The High Court has directed Naipa Supermarket Limited and New Kenya Co-operative Creameries Limited (KCC) to maintain the existing state of affairs as it considers an application seeking to safeguard the dairy processor’s assets and funds in a KSh 420 million dispute. In directions issued on October 12, 2026, the court ordered Naipa Supermarket to serve KCC with the application by the 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 substantive preservation orders sought by the supermarket.
Naipa Seeks to Block Disposal of KCC Assets
Naipa Supermarket, through its lawyer Phillip Nyachoti, has asked the court to prevent KCC from disposing of its assets or transferring funds from its bank accounts while the dispute is pending. The supermarket argues that proposed restructuring plans involving the dairy processor could threaten its ability to recover the KSh 420 million it claims is owed to it.
Among the orders sought is a prohibition against KCC selling, transferring, charging, leasing or otherwise disposing of its factories, machinery, vehicles, equipment and other properties. Naipa also wants the court to restrain KCC, its agents and financial institutions from withdrawing, transferring or dissipating money held in the company’s bank accounts.
Supermarket Wants Security for KSh 420 Million Claim
In its application, Naipa is asking the court to direct KCC to provide security for the disputed amount within 14 days of service of the order. The proposed security would either be an irrevocable bank guarantee issued by a reputable commercial bank in Kenya or a cash deposit placed in an interest-earning joint escrow account operated in the names of the parties’ advocates.
The supermarket further wants the court to order the attachment of KCC’s factories, real estate and fixed assets if the dairy processor fails to provide the required security. According to Naipa, the proposed measures are necessary to protect its interests while the dispute proceeds to arbitration and any resulting award is enforced.
Dispute Arises From Distribution Agreement
The disagreement between the two companies stems from a distribution agreement signed on January 1, 2022. The agreement provides for arbitration as the mechanism for resolving disputes under Clause 18(b).
Naipa says arbitration proceedings were initiated in accordance with directions issued by the court on December 1, 2025. The hearings are scheduled for November 5 and November 18, 2026. The supermarket is now seeking interim court orders to ensure that assets potentially needed to satisfy a future arbitral award remain available until the proceedings are concluded.
KCC Restructuring Plans Raise Concerns
Naipa has linked its application to recent government announcements concerning the restructuring and modernisation of KCC. The supermarket cites 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. One of the developments highlighted in the application is a proposed government settlement of approximately KSh 8 billion in outstanding debts and liabilities owed by KCC through the forthcoming Supplementary Budget.
Naipa also points to proposed modernisation of KCC’s milk processing plants, machinery and supply infrastructure, as well as changes to its financial operations and payment obligations to dairy farmers. The supermarket argues that these developments create concerns that the processor could transfer or dispose of assets and funds before the arbitration process is completed. It maintains that such transactions could complicate the recovery of any amount awarded in its favour and undermine the effectiveness of the arbitration proceedings.
Court Yet to Decide on Preservation Orders
Naipa says it approached the court promptly following the October policy announcements to protect the assets and funds that could be required to settle its claim. The application is supported by an affidavit sworn by the supermarket’s managing director, Anthony Munene Kibetu. For now, the court’s directions require both companies to maintain the status quo as the application proceeds. The order does not amount to a final determination of the preservation measures requested by Naipa.
The court is expected to hear both parties on October 22, 2026, before considering the application for substantive preservation orders.
