China Jiangxi Corporation for Economic and Technical Cooperation (Kenya) Ltd v Civil Aviation Authority & Another (as styled in the plaint; defendant a Kenyan limited liability company, interested party Stanbic Bank Kenya Limited)
The bottom line
#If a tender process is fraudulent, the court will cancel the demand guarantee, protecting you from losing your bid bond.
What this practically means
#Executive summary
#Key legal issues
#Whether the plaintiff proved fraud in the tender process and the calling of the Bid Bond
The court found the tender was a creation designed to defraud the plaintiff of the Bid Bond and that the claim was proved on a balance of probabilities.
The tender was cancelled on 2nd September 2019, yet fresh negotiations and a purported award followed without execution of a contract, after which the defendant demanded payment of the guarantee on 25th September 2019 for failure to provide a performance bond. The court found the sequence demonstrated the tender's purpose was to defraud the plaintiff of the Bid Bond.
Whether the guarantee should be cancelled
The guarantee dated 26th August 2019 issued by Stanbic Bank was cancelled.
Having found the guarantee was called after the original tender had been cancelled and pursuant to a fraudulent scheme, the court allowed the plaint and cancelled the guarantee, thereby arresting the liquidation of the Bid Bond.
Legal principles established
#- A demand guarantee called after the underlying tender has been cancelled, pursuant to a fraudulent scheme, will be cancelled by the court.
- Special damages must be pleaded with particularity and proved to the required standard.
Court orders
#- 1.GUARANTEE NO. xxxxxxxxx dated 26th August 2019 issued by STANBIC BANK KENYA LIMITED to the defendant on behalf of the plaintiff is hereby cancelled.
- 2.The defendant shall bear the costs of this suit.
- Jurisdiction invoked
- Original civil jurisdiction of the High Court over the plaint dated 26th September 2019
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "China Jiangxi Corporation for Economic and Technical Cooperation (Kenya) Ltd v Civil Aviation Authority & Another (as styled in the plaint; defendant a Kenyan limited liability company, interested party Stanbic Bank Kenya Limited)", Case Analysis (2020). Plaint dated 26th September 2019 (High Court Commercial Suit). Source:
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.