Question 1

Extension of the Registration Deadline for NGOs Under PBO Act

Accepted Answer

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Date: 20th May 2025
Extension of the Registration Deadline for NGOs Under PBO Act
		Authored by Irene Kashindi, FCIArb and Mellap Wataka
																														
Introduction
On 16th May 2025, the Kenyan government published a notice in the gazette indicating that the transition period under Regulation 5(1) of the Fifth Schedule to the Public Benefit Organizations (PBO) Act had been extended for a period of 1 year until 13th May 2026.
History of the Act and its Implementation
To appreciate the import of this extension it is necessary to understand the history of the PBO Act. The Act was passed and assented to on 14th January 2013. However, the Act remained dormant for over a decade until 14th May 2024 when it was operationalized through Legal Notice No.78 of 2024. In the intervening period, the predecessor statute &#8211; The Non-Governmental Organizations Co-ordination Act, 1990 – remained in force with the NGO Coordination Board as the sector regulator.
From the time the PBO Act was operationalized on 14th May 2024, Section 7 of the Act made it mandatory for all existing NGOs and INGOs previously registered under the now repealed NGO Coordination Act to register afresh under the provisions of the PBO Act.
This fresh registration is to be effected by the PBO Regulatory Authority. Nevertheless, and to allow existing organizations to continue to operate while Regulations are being developed, Regulation 5(1) of the Fifth Schedule to the Act provides that
Every non-governmental organization which on the appointed day [14th May 2024] is registered under the Non-Governmental Organizations Act (now repealed) shall, be deemed to be registered as a public benefit organization under this Act have up to one (1) year from the appointed day to seek the formal registration as a public benefit organization under this Act.
Therefore, existing NGOs including INGOs were required to formally apply for registration under the PBO Act within 1 year ending 14th May 2025. This requirement is enforceable under Regulation 5(2) of the Fifth Schedule which provides that an existing organization that fails to seek formal registration within the 1-year period and after receiving notice from the Authority to effect such registration, will cease to have PBO status.
Despite the foregoing, so far it has not been possible for registration as provided for in the PBO Act to be implemented. This is because the PBO Regulations which are expected to contain additional provisions on the modalities of registration -such as prescription of the forms, fees and other requirements for registration- have not yet been passed. Section 69 (4) of the Act requires that before the Regulations are passed, a draft should be published and circulated for comment by relevant stakeholders.
Conclusion
Given the complexities and nuances of the new dispensation under the PBO Act, the process of preparing the draft Regulations that will give full effect to the Act is still underway. It is in light of this that the 1-year extension (until 13th May 2026) has been issued by the government. It is anticipated that the PBO Regulations will be passed in that time.
In the meantime, existing NGOs/INGOs can continue to operate under their existing registration issued under the NGO Coordination Act.
We will continue to monitor the situation and provide additional updates as they become available.
For more information on this please contact us on nairobi@mmkadv.co.ke.

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Question 2

Automatic Expiry of Statutory Instruments under Section 21 of the Statutory Instruments Act, 2013 in Kenya

Accepted Answer

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Date:27th February 2025
AUTOMATIC EXPIRY OF STATUTORY INSTRUMENTS UNDER SECTION 21 OF THE STATUTORY INSTRUMENTS ACT, 2013 IN KENYA
Authored by: Dr. Seth Wekesa
																														
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 &#8211; 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&#8221;, 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 &#8211;
“…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 &#8220;money Bill&#8221;, 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 &#8211;
“…. 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&#8217;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: &#8211;
“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&#8217;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: &#8211;
“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; &#8211;
“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.&#8221;
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; &#8211;
&#8220;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&#8230;&#8221; 
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

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Question 3

Early Termination of Commercial Leases Without a Breakout Clause: An Analysis of The Decision of The Supreme Court in Petition No. E001 Of 2024 Kwanza Estates Limited Vs. JKUAT

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Date: 31st January 2025
EARLY TERMINATION OF COMMERCIAL LEASES WITHOUT A BREAKOUT CLAUSE: AN ANALYSIS OF THE DECISION OF THE SUPREME COURT IN PETITION NO.E001 OF 2024 KWANZA ESTATES LIMITED V JKUAT
Authored by: James Tugee, FCIArb and Mellap Wataka
																														
