In a major legal decision, the Nairobi Commercial Court has ordered Equity Bank to pay KSh 485 million to Zakhem International Construction Limited. The funds will come directly from the Kenya Pipeline Company’s (KPC) bank accounts. This ruling ends a long-standing legal dispute involving unpaid dues for pipeline construction work.
How It Started
In 2014, Zakhem signed a KSh 48 billion deal to construct the Mombasa–Nairobi oil pipeline. Over time, the firm claimed that KPC failed to pay for completed work. This sparked a court battle over outstanding payments, penalties, and interest.
In 2020, the High Court awarded Zakhem USD 44 million (KSh 5.6 billion). The court instructed KPC to pay taxes to the Kenya Revenue Authority (KRA) and clear part of the debt to Zakhem. KRA received KSh 3.09 billion, and Zakhem got KSh 915 million. But KSh 485 million remained unsettled.
The Court Ruling
On May 29, 2025, Justice Ngenye Macharia ordered Equity Bank to release KSh 485 million from KPC’s accounts. The judge issued a garnishee order, which allows a creditor to collect money directly from a debtor’s bank.
The court issued the original garnishee order in 2021. However, KPC challenged the ruling and filed an appeal. On March 11, 2025, Zakhem withdrew that appeal, clearing the way for the court to enforce payment.
Why Equity Bank Is Involved
Zakhem first tried to recover the money through Standard Chartered and Stanbic Bank, but those attempts failed. Later, the firm discovered that Equity Bank held enough funds belonging to KPC.
The court issued a fresh garnishee order on April 18, 2025, targeting Equity Bank. KPC opposed the move and asked the court to dismiss the order. But it later withdrew that application, leaving no obstacle for payment.
KPC’s Stand
KPC claims it settled the matter in September 2023 through a consent agreement. It argues that all tax and contractor payments were cleared. But the court disagreed.
According to the judgment, the KSh 485 million wasn’t included in the consent agreement. So, Zakhem remained within its rights to pursue the money through legal means.
The court also noted that Zakhem had earlier attempted to attach an extra KSh 926 million, but a separate ruling dismissed that claim. The current case, however, relates only to the earlier USD 44 million that the court had already awarded.
Read: Court Rejects Equity Bank’s Appeal Over Drug-Intoxicated Client Compensation
Key Implications
This ruling sends a strong message to contractors, financial institutions, and state-owned companies.
- Zakhem now receives a significant portion of its unpaid dues, showing that Kenyan courts can enforce commercial rulings effectively.
- Equity Bank must act fast to comply. Ignoring a garnishee order can result in penalties or contempt of court.
- KPC faces pressure to improve how it handles contract payments and legal disputes.
Why It Matters
This case shows that garnishee orders work. Kenyan courts are ready to protect creditors’ rights—even against powerful government bodies. It also reminds financial institutions that they must honor court directives, regardless of the client involved.
The judgment also encourages foreign contractors and investors. It proves that Kenya offers legal protection for commercial disputes.
What Happens Next?
- Equity Bank ordered to pay the funds immediately.
- Zakhem could go back to court to claim any remaining balances from the original deal.
- KPC might review its legal strategy or strengthen future contracts to avoid similar issues.
Final Thoughts
The order for Equity Bank to pay Zakhem from KPC accounts brings closure to a long and costly dispute. It highlights the power of the courts and the importance of honoring contracts. For Kenya’s infrastructure sector, it sets a vital example.
This ruling promotes accountability and trust—both critical for large public projects.
