Mitsubishi to pay local elevator firm Sh1bn

A businessman walks past the Mitsubishi Motors headquarters in Tokyo on April 20, 2016. AFP PHOTO | TOSHIFUMI KITAMURA 

By BRIAN WASUNA

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Summary

• Mits says Mitsubishi cornered it into signing an agreement that would grant the Japanese firm access to the entire business of the Kenyan firm, including confidential documents.
• The agreement also saw a Mitsubishi agent granted a position equivalent of general manager within the Kenyan firm.
• The Japanese firm argues that under Kenyan law, once arbitration proceedings have commenced, any court action is automatically suspended until a final decision is delivered.

Japanese multinational Mitsubishi has been ordered to pay a Kenyan lift company, Mits Electrical, a Sh1.2 billion compensation for hijacking the local firm’s supplies business in breach of a standing contract between them.

The Japanese firm was ordered to pay the hefty sum after it failed to enter a defence in the suit filed by Mits at Nairobi’s Milimani Commercial court.

“I hereby enter judgment against Mitsubishi Electric Corporation as prayed in the plaint, Mitsubishi Electric Corporation having been served with the summons to enter appearance through substituted service and having failed to enter appearance or file a defence within the prescribed period,” the deputy registrar ruled.

Mitsubishi, through its subsidiary Mitsubishi Electric Corporation, has however obtained a temporary order suspending the deputy registrar’s decision as it seeks to fight the claim.

Mitsubishi says the default judgment was entered while its application to refer the dispute to arbitration was pending before court, and should therefore be set aside.

Mits says Mitsubishi cornered it into signing an agreement that would grant the Japanese firm access to the entire business of the Kenyan firm, including confidential documents.

The agreement also saw a Mitsubishi agent granted a position equivalent of general manager within the Kenyan firm. Mits says Mitsubishi has since approached a number of its clients for business, including Southern Sun Hotels (Tanzania), Co-op Bank, the National Social Security Fund, BAT, and Best Western Premier Hotel.

Mitsubishi Electric’s building systems overseas marketing general manager, Tomoichiro Takayama, however holds that the Japanese firm has instituted arbitration proceedings at the International Chamber of Commerce, signalling its intention to resolve the dispute urgently.

The Japanese firm argues that under Kenyan law, once arbitration proceedings have commenced, any court action is automatically suspended until a final decision is delivered.

Justice Joseph Sergon ordered the parties to get a hearing date from the court registry, and promised to issue further directions when both parties will have submitted their arguments before him.

Mits says the two firms had agreed to sign a new deal in 2009 but Mitsubishi refused to furnish it with the new contract, instead insisting on short-term agreements for “trial periods” which have been renewed since 2009.

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