High Court Judge withdraws from Ksh.3B Kenya Breweries, contractor dispute

A high-stakes commercial dispute involving billions of shillings has taken a fresh twist after High Court Judge Freda Mugambi recused herself from hearing a petition filed by Kenya Breweries Limited (KBL) seeking to halt Ksh.3 billion arbitration proceedings involving contractor JILK Construction Company Limited.

When the matter came up for directions on Friday, Justice Mugambi stepped aside, citing concerns over a possible conflict of interest.

She said it was prudent to withdraw in order to safeguard public confidence in the court’s impartiality.

The judge directed that the file be placed before the Principal Judge of the Commercial Division on February 19, 2026, for reassignment and further directions.

JILK had urged the court to fast-track the petition, pointing to the planned exit of Diageo PLC, the London-based multinational that holds a majority stake in KBL’s parent company.

Diageo is expected to divest from the Kenyan market by July 31, 2026, following the sale of its shares to Asahi Group Holdings.

The contractor argues that the impending ownership transition could complicate enforcement or settlement of any arbitral award.

JILK was awarded the civil works contract between October 2017 and March 2018 for what was described as one of the largest private investments in Western Kenya since independence.

The project aimed to integrate more than 15,000 sorghum farmers into KBL’s value chain and create over 100,000 jobs.

However, disputes arose during implementation. JILK exited the site in November 2019 after receiving approximately Ksh.1.2 billion.

What began as a Ksh.163 million claim later escalated to Ksh.2.4 billion a dramatic increase that KBL describes as unjustified and indicative of a broader scheme.

Before the arbitral tribunal could deliver its award, KBL moved to the High Court in December 2024 seeking to terminate the arbitration.

Through lawyer Kamau Karuri, the brewer alleged corruption and collusion between the arbitrator and JILK’s chief executive, Sammy Maina Kamau.

Separately, JILK has filed a Notice of Motion against Diageo PLC, Kenya Breweries Limited, East African Breweries Ltd (EABL), and the Competition Authority of Kenya (CAK), seeking orders compelling the first three respondents to reserve and deposit Ksh.3 billion in court pending the hearing and determination of the suit.

The contractor is also asking the court to fast-track the matter and deliver judgment by April 30, 2026, ahead of anticipated regulatory approvals for the sale of Diageo’s stake in EABL to Asahi, expected between May and June 2026.

Although the contracts were formally between JILK and KBL, the contractor claims that Diageo exercised full control over the project, including supervision, procurement, and financial decisions, effectively acting as the true client.

JILK maintains that unresolved disputes from the project prompted it to initiate arbitration proceedings, in which it is claiming Ksh.2.45 billion plus interest and costs.

Final submissions in the arbitration were filed in August and November 2024, paving the way for delivery of an award.

Meanwhile, KBL’s Chief Executive Officer Jane Karuku has filed an application seeking to strike out what the company terms as “offending allegations” in JILK’s pleadings.

Through lawyer Cecil Miller, the company argues that it has been unnecessarily and improperly mentioned in the contractor’s filings.

Court papers state that the allegations made by the second respondent include references to sexual harassment claims against a non-party to the proceedings.

Miller contends that the allegations do not flow from or bear any connection to the commercial dispute before the court and are therefore prejudicial and irrelevant.

He further urged the court to determine the application expeditiously to avoid unnecessary delays in the hearing of the main suit.

The matter now awaits reassignment before a new judge in the Commercial Division.