The Statutory Instruments Act (SIA) 2013 provides for the making, scrutinizing, publishing, operating and enforcing statutory instruments or otherwise subsidiary legislations that establish and govern state corporations and entities. These instruments are vital in governing the conduct of the over 200 state corporations and agencies in Kenya by providing for their legal framework, operational guidelines and compliance requirements

These statutory instruments are issued under their enabling Acts of Parliament, and they encompass rules, orders, regulations and other directives that define the parameters of state corporation’s powers, duties, responsibilities, administrative functions and procedures of operations

Further to making statutory instruments, Parliament is mandated to ensure oversight through the periodical review of statutory instruments.

This includes repealing instruments that no longer serve a continuing purpose and ensuring that these instruments are for- ward-thinking, adaptable and reflect the current societal needs. Section 21 of the Statutory Instruments Act of 2013, in effect, sets a time limit for how long statutory instruments can remain in operation. The section provides that:

“(1) Subject to subsection (3), a statutory instrument is by virtue of this section revoked on the day which is ten years after the making of the statutory instrument unless a. It is sooner repealed or expires; or b. A regulation is made exempting it from expiry.

(2) The Cabinet Secretary responsible may, in consultation with the Committee, make a regulation under this Act extending the operation of a statutory role that would otherwise be revoked by virtue of this section for a period as is specified in the regulation not exceeding twelve months.

(3) Only one extension of the operation of a statutory rule can be made under subsection (2).”

This section explicitly mandates the automatic expiry of statutory instruments after 10 years unless they are repealed, expire or are exempted from expiry by regulation. Further, in consultation with the Committee on Delegated Legislations, the Cabinet Secretary may request Parliament to pass a special regulation extending the validity of the expired statutory instruments for a maximum period of twelve months. This extension can only be done once. 

Thereafter, a new instrument is expected to be created to facilitate the continuity of the lifeline of the various state agencies.

This article analyses the status of section 21 of SIA, considering the proposal to amend it through the Finance Bill 2023 and pronouncements of the High Court, Court of Appeal, and Supreme Court of Kenya on the section. It explores the legal reasoning behind these judicial interventions and their broader implications for legislative oversight, specifically the intro- duction of amendments to SIA in Parliament through a Finance Bill, which is a Money Bill. It also con- siders the broader impacts on constitutional compliance and the rule of law in Kenya.

The Conundrum in Section 21

In January 2023, Parliament exercised its authority under Section 21(2) of SIA.

As a result, the Statutory Instruments (Exemption from Expiry) Regulations 22 was enacted. This granted an emergency 12 – month extension to the more than 1,764 statutory instruments enacted under the various 400 Acts of Parliament. This extension was to buy time for state corporations, entities, and agencies, allowing them to re-publish their subsidiary legislation while ensuring conformity with constitutional dictates such as respect for fundamental human rights and freedoms.

In April 2023, the National Assembly, through the Finance Bill 2023, sought to extend the lifeline of the expired statutory instruments. The introduction of sections 88 & 89 in the Finance Bill 2023 aimed to delete Part V of the Statutory Instruments Act by introducing a new heading, “Purpose for Review of Statutory Instruments”, and repealing Section 21 altogether.

However, the passage of the Finance Bill into law sparked intense legal battles, with scrutiny on the introduction of sections 88 & 89 and the primary purpose of the Finance Bill as a money bill.

This move triggered a wave of litigation, challenging the legality of the Finance Act 2023 at various levels of the judiciary.

At the High Court

After enacting the Finance Act, 2023, litigation ensued in the case of Okoiti & 6 others v Cabinet Secretary for the National Treasury and Planning & 3 others; Commissioner-General, Kenya Revenue Authority & 3 others. The petitioners challenged the inclusion of sections 88 and 89 in the Finance Act, 2023, which repealed section 21 of SIA. They argued that this repeal watered down the purpose of the Finance Bill, 2023, in whole as a Money Bill, therefore amounting to a nullity as the inclusion was unconstitutional, null, and void

Additionally, they contended that the repeal of section 21 without the input of the Senate was procedurally flawed because SIA directly impacted the operations and conduct of county governments

Conversely, the respondents de- fended the repeal, asserting that the repeal of section 21 fell within the legitimate meaning of a Finance Bill, including amending laws on taxation and incidental duties. They justified the repeal of the SIA via sections 88 & 89 of the Finance Bill 2023, arguing that it was informed by the need to –

“…save the statutory instruments by extending the lifespan of subsidiary legislation providing a stable, consistent and predictable regulatory framework for the financial sector and to avoid the tedious and complex, time-consuming and expensive process of reviewing a host of regulations”.

