Can a contractor pursue insolvency proceedings where the debt is disputed and an arbitration clause exists? This was the central issue before the Court of Appeal in Kwale International Sugar Company Limited v Epco Builders Limited & 2 Others [2025] KECA 227 (KLR), a case with implications for contractors, employers and legal practitioners navigating construction disputes.
In 2012, Kwale Sugar contracted Epco Builders (Epco) to construct a sugar factory under a KES 2.22 billion Engineering, Procurement and Construction (EPC) agreement. A dispute arose over alleged non-payment of KES 712 million. Epco issued a statutory demand and subsequently filed an insolvency petition seeking liquidation of Kwale Sugar. Kwale Sugar applied to set…