US energy firm seeks to renew its Sh37bn Kenya payment claim

A power plant under construction at Olkaria V Geothermal in Naivasha. PHOTO | SALATON NJAU

By BRIAN NGUGI
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Summary

• WalAm Energy Inc has moved back to a World Bank tribunal seeking to revive a Sh37 billion compensation claim for what it alleges is the unlawful revocation of a geothermal licence by Kenya.
• Kenya on July 10 this year won a legal case against the Canadian headquartered energy firm at the Washington-based International Centre for Settlement of Investment Disputes.
• The World Bank tribunal now says in its website WalAm has applied to nullify the ruling and hence it has stayed the enforcement of the award pending the fresh case.

US-Canadian energy firm WalAm Energy Inc has moved back to a World Bank tribunal in Washington seeking to revive a Sh37 billion compensation claim for what it alleges is the unlawful revocation of a geothermal licence by Kenya.

Kenya on July 10 this year won a legal case against the Canadian headquartered energy firm at the Washington-based International Centre for Settlement of Investment Disputes.

WalAM sought to have the licence reinstated and also sought compensation amounting to $339.6 million (Sh37 billion) and interest for expropriation following the cancellation of the energy firm's licence for geothermal development at Suswa, in 2012.

But the World Bank tribunal, ICSID however dismissed the energy firm's bid in a decision that was welcomed by Kenya as a landmark victory.

The World Bank tribunal now says in its website WalAm has applied to nullify the ruling and hence it has stayed the enforcement of the award pending the fresh case.

“The Secretary-General registers an application for annulment of the award filed by WalAm Energy LLC and notifies the parties of the provisional stay of enforcement of the award," said the tribunal in its website. WalAm had not responded to Business Daily queries by press time yesterday. Attorney General Kihara Kariuki had also not responded to our queries by press time.

WalAm sued the Kenya Government following the cancellation of its Geothermal Resources Licence in 2012.

WalAM contended in its law suit that the government "unlawfully" revoked it's Geothermal Resources Licence thereby breaching its obligations under the Geothermal Resources License and the Geothermal Resources Act, including, the unlawful expropriation and the violation of the minimum standard of treatment of foreign investors.

Following the dismissal of its suit, WalAm was expected to bear its own legal fees and expenses and the entirety of the costs of the arbitration.

As such, WalAm was to pay the Government of Kenya $648,857.75 (Sh70 million) corresponding to its share of the costs of the arbitration.

WalAm was also expected to reimburse 75 percent of the Government of Kenya's legal fees and expenses in the amount of Sh441 million and Sh27.2 million) respectively.

The license had been issued by the former Minister for Energy, Kiraitu Murungi on 5 September 2007 under the Geothermal Resources Act of 1982.

It granted WalAm exclusive rights to "explore, drill for, extract, produce and dispose geothermal steam" and other geothermal resources in the Suswa area for a period of thirty years.

However, in October 2012, the Government revoked the license after establishing that WalAm "had not performed its duties under the license" and "did not have capacity to undertake the required exploration and exploitation work" according to Kenya.

Annulment is one of the post-award remedies available to parties within the autonomous, self-contained ICSID system.

The annulment procedure does not however permit a party to seek a re-opening of the tribunal’s consideration of the evidence or decision on the merits, explaind the World Bank tribunal in its website.