In addition, the respondents maintained that the repeal of section 21 did not warrant the input and approvals of the Senate as it did not affect the functions or powers of county governments. The making of the Statutory Instruments Act was a reserve of the National Assembly and the national government as provided for under Article 119 of the Constitution.

The High Court, in its analysis and determination, first considered whether the Finance Bill 2023 was a Money Bill in terms of Article 114 of the Constitution of Kenya 2010 and whether it contained matters outside the scope of a “money Bill”, including the introduction of sections 88 & 89. The Court, relying on the pith and substance test established in the case of Pevans East Africa Limited & another v Chairman Betting Control and Licensing Board & 7 others [2017] eKLR, observed that the Finance Bill 2023 was a Money Bill.

Majanja J (as he was then), Meoli J and Mugambi J aptly observed that –

“…. we are satisfied applying the pith and substance test that the Finance Bill is a money Bill within the meaning of article 114 of the Constitution. However, it contains certain matters other than those listed in the definition of a money Bill in Article 114(3). To the extent that those matters are extraneous to a money Bill, they are unconstitutional.”

The Court held that introducing sections 88 & 89 in the Finance Bill to repeal Section 21 of SIA was unconstitutional, null and void. As discerned by the Preamble to the Finance Bill, the Finance Bill was an Act of Parliament specifically designed and intended to amend the law relating to various taxes and duties and multiple taxes and duties. 

Further, Article 114 of the Constitution of Kenya was categorical as to what amounts to a money Bill. Introducing matters that do not fall within the purview or sub- stance of what amounts to the meaning of a money Bill was illegal and unconstitutional.

Furthermore, the respondent’s assertion that the repeal clauses were included to save them from imminent expiry was also dis- missed. The court emphasized that the purpose of section 21 was simply to subject subsidiary legislation to periodical review through public engagement, bringing it into conformity with changing circumstances.

Moreover, the Court observed that some of the statutory instruments might directly impact the powers and functions of county governments; hence, it was para- mount to seek the input of the Senate in the amendments.

In conclusion, the Court observed that: –

“The specific extraneous matters identified by the Court pertain to the amendment made to the ….. Repeal section 21 of the Statutory Instruments Act by sections 88 and 89 of the Finance Act, 2023. These amendments are extraneous to a money Bill and are there- fore unconstitutional.”

This position affirmed that a Finance Bill must strictly adhere to its intended objectives and cannot be used as a vehicle for unrelated legislative changes.

At the Court of Appeal

Unhappy with the High Court’s decision, the National Assembly, the Cabinet Secretary for Treasury and Planning, and other respondents appealed the decision to the Court of Appeal vide National Assembly & another v Okoiti & 55 others

The appellants argued that the Finance Act 2023 was procedurally debated and passed by the National Assembly in accordance with the Constitution. The Act was constitutional, with its amendments notwithstanding. They argued that the learned judges got it wrong in declaring sections 88 and 89 unconstitutional.

They contended that a proper reading of Article 114 on what amounts to a money Bill revealed that the Finance Bill was not limit- ed to provisions directly related to taxes or incidental to taxation measures under the Act. They also asserted that the expiry of the statutory instruments directly impacted revenue collection, further justifying their inclusion in the Finance Act.

Immediately after the High Court judgment, the National Assembly introduced the (Statutory Amendment) Bill 2024, seeking to repeal section 21 properly

However, this move became a basis of the respondent’s arguments that the introduction of the amendment bill had rendered the appeal on sections 88 & 89 of the Finance Act 2023 irrelevant, leaving no basis for argumentation. They argued that by initiating new legislative amendments to address the issue of statutory instruments, the appellants had effectively accepted the High Court’s ruling and taken steps to implement it. Therefore, they could not, in good faith, continue to challenge the declaration of unconstitutionality before the Court of Appeal.

The Court was tasked to determine whether the repeal of Section 21 of SIA had been rendered moot (a legal issue or question that no longer requires a resolution or decision because the circumstances have changed, making the issue irrelevant) by introducing a Bill to amend SIA, particularly Section 21. 

The Statutory Instruments (Amendment) Bill 2024 had already undergone its first reading on 14 February 2024 in the National Assembly. In its analysis, the Court of Appeal held that the issue of sections 88 & 89 of the Finance Act had indeed lost its practical significance, hence moot and irrelevant. The Court observed as follows: –

“Similarly, by tabling a Bill in Parliament which seeks to address the shortcomings identified by the High Court in nullifying sections 88 and 89 of the impugned Act, the appellants have not only accepted the court’s decision, but they also have taken decisive steps in complying with the decision.”

