NSSF loses Sh20b case
Aug 25, 2009
The National Social Security Fund has lost a $8.8m (about sh20b) case to Alcon International, a construction company it contracted to build the 19-storey Workers’ House.
By Hilary Nsambu and Anne Mugisa
The National Social Security Fund has lost a $8.8m (about sh20b) case to Alcon International, a construction company it contracted to build the 19-storey Workers’ House.
The Court of Appeal yesterday dismissed all grounds given by the fund, and upheld the lower court’s multi-million dollar award to the company by an arbitrator.
The NSSF lawyers said they would take the matter to the Supreme Court.
The dispute between NSSF and Alcon, a Kenyan firm, has dragged for 11 years.
Sentoogo and Partners were the architect of the $21m project.
In May 1998, NSSF cancelled the contract, accusing Alcon of stalling work, escalating the cost from $21m to $35m and sub-contracting a third party without its knowledge.
NSSF instead handed the work to Roko Construction.
However, Alcon still retains the land title for the property.
Following the cancellation of its contract, Alcon sued NSSF for breach of contract, demanding $28m.
The High Court ordered the case to go to an arbitrator, which awarded Alcon $8.8m.
NSSF protested to the High Court but Justice Stella Arach Amoko dismissed the appeal. NSSF then took the matter to the Court of Appeal, saying Amoko made a mistake in referring the matter to an arbitrator.
The NSSF gave 14 grounds. It said the arbitration “had been improperly procured†and that the arbitrator was involved in misconduct.
The Fund further contended that the judge had made an error to dismiss the accusation that Alcon had “obtained and sustained the contract through bribery.â€
But in a ruling yesterday, the Court of Appeal instead ordered the NSSF to pay costs to Alcon.
On the issue of bribery, the court ruled: “This ground was not sufficiently proven. The standard of proof for fraud being higher than in ordinary civil matters, was not discharged.â€
“I would, therefore, dismiss this appeal with costs to Alcon,†said Justice Alice Mpagi-Bahigeine, who wrote the lead judgement.
She said her colleagues, Justices Amos Twinomujuni and Steven Kavuma, agreed.
NSSF was represented by Kampala lawyers Dr. Joseph Byamugisha and George Kabugo. Alcon had Enos Tumusiime and MacDusman Kabega.
The money NSSF is likely to lose in the case could be between sh30b and sh40b when the costs of the lawyers are included.
Last year, there were reports that the NSSF board had agreed to an out-of-court settlement with Alcon. The NSSF wanted to pay about sh18b to Alcon and another sh14b in costs to the law firms, bringing the total payout to about sh32b. But NSSF lawyers advised against it.
The then boss, David Jamwa, said the Fund had received “independent legal advice†to cut its losses by settling the matter out of court because proceeding with the case would be more costly.
However, activists and workers protested against Jamwa’s suggestion.
The National Social Security Fund has lost a $8.8m (about sh20b) case to Alcon International, a construction company it contracted to build the 19-storey Workers’ House.
The Court of Appeal yesterday dismissed all grounds given by the fund, and upheld the lower court’s multi-million dollar award to the company by an arbitrator.
The NSSF lawyers said they would take the matter to the Supreme Court.
The dispute between NSSF and Alcon, a Kenyan firm, has dragged for 11 years.
Sentoogo and Partners were the architect of the $21m project.
In May 1998, NSSF cancelled the contract, accusing Alcon of stalling work, escalating the cost from $21m to $35m and sub-contracting a third party without its knowledge.
NSSF instead handed the work to Roko Construction.
However, Alcon still retains the land title for the property.
Following the cancellation of its contract, Alcon sued NSSF for breach of contract, demanding $28m.
The High Court ordered the case to go to an arbitrator, which awarded Alcon $8.8m.
NSSF protested to the High Court but Justice Stella Arach Amoko dismissed the appeal. NSSF then took the matter to the Court of Appeal, saying Amoko made a mistake in referring the matter to an arbitrator.
The NSSF gave 14 grounds. It said the arbitration “had been improperly procured†and that the arbitrator was involved in misconduct.
The Fund further contended that the judge had made an error to dismiss the accusation that Alcon had “obtained and sustained the contract through bribery.â€
But in a ruling yesterday, the Court of Appeal instead ordered the NSSF to pay costs to Alcon.
On the issue of bribery, the court ruled: “This ground was not sufficiently proven. The standard of proof for fraud being higher than in ordinary civil matters, was not discharged.â€
“I would, therefore, dismiss this appeal with costs to Alcon,†said Justice Alice Mpagi-Bahigeine, who wrote the lead judgement.
She said her colleagues, Justices Amos Twinomujuni and Steven Kavuma, agreed.
NSSF was represented by Kampala lawyers Dr. Joseph Byamugisha and George Kabugo. Alcon had Enos Tumusiime and MacDusman Kabega.
The money NSSF is likely to lose in the case could be between sh30b and sh40b when the costs of the lawyers are included.
Last year, there were reports that the NSSF board had agreed to an out-of-court settlement with Alcon. The NSSF wanted to pay about sh18b to Alcon and another sh14b in costs to the law firms, bringing the total payout to about sh32b. But NSSF lawyers advised against it.
The then boss, David Jamwa, said the Fund had received “independent legal advice†to cut its losses by settling the matter out of court because proceeding with the case would be more costly.
However, activists and workers protested against Jamwa’s suggestion.