Introduction
On 6th December 2024, the Supreme Court rendered a seminal judgment that will undeniably affect how commercial leases in Kenya are drafted and enforced. The decision of the apex court should be considered in the context of the Landlord and Tenants (Shops, Hotels and Catering Establishments) Act (the Act).
Despite  the  changing economic land-scape and significant increase in business premises in the country, the Act has survived repeal or drastic overhaul since it was initially enacted in 1965. It has been amended only five times, between 1968 and 2015, which pales in comparison to other statues affecting Kenyan commerce.
The Act is important as it was intended to protect business owners from capricious landlords that would arbitrarily evict them or increase their rents. This protection was provided by the creation of protected tenancies within certain parameters. The history of litigation on protected tenancies shows that such tenancies were extremely difficult to vary or terminate and generally considered by landlords to be unfairly advantageous to tenants of business premises.
As a reaction to this and in adapting to changing economic times, the drafters of commercial leases representing landlords attempted to seal legal loopholes for conversion of commercial leases to protected tenancies by providing for terms longer than 5 years and excluding the notorious breakout clause.
This quickly became the touch- stone for commercial leases in the country, which meant tenants could not break out of their leases before the specified term expired.
Early termination became extremely difficult, and the courts would consistently issue steep penalties against tenants that violated this standard provision by requiring them to pay the rent due for the remainder of the term. This engrained practice retitled the scales heavily in favour of land- lords.
In this article, we analyze the decision of the Supreme Court which has now disturbed the previous order of things and attempted to strike a balance in the protection of both landlords and tenants in commercial leases.
Summary of the Case
In this case JKUAT (referred to herein as the Tenant) signed a lease for a business premises owned by Kwanza Estates Limited (referred to as the Landlord) for a period of 6 years set to expire in April 2022. However, in July 2020 the Tenant gave the Landlord 3 months’ notice of its intention to terminate the lease and vacate the premises. At the lapse of the notice period when the Tenant was in the process of vacating the premises, the Landlord restrained them from forcing so by placing security guards and goons at the entry and exit points of the premises.
The Landlord also demanded rent for the subsequent quarter during which rent was payable. The Tenant failed to pay the rent, and the Landlord levied distress by attaching the Tenant’s property as is typically provided in commercial leases as a remedy for default in payment of rent.
The Tenant eventually vacated the premises in January 2021.
Proceedings in the Environment and Land Court
Against this backdrop the Tenant instituted legal proceedings in the Environment & Land Court (ELC) seeking orders that the commercial lease be declared as terminated on account of frustration. The Tenant detailed various issues that had caused it financial hardship that made it impossible for it to continue meeting its obligations under the terms of the lease key among these being the attendant effects of the COVID-19 pandemic. The Tenant argued that the pan- demic had forced it to close its doors to students in obedience to government directives which had severely impacted its finances. As such the premises could not be used for several months and the purpose for which the lease was entered into could not be fulfilled.
A consent was recorded in the ELC for the Tenant to pay to the Landlord a staggering Kshs.40 Million for restoration of the premises to its original condition as a condition for the Tenant to vacate the premises in January 2021. In the end however, the ELC took the view that the lease having no break clause as is wont of commercial leases, was binding to the parties for the entirety of the lease period ending in 2022. The ELC awarded the Landlord the balance of the rent payable up to the agreed end date totaling over Kshs.71 Million making the total liability of the Tenant to the Land- lord a whooping Kshs.111 Million.
Appeal to the Court of Appeal
The Tenant was dissatisfied with the decision of the ELC and lodged an appeal to the Court of Appeal.
The Tenant argued that the phrase ‘or sooner determination’ contained in the lease meant that the parties envisaged a scenario where the lease could be deter- mined before the end of the specified term. The Court of Appeal rejected this argument on the basis that this issue of interpretation of the lease had not been raised before the ELC and could therefore not be raised for the first time in the appeal.
The Court of Appeal, however, agreed with the Tenant on frustration of the performance of the lease noting that the COVID-19 pandemic and decreased government funding had adversely affected the Tenant’s ability to continue to use the premises and pay rent under the lease. The court criticized the Landlord’s action of restraining the Tenant from vacating the premises in 2020 and later on demanding rent from the Tenant.
The court held this conduct to be “absurd, unfair and unjust” and had the Landlord allowed the Tenant an early exit, it could have entered into a fresh lease with another tenant. Consequently, the court set aside the award of rent for the remainder of the term of the lease and only upheld the award of Kshs.40 Million for restoring the premises to its original condition providing some reprieve to the Tenant.
Proceedings in the Supreme Court
The Landlord was dissatisfied with the decision of the Court of Appeal and moved to the Supreme Court. In the Supreme Court the Landlord argued that the Court of Appeal had erroneously interpreted the effects of the COVID-19 pandemic on the Tenant’s business as frustration of the lease instead of as a force majeure event.
