LBDA seeks Appeal Court reprieve in Sh475 million Lake Basin Mall award
Written on
The Lake Basin Development Authority has asked the Court of Appeal for leave to file a late appeal against a High Court judgment enforcing a Sh475.3 million arbitration award in favour of Erdemann Property over the construction of Lake Basin Mall in Kisumu.
The Lake Basin Development Authority (LBDA) and Erdemann Property Limited are locked in a court battle over a Sh475 million arbitration award arising from the construction of Lake Basin Mall in Kisumu, with the State agency seeking permission from the Court of Appeal to file a late appeal.
The dispute stems from a 2013 agreement under which Erdemann was to build the mall for Sh2.45 billion. The contract sum later rose to Sh3.86 billion amid disagreements over financing and payments. In February 2024 an arbitrator ordered LBDA to pay Erdemann Sh344.5 million plus interest at 14% a year from the start of arbitration, with accrued interest of Sh107.7 million at the time and costs later assessed at Sh23 million, bringing the total to Sh475.3 million before further interest. The principal attracts about Sh132,175 in daily interest until payment.
LBDA asked the High Court to set aside the awards, alleging the arbitrator ignored crucial evidence, shifted the burden of proof and was biased, and argued the decision exposed taxpayers to an unjustified burden contrary to public policy. It relied on an expert report that found no basis for the interest claimed on Erdemann's loans and questioned whether borrowings from Development Bank, Kenya Commercial Bank and Co-operative Bank financed the mall's construction. The authority said Erdemann had received Sh4.51 billion from the Exchequer and Co-operative Bank, exceeding the revised contract sum, and cited a Sh4.14 billion final account.
Erdemann managing director Zeyun Yang said LBDA was asking the court to re-examine the merits of the arbitration, arguing that both parties had called witnesses, cross-examined them and presented documents, and that LBDA had identified no issue decided outside the arbitration agreement.
The High Court dismissed LBDA's challenge on January 27, 2026 and allowed Erdemann's application to have the awards recognised and enforced as a High Court judgment, holding that the complaints concerned the assessment of evidence and did not meet the grounds for setting aside an award under the Arbitration Act. The Court of Appeal has referred LBDA's application for more time to a full bench to avoid conflicting decisions, and the application is awaiting hearing.