Court declines to stay order barring sale of State assets

The Court of Appeal has declined to suspend a High Court judgement that blocked the sale of parastatals, dealing a major blow to the ="https://www.standardmedia.co.ke/business/business/article/2001491537/kenya-kwanza-accused-of-breaking-the-law-in-planned-hotel-sale">Kenya Kwanza administration<.

The government, led by President William Ruto, had sought to privatise ="https://www.standardmedia.co.ke/national/article/2001486697/court-suspends-sale-of-11-parastatals">11 state-owned enterprises<, arguing that they were either loss-making or placing a financial burden on the exchequer.

However, Justices Fred Ochieng, Weldon Korir and Joel Ngugi ruled that the National Assembly and its Speaker, Moses Wetang’ula, had not presented compelling evidence of public interest to justify the request.

The judges also noted that the applicants had failed to demonstrate how the appeal would be rendered futile without a suspension of the judgement, or how the decision would negatively impact Kenya’s public finances.

In September 2024, Justice Chacha Mwita of the High Court’s Constitutional Division nullified the Privatisation Act, 2023, which had paved the way for the rapid disposal of public assets.

The Kenya Kwanza administration had proposed to sell key parastatals, including the ="https://www.standardmedia.co.ke/national/article/2001503345/court-stops-sale-of-kicc-rules-law-on-assets-sale-unconstitutional">Kenyatta International Conference Centre< (KICC), Kenya Pipeline Company (KPC), Kenya Literature Bureau (KLB), New Kenya Cooperative Creameries, and the National Oil Corporation (NOC).

Other entities targeted for privatisation included Kenya Seed Company Limited, Mwea Rice Mills, Western Kenya Rice Mills Limited, Kenya Vehicle Manufacturers Limited, Rivatex East Africa Limited, and the Numerical Machining Complex.

Justice Mwita ruled that the National Assembly had failed to ensure meaningful public participation during the amendment of the Act, thereby breaching its constitutional oversight role.

The Bill, tabled by Majority Leader Kimani Ichung’wah, repealed the Privatisation Act of 2005 and was passed in full by Members of Parliament, leading to the court challenge.

President Ruto assented to the Privatisation Bill, 2023, on 9 October, thereby enabling the Treasury Cabinet Secretary to formulate the privatisation programme, subject to Cabinet approval, without direct involvement from Parliament.

The Bill also gave the Privatisation Authority the power to oversee the process, removing the role previously held by the National Assembly.

In the High Court proceedings, lawyers for the Orange Democratic Movement (ODM), led by Jackson Awele, argued that there was no evidence showing how the sale of the assets would benefit the national budget.

Kevin Oriri, representing journalist Gitahi Ngunyi, contended that the legislation would render Parliament a mere bystander, while the Treasury Cabinet Secretary would act as a conveyor belt in the privatisation process.

“Kenyans are yet to receive specific, comprehensive reports on the sale of each entity from the Auditor-General, which would help determine whether public funds have been applied lawfully and effectively,” Oriri added.

Other petitioners in the case included the Katiba Institute, the Institute of Social Accountability, and the African Centre for Open Accountability.

In the end, Justice Mwita agreed with the petitioners and ruled against the government.

Following the ruling, Attorney-General Dorcas Oduor, the National Assembly and Speaker Wetang’ula sought to have the judgement suspended pending appeal.

“In the result, we find that the applicants have failed to satisfy the requirements for the grant of stay of execution or conservatory orders under Rule 5(2)(b) of the Court of Appeal Rules, 2022,” Justices Ochieng, Korir and Ngugi stated.

“The upshot is that the application lacks merit and is hereby dismissed. Costs shall abide the outcome of the appeal.”

Lawyers for Wetang’ula and the National Assembly had argued that Justice Mwita’s judgement would have far-reaching consequences, including a requirement for Parliament to publish legislation in Kiswahili.

They further claimed that allowing the judgement to stand would strain limited public resources, as the government would be compelled to maintain public assets that provide no tangible benefit.

However, Oriri maintained that the applicants had failed to prove that their appeal was arguable or that it would be rendered nugatory without a stay.

Awele argued that the application did not meet the legal threshold for a stay of execution, as it sought to stay a negative order.

Malidzo Nyawa, representing the Katiba Institute, stated that granting a stay would undermine constitutional principles by enabling the privatisation of strategic public assets without adequate public engagement.

The appellate judges also criticised the lawyers representing Wetang’ula and the National Assembly for claiming that the sale would ease pressure on public resources, noting that they had not submitted any supporting evidence or affidavits.

The court concluded that the High Court judgement merely reinstated the status quo prior to the enactment of the Privatisation Act, 2023, and did not create a legal vacuum.