According to the Landlord a force majeure event such as COVID-19 could only be relied upon if the contract between the parties -in this case the lease – provided for it. Additionally, according to the Landlord, the Tenant took up alternative premises after vacating the subject premises only as a means of unlawfully avoiding its obligations under the lease and not as a result of the alleged frustration. The Tenant maintained that the lease was frustrated by supervening events that radically changed what the parties had contemplated under the lease.
Frustration vis-à-vis Force Majeure
In view of these arguments, the Supreme Court accordingly delved into the distinction between force majeure and frustration. The court held that the decision of the High Court in Pankaj Transport PVT Limited v Transnami Kenya Limited [2017] eKLR is persuasive on the application of the doctrine of force majeure and held that:
“The doctrine of force majeure has expanded to include events caused by both human actions and natural occurrences, defining situations beyond the control of parties that prevent them from meeting contractual obligations. Further, the interpretation the courts give is dependent on the choice of wording and events de- lineated by the parties in their contract”
According to the apex court, the key distinction between force majeure and frustration is that force majeure must be recorded in the contract between the parties and frustration is implied into every contract and discharges parties from further performance of their respective obligations due to an unforeseen event making it impossible to carry out the purpose for which they contracted.
In other words, these events alter the circumstances such that performance is no longer possible or logical. The Supreme Court further held that the doctrine of frustration is not absolute and the party alleging it must prove that “the frustrating event occurred without their fault or contribution” to successfully rely on it.
Applying this principle to the facts of the case, the court noted that there was no provision for force majeure in the lease between the Landlord and the Tenant and it was therefore inapplicable. In the court’s view, the tenant had consistently raised the issue of frustration.
Was the Pandemic a Frustrating Event?
The next issue therefore became whether the COVID-19 pandemic and its effect of the Tenant’s business amounted to frustration of the lease.
The court took judicial notice of the effects of the pandemic on all aspects of life and commerce, including on business premises.
The court noted that as a result of the pandemic, government directives were issued on closing down of institutions of learning such as the Tenant which was forced to halt operations. However, such closure was temporary, and any financial hardship caused was transient noting that the Tenant eventually took up alternative premises from which to continue its operations. As such the court held that the effects of the pandemic and the attendant financial hardship occasioned to the Tenant did not constitute an event capable of frustrating the lease.
No Breakout Clause – Breach of Contract by Tenant
The apex court also held that the lease that was the subject of the litigation between the parties did not contain an early exit clause.
The court recognized that such a clause would have converted it to a protected lease under the terms of the Act, which modern leases tend to avoid. In view of this finding, the court held that the Tenant was in error by issuing an early termination notice and therefore in breach of the terms of the lease agreement between the parties.
Balancing Act – Early Termination & Reliefs Available
Nevertheless, and in what seems to be a final twist, the court was of the view that the absence of an early termination clause notwithstanding, it would be unconscionable for a commercial landlord to compel a tenant to remain in occupation of premises the tenant no longer wishes to occupy.
The court further held that requiring a tenant under a commercial lease to pay the rent for the remainder of the lease period is also unreasonable.
According to the learned judges, the remedy available to a landlord whose tenant has exited a commercial premises before the expiry of the term is rent up to the date of vacating and damages for breach of contract which must be specifically pleaded and proven by  the landlord.
The court emphasized that in applying the reasoning set out above, it must balance the interests of both the Landlord and the Tenant in the circumstances of the case. As such, the court was of the view that it would be unreasonable to award the rent for the remainder of the lease (14 months) reckoned from the date the Tenant vacated.
It also noted that the Landlord held a security deposit. In the end, the  court directed the Tenant to pay to the Landlord 3 months’ rent of about Kshs.13.8 Million less the security deposit of Kshs.11.3 Million culminating in a net award of Kshs.2.4 Million.
This is certainly a landmark decision by the Supreme Court that will likely impact dealings between landlords and tenants under commercial leases. The following key lessons can be identified from the decision:
It is likely that commercial leases will retain the provisions requiring them to run for a period of more than 5 years without a breakout clause to avoid conversion of the lease to a protected tenancy under the Act. However, should there be a need for an early breakout, an award of rent for the remainder of the lease period, especially where this is a long period of time, will not be made.
The absence of an early breakout clause in a commercial lease does not prevent a tenant from vacating the premises before the expiry of the term of the lease.
The only remedy available to a landlord for an early termination of a commercial lease without a breakout clause is rent up to last date of occupation and special damages for breach of contract.
The doctrine of force majeure is distinguishable from the doctrine of frustration in that force majeure must be expressly provided for in contract while frustration is implied in every contract.
A party seeking to be discharged from their contractual obligations due to frustration must prove that the supervening event was unforeseen and occurred through no fault of their own.