These sentiments, in effect, affirmed Sections 88 and 89 as un- constitutional, null and void.

Beyond striking down sections 88 & 89, the Court of Appeal went even further to declare the entire Finance Act 2023 unconstitutional due to lack of adequate public participation in post-amendment changes and failure to follow the proper legislative procedure during its enactment.

At the Supreme Court

The National Assembly (along with other appellants) were dissatisfied with the Court of Appeal’s decision. The Court had declared the whole of the Finance Act 2023 unconstitutional due to inadequate public participation. It also cited the presence of provisions unrelated to the substance of the meaning of a money bill. As a result, the appellants escalated the matter to the Supreme Court in the case of Cabinet Secretary for the National Treasury and Planning and 4 others v Okoiti and 52 others.

Among the key issues that were determined were whether the Finance Act was unconstitutional and whether there was adequate public participation. The Court reversed the Court of Appeal decisions. It affirmed that the Finance Act was constitutional and that due process, including public participation, was followed in enacting it. In its reasoning, the Court stated that; –

“It is common ground that the Court of Appeal, unlike the High Court, declared the entire Act un- constitutional because the legislative process that led to its enactment was fundamentally flawed and in violation of the Constitution. However, based on this Court’s findings in the eight (8) issues herein above, we find conversely that the legislative process (public participation and concurrence) was in accordance with the constitutional edicts. In particular, we find that the Bill underwent the concurrence process under Article 110 (3) of the Constitution; the Bill being a money Bill did not require consideration by the Senate; and the Bill was subjected to public participation which was adequate and satisfactory taking into account the circumstances of enacting a Finance Act. To that extent, we find there was no basis to declare the entire Act unconstitutional.”

While the Supreme Court reinstated the Finance Act 2023, it affirmed the finding that sections 88 and 89 of the Finance Act 2023 intended to amend section 21 of the SIA were irrelevant due to the introduction of the Statutory (Amendment) Bill 2024 in the National Assembly. The Court observed as follows; –

“Consequently, the order that commends itself is an order set- ting aside the Court of Appeal’s judgment save for the finding that the questions relating to Sections 84 (Affordable Housing Levy) 88 and 89 (Statutory Instruments Act) of the Act were moot…” 

Conclusion

The legal controversy surrounding Section 21 of the Statutory Instruments Act high- lights the delicate balance between legis- lative authority and constitutional safe- guards. The High Court declared the amendment of Section 21 through Sections 88 & 89 of the Finance Bill 2023 as unconstitutional, null and void as they fell outside the meaning of a money bill under Article 114 of the Constitution. 

The Court of Appeal and the Supreme Court affirmed that the actions of Parliament to introduce an amendment bill to repeal Section 21 after the High Court judgement was moot, as the issue had been overtaken by circumstances. These decisions under- scored the principle that statutory amendments must align with constitutional frameworks and legislative intent, ensuring that statutory instruments remain subject to periodic review. Any need to repeal the Statutory Instrument Act must follow the proper procedural channels.

The enactment of the Statutory Instruments (Amendment) Bill 2024 into law will provide a lifeline to more than 1,000 subsidiary legislations that expired in January 2023. Clause 7 of the Bill seeks to amend and/or repeal Section 21 of the Act to remove the mandatory requirement for reviewing subsidiary legislation and the automatic expiry of statutory instruments after ten years

On 5 April 2024, the Statutory Instruments (Amendment) Bill 2024 was passed by the National Assembly and consequently forwarded to the Senate for consideration.

Section 21 of SIA remains in force. This means the existing statutory instruments will expire automatically after 10 years with a one-year extension. The only option is for Parliament to expedite the passage of the Statutory Instruments (Amendment) Bill 2024 to solve the legal controversy where state corporations and agencies are operating illegally with outdated statutory instruments, exposing them to potential legal disputes that could have huge financial implications on their operations. Where- as the repeal of Section 21 may provide some form of stability for state agencies and corporations, it can, in the long run, lead to outdated or ineffective regulations without the necessary and timely revisions to align with the evolving legal and socio-economic contexts.

Parliament must develop and establish a structured review mechanism of statutory instruments without necessarily causing a legal vacuum. This may include a transitioned framework that allows statutory instruments to remain in force for a limited time, pending review and re-enactment