KENYA’S STANDARD GUAGE RAILWAY CONTRACT DECLARED ILLEGAL BY COURT
Kenya’s Standard Gauge Railway, a multibillion-dollar Chinese-funded Belt and Road Initiative project is facing serious setbacks that could damage international relations between China and Kenya. On Friday, a Kenyan appellate court declared the rail contract between Kenya and the China Road and Bridge Corporation (CRBC) illegal.
Kenyan activist Okiya Omtatah and the Law Society of Kenya, an association of practising advocates, brought the suit in 2014 in a bid to stop construction of the SGR. They argued the railway was a public project that should have been subject to a fair, competitive and transparent procurement process.
Instead, they said, the contract was single-sourced without being put up for tender, despite the burden of loan repayments falling on Kenyan taxpayers.
But the appeal court’s decision in favour of the plaintiffs comes after a large section of the project has been completed and is operational. While it is unclear what might happen next, it is possible either the Kenyan government or CRBC could take a challenge of the appeal court ruling, or seek its interpretation, in the Supreme Court.
However, legal experts said that Friday’s ruling may also have future implications as it gives leeway for both the government and the CRBC to avoid meeting contractual obligations.
Nelson Havi, president of the law society, suggested the Court of Appeal ruling may provide an excuse for the Kenyan government to dismiss its liability over the project if it wanted to.
Something doesn’t add up in Court of Appeal’s decision declaring completed SGR project unconstitutional and unlawful. It may be a preparatory process for GoK to plead illegality at an international arbitration should China Road and Bridge Corporation sue for breach of contract.
— Nelson Havi (@NelsonHavi) June 19, 2020
CRBC was awarded the US$3.2 billion contract in 2014 to build the rail line running from the port of Mombasa to Kenya’s capital city, Nairobi. Its parent company, the China Communications Construction Company, later stepped in to build an extension from Nairobi to Naivasha, a town in the Central Rift Valley, for another US$1.5 billion.
Both projects have been completed, with passenger and cargo trains operating, and in 2017 the Africa Star Railway Operation Company, a CRBC subsidiary, was awarded the contract to manage the operations of both passenger and cargo trains on the SGR.
SOURCE: South China Morning Post