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Case Brief · caselaw.co.ke
High CourtDismissed· [2020] KEHC 9594 (KLR)
Nairobi City County v The Illuminator Limited
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·~2 min to read original · ~4 min briefThe bottom line
#If a contract is found illegal, you still owe payment for the work you completed under a pilot project.
What this practically means
#Executive summary
#Nairobi City County applied by Notice of Motion dated 17th August 2017 to set aside the Final Award of the sole arbitrator, Justice R.O. Kwach, which awarded The Illuminator Limited Ksh 5 million plus interest at 12% per annum. The respondent's claim before the arbitrator was for breach of contract arising from the county's unilateral repudiation. The arbitrator found the contract illegal for failure to comply with procurement laws and rejected the claim for loss of expected earnings based on the illegal contract. However, he found there was irrefutable evidence that senior officers in the City Planning Department, specifically Mr Kibinda and the mayor, engaged the claimant to undertake a pilot project; the claimant carried out that project, and the county advanced no defence capable of avoiding payment for the work done. The county argued before the High Court that it offended public policy under section 35 of the Arbitration Act for the arbitrator to declare the contract invalid yet award compensation on a quantum meruit basis as an equitable doctrine. Justice Mary Kasango, citing the dictum that arbitrators are masters of facts, held the arbitrator's finding could not be faulted: the county obtained the respondent's services in the pilot project and was liable to pay for them. The award was for actual work carried out, not on the illegal contract. Finding the single issue raised had no basis in law, the court dismissed the application with costs on 29th April 2020, delivered virtually due to COVID-19 restrictions.
Key legal issues
#01
Whether an award on quantum meruit following a finding that the contract was illegal offends public policy under section 35 of the Arbitration Act
Holding
No. The award was not on the illegal contract but for actual work carried out under a pilot project, for which the county was liable to pay.
Reasoning
The arbitrator expressly held the claim based on the illegal contract unsustainable, but found irrefutable evidence that senior county officers engaged the claimant to undertake a pilot project, which was carried out, and that no defence could avoid payment for that work. The court held the arbitrator's finding could not be faulted and the application failed.
p. 1
Legal principles established
#- A party who obtains services under a pilot project cannot avoid paying for the work done even where the underlying contract is found illegal for breach of procurement laws.
Court orders
#- 1.The Notice of Motion dated 17th August 2017 is dismissed with costs
- Jurisdiction invoked
- Section 35 of the Arbitration Act (application to set aside arbitral award)
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Nairobi City County v The Illuminator Limited", Case Analysis (2020). . Source:
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.