Africa Rail Opportunities v Kenya Railways Corporation

7. On the other hand, the respondent asserted that the termination notice of 13.2.2025 was properly issued in adherence with the agreement. Analysis and Determination 8. The issue is whether the applicant is entitled to an interim measure of protection sought. 9. This dispute concerns the termination of a contract for haulage or transportation executed on 13.4.2022 for a renewable term of ten years. The applicant complained that the termination is premised on default as to performance yet the defendant has not provided the necessary infrastructure for optimum operation. 10. The applicant highlighted that the agreement provides a comprehensive dispute resolution mechanism and process the final being arbitration which it has commenced. However, the applicant is apprehensive that before the arbitration is heard and determined, the respondent would have terminated the agreement. It is also apprehensive that its contractual obligations to third parties would likely be terminated if the contract is terminated because it relied on the respondent’s infrastructure to perform. 11. The respondent maintained that the termination notice was in accordance with clause 21 of the agreement due to performance deficiencies. It claimed that the applicant consistently failed to meet its obligations leading to disruption in freight transport services causing financial loss. 12. The respondent denoted that the applicant consistently failed to meet delivery timelines, poorly maintained and used haulage equipment and failed to comply with agreed-upon operational procedures. 13. The respondent asserted that it has made significant infrastructural investments and facilitated several other haulage companies that continue to operate efficiently without issue. 14. The respondent also contended that the infrastructural issues were minor and did not hinder overall operational capacity of other parties using the same facilities. 15. The respondent argued that the applicant’s contracts with other parties as justification for not terminating the haulage contract is unfounded as the respondent is not a party to those contracts. 16. The respondent further argued that the applicant has failed to demonstrate why it cannot seek damages in arbitration as provided under the contract’s dispute resolution mechanism. 17. The parties agreed to resolve the dispute through arbitration. The applicant indicated in the plaint that it acknowledges the dispute resolution mechanism in their agreement but wished to make an application under section 7 of the Arbitration Act for protection in the interim. 18. Section 7 of the Arbitration Act provides that: “ 7(1) It is not incompatible with an arbitration agreement for a party, to request from the High Court, before or during arbitral proceedings, an interim measure of protection for the high court to grant that measure. (2) Where a party applies to the High Court for an injunction or other interim order and the arbitral tribunal has already ruled on any matter relevant to this application, the High Court shall treat the ruling or any finding of fact made in the course of the ruling as conclusive for the purposes of the application.” https://new.kenyalaw.org/akn/ke/judgment/kehc/2025/19252/eng@2025-12-17 2

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19. The principles for consideration in an application for interim measures pending arbitration were outlined by the Court of Appeal in Safaricom Limited v Ocean View Beach Hotel Limited, Salim Sultan Moloo & Alsai (K) Limited (Civil Application 327 of 2009) [2010] KECA 346 (KLR). 20. These include whether the subject matter of the arbitration is under threat; the appropriate measure of protection in the special circumstances and the appropriate period for the interim measures of protection to avoid encroaching on the tribunal’s decision-making power as intended by the parties. 21. Further, ‘the court must be careful not to encroach on the substantive decision-making power of the arbitrators (appointed or to be appointed) by venturing into the merits of the dispute.’ Isolux Ingeniera, S. A v Kenya Electricity Transmission Company Limited & 5 others [2017] KEHC 1472 (KLR) 22. The interim measures of protection sought by the applicant are to restrain the respondent from enforcing the termination notice dated 13.2.2025 and terminating the contract between them pending arbitration. 23. Some courts have opined that a contract is not capable of being preserved under Section 7, hence disinclined to issue interim measures of protection restraining the termination of a contract. Associated Construction Company (K) Limited v Ministry of Transport, Infrastructure Housing Urban Development Public Works & another [2021] KEHC 12765 (KLR) 24. Other courts have considered that the suspension of a contract may encroach on the substantive decision-making power of the arbitrators. Channel Tunnel Group Ltd v Balfour Beauty Construction Ltd [1993] A C 334 cited in Isolux Ingeniera, S. A v Kenya Electricity Transmission Company Limited & 5 others [supra]. 25. The major arguments by the applicant is akin to sustaining the contract as well as adjudicating upon third party claims against it. The respondent’s position on the latter is tenable as it has nothing to do with third parties contracted by the applicant. Each party claims breach of the contract against the other. Of peculiar importance in this case is that; on the one hand, the applicant claims inability to perform as a result of lack on the infrastructure required to perform the contract which they claim the respondent out to provide. On the other, the respondent claims there is sufficient infrastructure for performance of the contract which other contractors use and are performing save the applicant. Making the case unsuitable for interim measure of relief sought. In any event, those matters form part of the dispute to be tried in arbitration. 26. But, on a generalized note and without reference to this case, I wish to caution depraved practice now gaining root in government where officials of government or state organs or parastatals seek to create or induce breach in order to terminate a contract and award it to another person for unlawful personal gain-a bribe. A behavior that should be ruthlessly suppressed by courts, quasi-judicial bodies and implementing institutions tasked with the duty of dealing with such offensive conduct by imposing personal liability and surcharge upon those concerned rather than leave it to damages against the innocent institution. Courts must be prepared to disrupt and end this old bad habit which has impoverished many entrepreneurs and seen loss of colossal sums of public funds. And foster new narratives and practices of accountability and transparency in the exercise of public power. Which may also include re-authoring texts and meanings in interpretation and application of the law to align them with the Constitution. https://new.kenyalaw.org/akn/ke/judgment/kehc/2025/19252/eng@2025-12-17 3

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Conclusion 27. From the above, the court finds that the application dated 11.03.2025 is not merited. The application is dismissed with no orders as to costs. DATED, SIGNED AND DELIVERED AT NAIROBI THIS 17TH DAY OF DECEMBER, 2025 THROUGH MICROSOFT TEAMS ONLINE APPLICATION ----------------F. GIKONYO M JUDGE In the presence of: Ms. Kemunto for Rono for defendant Mahinda for plaintiff CA Kinyua https://new.kenyalaw.org/akn/ke/judgment/kehc/2025/19252/eng@2025-12-17 4

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