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Automatic Expiry of Statutory Instruments under Section 21 of the Statutory Instruments Act, 2013 in Kenya

Early Termination of Commercial Leases Without a Breakout Clause: An Analysis of The Decision of The Supreme Court in Petition No. E001 Of 2024 Kwanza Estates Limited Vs. JKUAT

ILO’s Fundamental Principles and Rights at Work: Basic Insights for employers

Examining the right to life in an employment context: Faith Kaburuku & 2 others v. NBK

Mutual Separation Agreements under Kenyan Employment Law

Question 4

An analysis of the Court of Appeal's decision in Samasource EPZ Ltd v Meta Platforms and Others, on mandatory interlocutory injunctions

Accepted Answer

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Date:  31st January 2025
An analysis of the Court of Appeal&#8217;s decision in Samasource EPZ Ltd v Meta Platforms and Others, on mandatory interlocutory injunctions
		Authored by Irene Kashindi, FCIArb and Mellap Wataka
																														
Introduction 
The Court of Appeal in Samasource EPZ Limited t/a Sama v Meta Platforms, Incorporated & 186 others; Kenya Human Rights Commission & 8 others (Interested Parties) (Civil Appeal E595 of 2023) [2024] KECA 1152 (KLR) delivered on 20th September 2024, set aside orders that had been issued by the Employment and Labour Relations Court (ELRC). 
The ELRC had granted several orders at an interlocutory stage, some of which included mandatory injunctive orders.
“Unlike a prohibitory injunction, which preserves the status quo, a mandatory injunction goes well beyond simply maintaining the status quo pendente lite and is particularly disfavoured. A mandatory injunction is seen as upsetting the status quo and is subjected to a heightened preliminary standard.” Court of Appeal in Samasoure EPZ Ltd v Meta Platforms and Others.
Summary of the Case
The dispute arose when content moderators, employed by Samasource EPZ Limited (Sama) to moderate content on behalf of Meta Platforms (Meta) on Facebook app, alleged violations of constitutional and labour rights. 
These claims centred around the moderators&#8217; alleged exposure to harmful working conditions and the termination of employment through what they claimed to be a purportedly unlawful redundancy exercise.
The content moderators&#8217; claims in the ELRC included:

Unlawful redundancy: They argued that the redundancy notices issued by Sama lacked genuine justification, failed to comply with procedural requirements under Section 40 of the Employment Act, and were retaliatory following a previous lawsuit, Daniel Motaung v Sama & Meta Platforms.

Unhealthy working environment: The moderators alleged significant psychological harm due to exposure to disturbing content, inadequate mental health support, and exploitative

Lack of consultation: The moderators claimed they were not adequately consulted on the redundancy, and no reasonable efforts were made to redeploy affected employees.

Employer control and employment relationship: They asserted that Meta’s direct control over their work, including policies, tools, and performance evaluation—created a de facto employment relationship between Meta and the moderators, making Meta liable as their employer.

The moderators sought several remedies at the ELRC, including:

Declarations of employment relationships between the moderators and Meta Platforms.
Extensions of employment contracts pending resolution of the case.
Prohibitory orders preventing Meta and Sama from hiring replacements or retaliating against moderators.
Orders compelling Meta and Sama to provide medical and psychological support.
Regularization of immigration statuses for foreign moderators to enable them to remain in Kenya while pursuing the case.

