Kenya Airways (KQ) has lost a High Court application seeking to block real estate developer EPCO Builders from pursuing a compensation claim over a 312-unit staff housing project in Embakasi, Nairobi. In a ruling delivered on November 5, 2026, Justice Moses Ado dismissed the airline's attempt to overturn an arbitrator's decision allowing the developer's claim to proceed.
The dispute dates back to October 16, 2009, when the two companies entered into a housing project agreement. Under the arrangement, Kenya Airways was to transfer three parcels of land to EPCO, which would construct 312 residential units for purchase by the airline's employees.
The development was expected to include two-bedroom houses priced at Sh2.6 million and three-bedroom units costing Sh3.9 million. However, EPCO accused the airline of delaying the transfer of the land and failing to provide vacant possession, disrupting the construction schedule and increasing project costs.
The contractor claimed that the delays affected its ability to secure financing and complete the development within the agreed timelines. It subsequently sought compensation for additional construction expenses, financing costs and other losses allegedly arising from the delays.
EPCO first filed a lawsuit against Kenya Airways in April 2014. The airline later applied to have the dispute referred to arbitration, with the High Court granting the request in July 2018. The developer formally commenced arbitration proceedings in March 2023.
Kenya Airways challenged the compensation claim, arguing that it was filed outside the six-year limitation period generally applicable to contractual disputes under the Limitation of Actions Act. The airline maintained that the alleged breach occurred around 2010 and that EPCO had waited too long to pursue compensation.
However, arbitrator Kyalo Mbobu rejected the objection in an interim award issued on June 7, 2024. He found that Kenya Airways had waived its right to challenge the tribunal's jurisdiction by failing to raise the objection at the appropriate stage of the proceedings.
The airline subsequently approached the High Court seeking to set aside the arbitrator's decision under Section 35 of the Arbitration Act. Justice Ado ruled that KQ should instead have used Section 17(6), which provides a specific procedure for challenging preliminary jurisdiction decisions within 30 days.
The judge also rejected the airline's argument that the arbitrator's decision violated public policy, noting that the setting-aside procedure could not be used as an appeal against the arbitrator's legal reasoning.
The ruling leaves EPCO's compensation claim open for determination through arbitration. Kenya Airways could ultimately be required to pay damages if the contractor establishes its case, although the amount, if any, remains to be determined.
