MKU loses much sought arbitration attempt in Sh511million disputed premises, files late defence

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Businessman Simon Gicharu, proprietor of Mount Kenya University (MKU) and currently serving as the chairman of the Rural Electrification and Renewable Energy Corporation (Recrec)

Embattled Mt Kenya University has been allowed to make late filing of defence in a Sh511 million dispute against Step Up Holdings over disputed Nakuru Campus premises.

The university was appealing a ruling in 2011 that found it liable to pay Sh511 million to Step Up Holdings owned by Bernard Gikunda Mwarania.

Court documents show that in 2011 MKU and Step Up Holdings entered a verbal agreement to open a branch in Kericho town.

Until then, Step Up Holdings ran the MKU Nakuru Campus, paying collaborating fees to the university.

Step Up Holdings avers that a month after their verbal agreement, the university forced the firm to close the Kericho Campus leading to a loss of Sh953,881.

The firm claims the university then “illegally took over” the campus by relocating 3,807 students and 295 staff to other premises. The court sided with Step Up Holdings and found the university liable for Sh511 million.

MKU did not place a legal defence arguing the matter was for arbitration.

In 2012, the Court of Appeal in Nakuru dismissed appeal attempt by MKU dismissing the appellants’ application for stay of proceedings pending Arbitration.

“The background to the appeal is that, both the appellant and the respondent entered into a memorandum of understanding (MOU) containing an arbitration clause.” Court records show.

However, Nakuru High Court judge Justice Hillary Chemitei has allowed the university to file defence Sh511million dispute.

“The interlocutory judgement entered against the applicant or defendant on November 17, 2011, is hereby set aside,” ruled Justice Hilary Chemitei.

“The applicant shall within 30 days from the date herein deposit Sh511million in a joint interest-earning account in the names of both counsel for the applicant and the defendant pending the hearing and determination of the suit,” stated Justice Chetimei.

The court also ordered Step Up Holdings to provide a Sh511million bank guarantee from a reputable bank within 30 days pending the hearing of the case.

Provisions of the MoU cited by the university in its flopped attempt to push for arbitration that was dismissed by the Court of Appeal provided as follows:

““Settlement of Disputes.

(1) The Chairman of Mt. Kenya University and the Chairman of Step up Holdings retain the final say on any matter which calls for interpretation of this MOU and any other agreements related to or incidental to this MOU.

(2) The parties shall use their efforts to settle amicable (sic?) all the disputes arising out of or in connection with this agreement or interpretations hereof.

(3) Any dispute, difference or question which may arise at any one time between the parties which cannot be settled amicably within thirty (30) days after receipt by one party of the other party’s request for such amicable settlement shall be referred to the decision of a single arbitrator to be agreed upon by the two parties or in default of agreement within fourteen (14) days of each party raising such disputes shall write to the Chairman of the Chartered Institute of Arbitrators, Kenya Branch in accordance with and subject to the provisions of the Arbitration Act, Cap 49 Laws of Kenya or any statutory Modification or re-enactment thereof for the time being in force.

(4) Any party not satisfied with the Arbitration shall have the right to seek redress in a court of law.” The records show.

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