NAIROBI, Kenya, Dec 7 – A High Court judge has ordered the Kenyan government to pay approximately Sh24 billion to a sugar company in a landmark commercial ruling, citing the state’s failure to honor land lease agreements and protect the investor from squatters.
Justice Florence Wangari of the High Court in Mombasa delivered the ruling in favour of Kwale International Sugar Company Limited (KISCOL), a partnership between Mauritian agribusiness giant Omnicane Limited and Kenya’s Pabari Group. The award is expected to rise further once interest and legal costs are calculated.
The dispute stems from a $300 million integrated sugar project initiated in 2007. Court filings show KISCOL secured a 15,000-acre leasehold to establish an irrigated sugar estate and milling complex in Kwale County, intended to transform the region’s agricultural landscape.
However, the project was immediately hindered by competing land claims. Local residents asserting ancestral rights occupied significant portions of the leased area. Despite KISCOL successfully defending its position in previous land litigation, the court found the state failed to enforce evictions or secure the site for the investor.
Justice Wangari ruled that “quiet and peaceful possession of the land” was a bedrock condition for the investment, a commitment the government failed to uphold in both written assurances and conduct.
Beyond the squatter invasions, the court noted that the government carved out approximately 1,000 hectares (2,470 acres) of the leased land for mineral extraction by Base Titanium without providing compensation or alternative land to KISCOL.
The administrative failures forced the company into repeated financial restructuring with lenders, leading to rising interest burdens and mounting losses as it was unable to utilize nearly half of the project land.
In its defense, the government argued it had delivered vacant possession and claimed KISCOL failed to secure the site. The state also argued the matter was time-barred and filed a counterclaim seeking termination of the lease.
Justice Wangari dismissed the government’s defense in its entirety, emphasizing that the state’s obligations under contract and law were clear and had been breached.
KISCOL’s Legal Adviser, Benson Musili, called the ruling a “monumental victory” for the principle that government commitments must be honored.
“For many investors, both domestic and foreign, the case offers a decisive affirmation that the courts will uphold agreements even when the State is the offending party,” Musili said.
The ruling comes as President William Ruto’s administration seeks to position Kenya as a predictable destination for global capital. While the dispute predates the current administration, the judgment is seen by analysts as a test of the government’s commitment to the rule of law in commercial disputes.
The state has 14 days to appeal the decision.
