Court sets aside Sh611 million award to Equity Bank, citing bias

The High Court in Narok has set aside an arbitral award that had ordered Narok County Government to pay Equity Bank Limited over Sh611 million, citing bias, excess of mandate and violation of public policy.

The dispute stemmed from a 2011 contract in which the county engaged Equity Bank to provide a smart card system for revenue collection at the Maasai Mara National Reserve.

The county later terminated the agreement, prompting a protracted arbitration that culminated in March 2024 with sole arbitrator Rajinder Billing awarding the bank Sh611,469,155 costs of Sh110,895,329.96, and 12 per cent annual interest.

Aggrieved, the county government moved to court seeking to nullify the award, arguing that the arbitrator ignored its evidence, determined matters not pleaded, particularly investment costs outside procurement law, and issued an award that unjustly enriched the bank at the expense of taxpayers.

It also contended that the 12 per cent interest rate was punitive and detrimental to public finances.

Equity Bank, on its part, opposed the application, maintaining that the award was lawful, the county had waived its objections by failing to raise them during arbitration, and the enforcement process was already underway in Nairobi. The bank further insisted that the county's application was filed out of time and amounted to an abuse of court process.

Justice Charles Kariuki ruled that while the application was lodged on the deadline day despite system delays, the award could not stand.

The judge held that the arbitrator had exhibited bias by disregarding the county's evidence and had ventured into issues beyond the scope of reference.

He further found that the colossal sums awarded, covering anticipated commissions for ten years despite the contract lasting only two, were against public policy and would lead to unjust enrichment.

"The award granted was excessive and unjustifiably high, given the colossal public funds involved. To enforce it would cause gross injustice and injure public finances," Justice Kariuki observed.

Consequently, the court declined the county's request to file additional documents but set aside the arbitral award in its entirety.

The judge also dismissed Equity Bank's bid for recognition and enforcement of the award, instead directing that the matter be referred to a new arbitrator for a fresh hearing and determination.

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