The High Court has directed Naipa Supermarket Limited and New Kenya Co-operative Creameries Limited (KCC) to preserve the existing state of affairs as it considers an application seeking to protect assets and funds linked to a Sh420 million claim.
In directions issued on October 12, 2026, the court ordered Naipa to serve KCC with its application by close of business on October 14. KCC was granted seven days from the date of service to file and serve its response. The matter is scheduled for an inter partes hearing on October 22, 2026, when both parties will present their arguments. The court has not yet determined whether to grant the specific preservation orders sought by the supermarket.
Naipa moved to court through its lawyer, Phillip Nyachoti, seeking to prevent KCC from disposing of its assets or transferring funds from its bank accounts before the dispute is resolved through arbitration. The supermarket argues that proposed restructuring and modernisation plans involving the dairy processor could jeopardise its ability to recover the amount claimed.
Among the orders sought, Naipa wants the court to restrain KCC from selling, transferring, leasing, charging or otherwise disposing of its factories, machinery, vehicles, equipment and other properties pending the determination of the application and the arbitration proceedings. It is also seeking restrictions on KCC, its agents and financial institutions against withdrawing, transferring or dissipating funds held in the company’s bank accounts.
Additionally, Naipa wants KCC directed to provide security for the KSh420 million claim within 14 days of service of the order. It proposes that the security be provided through an irrevocable bank guarantee issued by a reputable commercial bank in Kenya or a cash deposit into an interest-bearing joint escrow account held by the parties’ advocates.
Should KCC fail to provide the proposed security, the supermarket is asking the court to authorise the attachment of the processor’s factories, real estate and fixed assets pending the determination and enforcement of the arbitral award.
The dispute arises from a distribution agreement dated January 1, 2022, which provides for arbitration as the mechanism for resolving disagreements between the parties under Clause 18(b).
According to Naipa, arbitration proceedings were initiated following directions issued by the court on December 1, 2025. Hearings in the arbitration are scheduled for November 5 and 18, 2026. The supermarket has cited recent government announcements on the restructuring of KCC as part of the basis for its application, arguing that the developments raise concerns about the preservation of assets that could be used to satisfy a future award.
In particular, Naipa referred to remarks made by President William Ruto during the Agriculture and Food Systems Transformation Summit held at the Jamhuri Park ASK Showground in Nairobi from October 7 to 9, 2026.
The supermarket cited a proposed government settlement of approximately Sh8 billion in outstanding debts and liabilities owed by KCC through a forthcoming Supplementary Budget. It also pointed to proposed modernisation of the company’s milk processing plants, machinery and supply infrastructure, alongside changes to its financial operations and payment obligations to dairy farmers.
Naipa contends that these developments create a risk that KCC’s assets or funds could be transferred or depleted before the arbitration process is completed, potentially making recovery of any favourable award difficult. The application is supported by an affidavit sworn by Naipa’s Managing Director, Anthony Munene Kibetu, who outlines the supermarket’s concerns regarding the preservation of the assets and funds.
The court’s current directions require the parties to maintain the status quo as the application proceeds. The substantive preservation orders sought by Naipa remain undetermined, with the next hearing set for October 22, 2026.
