenya Electricity Transmission Company (Ketraco) to pay it Sh549 million from proceeds of a Sh10 billion arbitral award involving a Spanish company. The High Court in Milimani, Nairobi ruled that the bank's claim takes priority over competing claims by Spanish contractor Instalaciones Inabensa SA and COX T&L SL. The order directs Ketraco to pay the bank €3.8 million (Sh547.9 million) and Sh1.5 million directly.

The dispute arose from two contracts awarded by Ketraco in April 2013 to Instalaciones Inabensa SA for construction of the 400-kilovolt Lessos–Tororo transmission line and extension of the Lessos substation. However, disagreements over contract performance and payments led Ketraco to terminate both contracts on April 25, 2016. Inabensa challenged the decision through arbitration, accusing the State agency of breaching its contractual obligations.

On July 30, 2019, the arbitral tribunal found Ketraco liable and awarded the Spanish firm €37.365 million (Sh5.3 billion), in addition to interest and costs. The tribunal also awarded Sh102 million in legal fees, Sh83.5 million in arbitration costs, and Sh2 million in administrative expenses. The claim increased to €62.67 million (approximately Sh10 billion including accrued interest) and Sh195.3 million as at February 2024.

Ecobank had obtained a consent decree on March 10, 2021, with Inabensa, which agreed to settle the bank's claim by paying €3.8 million (Sh547 million) and Sh1.5 million. However, Inabensa failed to honour the agreement and sought to transfer its rights under the award to COX T&L SL following insolvency proceedings in Spain. Ecobank sought direct payment from Ketraco, citing the risk of loss if the proceeds were released before settling its claim.

The court allowed Ecobank's application, finding that the 2021 consent decree remained valid and had not been set aside for fraud, collusion, mistake, or misrepresentation. The court also found that Ecobank's secured claim predated the Spanish court order and deed of subrogation relied on by COX, both issued in 2023.

The court barred Ketraco, its officers, and agents from releasing any part of the award proceeds to Inabensa, COX, or their agents until Ecobank receives €3.8 million (Sh547 million) and Sh1.5 million, or the sums are otherwise secured to its satisfaction. Ketraco is required to pay the euro amount into Ecobank's euro account and the shilling amount into an account held by the bank for Nyaanga and Mugisha Advocates.

The order comes as Ketraco faces a separate liquidation petition over the award. The court dismissed the utility's preliminary objection, allowing Spanish company C.A. Infraestructuras T&I SLU to pursue its petition. The Attorney-General has warned of a risk that Kenya could face competing claims to the same debt.

Key points

• The court order directs Ketraco to pay Ecobank Kenya Sh549 million from proceeds of a Sh10 billion arbitral award involving a Spanish company.
• The dispute arose from two contracts awarded by Ketraco to Instalaciones Inabensa SA for construction of the 400-kilovolt Lessos–Tororo transmission line and extension of the Lessos substation.
• The court also barred Ketraco from releasing any part of the award proceeds to Inabensa, COX, or their agents until Ecobank receives the specified amounts.