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23 Jun 2020

Jevans Nyabiage, South China Morning Post (Hong Kong)

Kenya: Court of Appeal rules contract for China-funded Standard Gauge Railway illegal

"Contract for Kenya’s China-funded railway ruled ‘illegal’", 23 June 2020

[...] Xi congratulated Kenya’s President Uhuru Kenyatta for ensuring the uninterrupted flow of cargo from the Port of Mombasa on the Kenyan coast into the East African hinterland via the Standard Gauge Railway (SGR), which first started operating in 2017. Kenya’s decision, he said, had helped keep trade flowing in the region despite freight restrictions required by Covid-19 containment measures.

But the rail project has faced one setback after another, and the latest could have major implications on its future and any other projects that may follow. On Friday, a Kenyan appellate court declared the rail contract between Kenya and the China Road and Bridge Corporation (CRBC) illegal.

The Court of Appeal, which handles cases arising from the decisions of the High Court in Kenya, ruled that state-owned Kenya Railways had failed to comply with – and violated – the nation’s laws “in the procurement of the SGR project”.

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. [...]

Kenya Railways and CRBC defended the contract, saying the Kenyan government had negotiated a financing agreement with Exim Bank of China for two loans, each for US$1.6 billion, to support the SGR project.

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. [...]