Republished by Horn Africa News
Source: Africanlawbusnisess.com
The LCIA has rejected the claims brought by two companies accusing the two African states of wrongfully terminating a concession agreement related to the Rift Valley Railways line.
The London Court of International Arbitration (LCIA) on Wednesday (23 July) dismissed a USD 2 billion claim brought against Kenya and Uganda stemming from the collapse of a planned 25-year concession for the Rift Valley Railways line – which was designed to boost freight and passenger transportation between the two countries.
In a LinkedIn post published on Friday (25 July), Mohammed Muigai LLP, which acted for Kenya, confirmed that the LCIA had dismissed the entire claim and affirmed that the government of Kenya had fulfilled its obligations under the concession agreements. It also found that Uganda was not in breach of its obligations. The tribunal also awarded Kenya KES 950 million (USD 7.3 million), GBP 1.3 million and a further USD 610,000 in costs, while it awarded Uganda USD 3.6 million in legal costs and around GBP 200,000 in arbitration costs.
The claims, brought by KU Railways Holdings and Rift Valley Railway Investments, arose after the two companies entered into concession agreements with Kenya and Uganda in 2006 for the management of the Rift Valley Railways line, which was built in the early 20th century to connect Mombasa on the Kenyan coast to Uganda. However, both states terminated the 25-year contract in July 2017, citing persistent breaches by the concessionaires including failure to invest, maintain infrastructure and meet concession obligations. The two companies launched arbitration proceedings in 2020 alleging wrongful termination and breach of key obligations under the agreement.
“This award is not only a legal victory. It reaffirms Kenya’s commitment to good governance in public-private partnerships, respect for contractual integrity, and a firm stance against frivolous investor claims,” Mohammed Muigai LLP stated.
Solicitor General of Kenya Shadrack Mose, who also represented the country in this matter, said in statement: “This victory has saved the Republic of Kenya, and by extension the Kenyan taxpayer, from incurring what would otherwise have been a significant financial burden.”
The termination of the agreement led to the Kenya Railways Corporation and Uganda Railways Corporation taking over operations of their respective sections of the railway, with the development of the standard gauge railway (SGR) in Kenya and Uganda expected to replace the older metre-gauge line.
In other arbitration news, the Federal High Court of Lagos earlier this month gave offshore drilling contractor Dolphin Drilling the green light to kick off the enforcement of a USD 105 million arbitral award it won against oil and gas exploration company General Hydrocarbons Limited last year.
