The Court of Appeal has overturned a High Court decision that suspended government directives requiring that all cargo imported through the port of Mombasa be transported to Nairobi and the hinterland exclusively through the standard gauge railway (SGR).
Following the ruling, the directives by the government will continue to be implemented until the case is heard and determined.
In its appeal, the Kenya Ports Authority (KPA) argued that it would be impossible to meet repayment obligations for the SGR loan, in case the directives were quashed.
The government signed a “take or pay agreement” during construction of the SGR, which means that KPA would consign to Kenya Railways as a carrier of a set volume of freight and or other cargo, pursuant to commencement of SGR operations to KPA’s inland container depot (ICD) at Embakasi.
“We hold and find that the applicant (KPA) has shown that indeed it has an arguable appeal and has also shown its appeal would be rendered nugatory should the application fail,” ruled Appellate judges Asike Makhandia, Hellen Omondi and Mumbi Ngugi.
In November last year, the directives by the government were quashed to allow the government to conduct public participation on the directives, which was one of the gaps identified by the court.