keca-2023-01665

3. Through an application dated 4th July 2023, Oilelds moved the court seized with the consolidated applications for a mareva injunction to restrain Kenya Pipeline Company Limited (KPC or 2nd respondent herein) from paying over to Zakhem a sum of USD.31,308,249.80 pursuant to contract No. 54/05/320/13 entered between Zakhem and KPC pending the hearing and determination of the consolidated matters. In the rst instance, and ex parte, the High Court (Mugambi, J) granted an interim injunction pending interpartes hearing of the application. Zakhem could not wait and in turn sought lifting or setting aside of the interim order through an application dated 6th July 2023. 4. In a composite ruling delivered on 31st August 2023, Mugambi, J determined both interlocutory applications in which she dismissed Zakhem’s application of 6th July 2023 and granted a mareva injunction in favour of Oilelds as prayed. It is this decision that Zakhem signals its intention to challenge through the notice of appeal dated 31st August 2023. 5. We explain the KPC angle in brief. Zakhem obtained a partial judgment against KPC in Milimani E322 of 2019 Zakhem International Construction Limited v Kenya Pipeline Company Ltd. for the sum of USD 44,019,024.64. In that partial judgment, the High Court (Nzioka, J.) further directed the two parties to consider a third party intervention to reconcile certain disputed accounts beyond the adjudged sum. We were told by Zakhem that the negotiations are ongoing. 6. In an adavit in support of the stay motion, Ibrahim Zakhem, the Managing Director of the applicant, avers that Zakhem has creditors who have valid and enforceable decrees issued by various courts patiently waiting for the conclusion of the negotiation exercise between the applicant and the 2nd respondent so that their debts are addressed. The creditors are Ecobank, Azicon Kenya Ltd, Quality Inspectors Ltd, Multiple (K) Ltd and LJA Associates LLP. Zakhem asserts that the net eect of the mareva injunction ruling is that it will be unable to receive its dues from KPC to in turn meet its obligations to the lawful creditors. 7. Zakhem contends further that the ruling indicates manifestation of an already pre-determined outcome of the consolidated matter; curtails its right to fair hearing and right to challenge the Arbitral Award; and the hearing of the consolidated matter may be rendered an academic exercise. Attached to the adavit of Mr. Ibrahim is a draft memorandum of appeal as demonstration of an arguable appeal. 8. The motion is opposed through a replying adavit by John Huba Waka, a Director of Oilelds, sworn on 14th September 2023. In it he contends that the application before Court is bad in law, incompetent, defective, an abuse of the court process and marred with misrepresentations; the mareva injunction simply preserved the funds pending determination of the consolidated applications and was made in the interests of justice; and the grounds raised in the draft memorandum of appeal are not arguable. 9. Oilelds asserts that the intended appeal will not be rendered nugatory if stay is not granted because; once the applications are heard and determined either way, the High Court will unfreeze the monies and order them to be paid to either the Zakhem or Oilelds; that determination will lead to the nal determination of the rights between the parties herein; and the freezing order was only interlocutory. 10. At the plenary hearing on 1st November 2023, Mr.Ahmednasir learned senior counsel appeared for Zakhem while learned counsels Mr. Nyachoti, Mr. Odero and Ms. O’kubasu represented Oilelds. And although duly served with the notice of hearing, KPC neither participated in the proceedings nor appeared. After hearing counsel on the motion, we, at the request of counsel for Zakhem, granted interim orders pending delivery of this ruling. 11. An applicant is entitled to an order of stay of execution, stay of proceedings and injunction pending appeal under rule 5(2)(b) if the applicant has led a notice of appeal and has also demonstrated that the https://new.kenyalaw.org/akn/ke/judgment/keca/2023/1665/eng@2023-12-15 2

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intended appeal is arguable and will be rendered nugatory if stay is not granted. The two considerations must be established to the satisfaction of the Court. 12. On the arguability of an appeal, it is not necessary for an applicant to demonstrate a multiplicity of issues nor must that the issues necessarily succeed in the end. It will be enough for the applicant to show even a single issue which is not frivolous and deserves to be interrogated by the Court that will hear the intended appeal. 13. Against this threshold, we hold that the intended appeal is arguable. In the setting aside application, Zakhem drew the High Court’s attention to decree creditors who were in queue for the money it was expecting from KPC. The argument that the eect of the mareva injunction is to improperly give Oilelds, whose award has not matured into a decree, preferential treatment over other creditors who hold decrees and who were not heard is not inconsequential. 14. The second limb is not as plain sailing for the applicant. In the submissions before us, the applicant argues the fate of the consolidated appeals has already “taken shape in outcome” and this will render the appeal nugatory. We understand the applicant to be arguing that the learned judge has a predetermined mind. It is true that in reaching the decision that Oilelds was deserving of a mareva order the learned Judge came to the conclusion, as she had to being the threshold for grant of such an order, that the Oilelds had made out a good arguable case. Yet the learned Judge was categorical that the basis of her conclusion was that Oilelds held a published arbitral award in its favour. Whether the court was correct in applying that yardstick is the remit of the Court which will hear the intended appeal. What has not been demonstrated to us is that the learned judge made comments that indicated her leaning one way or other in respect to the merit or otherwise of the substantive applications. We observe further, that the mareva order merely preserved the money with KPC and so it will be available to who, between Oilelds and Zakhem, emerges victorious. 15. Last, we have reected on the eect that the mareva injunction would have on the named creditors and have reached a conclusion that they are not helpless. We were informed by senior learned counsel that one of the creditors, Ecobank, has already moved the High Court for setting aside and or variation of the mareva injunction so as to accommodate its decree. The creditors are therefore not without an avenue for seeking relief. 16. Ultimately, we nd that the notice of motion dated 8th September 2023 is without merit and is hereby dismissed with costs. If we must add, the interim order we granted on 1st November 2023 pending this Ruling, is hereby vacated. DATED AND DELIVERED AT NAIROBI THIS 15TH DAY OF DECEMBER 2023. S. GATEMBU KAIRU FCIArb. ......................................... JUDGE OF APPEAL F. TUIYOTT ......................................... JUDGE OF APPEAL ......................................... J. LESIIT JUDGE OF APPEAL https://new.kenyalaw.org/akn/ke/judgment/keca/2023/1665/eng@2023-12-15 3

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I certify that this is a true copy of the original Signed DEPUTY REGISTRAR https://new.kenyalaw.org/akn/ke/judgment/keca/2023/1665/eng@2023-12-15 4

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