The ELRC granted several interlocutory orders and made various findings, including:

A finding that an employment relationship existed between the moderators and Meta.
A mandatory order to extend the moderators&#8217; employment contracts pending the resolution of the main petition.
A prohibition against Sama and Meta from recruiting new moderators to replace the petitioners.
An order requiring Sama and Meta to provide medical, psychiatric, and psychological support to the moderators.
An order compelling Sama and Meta to regularize the immigration status of foreign moderators to enable them to remain in Kenya.
An order restraining Sama and Meta from retaliating against the moderators for instituting the legal action.

The appeal to the Court of Appeal 
Sama as supported by Meta platforms, contested the ELRC’s orders at the Court of Appeal, arguing that:

The ELRC improperly determined contested facts, such as the employment relationship, at the interlocutory stage.
The mandatory injunctions disrupted the status quo and exceeded the scope of interim relief. 
The ELRC failed to apply the proper legal threshold for mandatory injunctions.
The orders effectively pre-empted the outcome of the main trial, causing undue prejudice to the appellants.

The Court of Appeal&#8217;s position on mandatory interlocutory injunctions 
The Court of Appeal held that mandatory interlocutory injunctions differ from prohibitory injunctions, which aim to preserve the status quo. The Court emphasized that mandatory injunctions require a heightened preliminary standard, as they often disrupt the existing status quo and may result in finality to disputes prematurely. Quoting the English case of Lo cabail International Finance Ltd vs Agroexport and Others [1986] 1 ALL ER 901, the Court reiterated: “A mandatory injunction ought not to be granted on an interlocutory application in the absence of special circumstances, and then only in clear cases&#8230;before granting such an injunction, the court had to feel a higher degree of assurance that at the trial it would appear that the injunction had rightly been granted.” 
The Court of Appeal outlined the guidelines for granting such relief as follows:

The plaintiff must establish a strong case for trial, exceeding the prima facie standard that applies in prohibitory injunctions. 
The relief must be necessary to prevent irreparable or serious injury that cannot be compensated monetarily. 
The balance of convenience must favour the party seeking the injunction

The Court of Appeal held that the ELRC delved into contested issues, such as the existence of an employment relationship between the moderators and Meta Plat forms and the interpretation of their contracts, effectively issuing findings akin to a final judgment. The Court of Appeal found no exceptional circumstances warranting the mandatory injunctions granted by the ELRC. The Court added that the issues raised by the ELRC were heavily contested and required determination on merit at trial. 
The orders issued risked resolving the main dispute prematurely, potentially rendering the ongoing trial moot. The Court added that consequences of such an order is that it can prejudice the yet to be resolved dispute and even place the dispute beyond the reach of the law because some consequences of a court order may be irreversible. 
In the final analysis, the Court of Appeal set aside the orders granted by the ELRC.
Conclusion 
The decisions, both at the ELRC and the Court of Appeal, attracted significant attention due to the nature of the case. The finding by the ELRC that Meta Platforms was the moderators’ employer particularly drew scrutiny. The ELRC had reached this conclusion based on Meta’s control over key aspects of the moderators’ work, including tools, policies, and performance metrics. This ELRC ruling (which has now been set aside by the Court of Appeal) raised critical questions about the viability of outsourcing and business process outsourcing (BPO) as a strategy for organizations. Furthermore, this case is among the first to address workplace issues arising from digital platforms, possibly marking a wave of similar cases likely to emerge as digital platform work and BPOs expand.
It is important to note that the substantive petition is yet to be determined by the ELRC, leaving the issues raised unresolved as the Court of Appeal was handling an interlocutory appeal. The eventual decision of the ELRC on the main petition will undoubtedly have significant implications for the labour and digital economy landscape in Kenya.

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Question 5

Supreme Court of Kenya on the employer’s duty

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Legal Insights
Supreme Court of Kenya on the employer’s duty
																														
A digest of a recent decision by the Supreme Court of Kenya on the employer’s duty to reasonably accommodate sick employees, indirect discrimination at the workplace and employee’s right to be heard before termination of employment.
The Supreme Court of Kenya [Mwilu (DCJ & VP), Ibrahim, Wanjala, Njoki & Lenaola, SCJJ] in a decision delivered on 22nd October 2021 held that an employer must provide reasonable accommodation to a sick or incapacitated employee or to demonstrate that they would incur undue hardship in providing such accommodation.
The court concluded that the employer’s failure to reasonably accommodate the employee amounted to indirect discrimination. The court also addressed an employee ’s right to be heard before termination of employment for incapacity.

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