The Privatisation Act, 2023 and the Decision to Privatise the Kenya International Conference Center was Unconstitutional
Headnote: the main issue involved the constitutionality of the Privatisation Act and the decision to privatise the Kenya International Conference Center. The court found that the National Assembly did not conduct reasonable, meaningful, adequate and or and effective public participation before passing the Privatisation Act, 2023, hence the entire Privatisation Act, 2023 was, unconstitutional, null and void. In addition, the decision to privatise Kenyatta International Conference Centre, (Kenyatta International Convention Centre) a national monument, contravened Article 11(2) of the Constitution as read with the provisions of the Monuments and Heritage Act and was, therefore, unconstitutional, unlawful null and void.
Orange Democratic Movement Party & 4 others v Speaker of National Assembly & 5 others (Constitutional Petition E491 of 2023 & E010 & E025 of 2024 (Consolidated)) [2024] KEHC 11494 (KLR) (Constitutional and Human Rights) (24 September 2024) (Judgment)
Neutral citation: [2024] KEHC 11494 (KLR)
High Court at Nairobi (Milimani Law Courts)
EC Mwita, J
September 24, 2024
Reported by Robai Nasike Sivikhe
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Constitutional Law – constitutionality of statutes – constitutional validity of a statute – enactment of a statute – public participation during enactment of a statute – whether there was reasonable, meaningful and efficient public participation during the legislative process leading to the enactment of the Privatisation Act – Constitution of Kenya, 2010, article 10 (2) and 118
Constitutional Law – constitutionality of statutes – constitutionality of the Privatisation Act – where the Privatisation Act provided that a privatization programme was considered as ratified if the National Assembly delayed to ratify the same, on expiry of 90 days – whether the provision that a privatization programme was considered as ratified if the National Assembly delayed to ratify the same, on expiry of 90 days, overlooked the National Assembly’s oversight role – whether a provision that side stepped the oversight role of the National Assembly was unconstitutional
Constitutional Law – constitutionality of statutes – constitutionality of the Privatisation Act – where the Privatisation Act provided for Privatisation of entities considered as national monuments – whether the privatization of KICC (Kenya International Conference Center), a national monument and cultural heritage, was Constitutional – Constitution of Kenya, 2010, article 11 (2) (a)
Constitutional Law – legislation – law-making process – Bills that required the concurrence of the Senate before enactment – where the process of the Privatisation Act did not involve the Senate, even though some of the entities to be privatized were located in counties – whether it was necessary to seek concurrence of the senate during enactment of the Privatisation Act
Brief Facts
On October 9, 2023, the President assented to the Privatisation Bill, 2023 as the Privatisation Act, 2023 (the Act) with a commencement of October 27, 2023. The Act repealed the Privatization Act, 2005. The Cabinet Secretary for Treasury and Planning (CS Treasury) then published a privatization programme, (the programme), identifying 10 public entities for privatization, under section 21 of the Act. Members of the public were invited to submit their views on the programme. The entities identified for privatisation were; Kenyatta International Convention Centre (KICC); Kenya Pipeline Company (KPC); the New Kenya Cooperative Creameries (New KCC); Kenya Literature Bureau (KLB); National Oil Corporation of Kenya (NOCK); Kenya Seed Company Limited (KSC); Mwea Rice Mills Ltd (MRM); Western Kenya Rice Mills (WKRM); the New Kenya Cooperative Creameries Limited (NKCC); Numerical Machining Complex Limited (NMC) and Kenya Vehicle Manufacturers Limited (KVM). The proposed privatisation programme generated intense public interest and three petitions, which were consolidated, were filed challenging the constitutionality of the Act as well as a number of sections the Act. The main issues identified for determination, were: whether there was meaningful and effective public participation during the legislative process and whether the impugned sections were constitutionally invalid.
Issues:
Orange Democratic Movement Party & 4 others v Speaker of National Assembly & 5 others (Constitutional Petition E491 of 2023 & E010 & E025 of 2024 (Consolidated)) [2024] KEHC 11494 (KLR) (Constitutional and Human Rights) (24 September 2024) (Judgment)
Neutral citation: [2024] KEHC 11494 (KLR)
High Court at Nairobi (Milimani Law Courts)
EC Mwita, J
September 24, 2024
Reported by Robai Nasike Sivikhe
Download the Decision
Constitutional Law – constitutionality of statutes – constitutional validity of a statute – enactment of a statute – public participation during enactment of a statute – whether there was reasonable, meaningful and efficient public participation during the legislative process leading to the enactment of the Privatisation Act – Constitution of Kenya, 2010, article 10 (2) and 118
Constitutional Law – constitutionality of statutes – constitutionality of the Privatisation Act – where the Privatisation Act provided that a privatization programme was considered as ratified if the National Assembly delayed to ratify the same, on expiry of 90 days – whether the provision that a privatization programme was considered as ratified if the National Assembly delayed to ratify the same, on expiry of 90 days, overlooked the National Assembly’s oversight role – whether a provision that side stepped the oversight role of the National Assembly was unconstitutional
Constitutional Law – constitutionality of statutes – constitutionality of the Privatisation Act – where the Privatisation Act provided for Privatisation of entities considered as national monuments – whether the privatization of KICC (Kenya International Conference Center), a national monument and cultural heritage, was Constitutional – Constitution of Kenya, 2010, article 11 (2) (a)
Constitutional Law – legislation – law-making process – Bills that required the concurrence of the Senate before enactment – where the process of the Privatisation Act did not involve the Senate, even though some of the entities to be privatized were located in counties – whether it was necessary to seek concurrence of the senate during enactment of the Privatisation Act
Brief Facts
On October 9, 2023, the President assented to the Privatisation Bill, 2023 as the Privatisation Act, 2023 (the Act) with a commencement of October 27, 2023. The Act repealed the Privatization Act, 2005. The Cabinet Secretary for Treasury and Planning (CS Treasury) then published a privatization programme, (the programme), identifying 10 public entities for privatization, under section 21 of the Act. Members of the public were invited to submit their views on the programme. The entities identified for privatisation were; Kenyatta International Convention Centre (KICC); Kenya Pipeline Company (KPC); the New Kenya Cooperative Creameries (New KCC); Kenya Literature Bureau (KLB); National Oil Corporation of Kenya (NOCK); Kenya Seed Company Limited (KSC); Mwea Rice Mills Ltd (MRM); Western Kenya Rice Mills (WKRM); the New Kenya Cooperative Creameries Limited (NKCC); Numerical Machining Complex Limited (NMC) and Kenya Vehicle Manufacturers Limited (KVM). The proposed privatisation programme generated intense public interest and three petitions, which were consolidated, were filed challenging the constitutionality of the Act as well as a number of sections the Act. The main issues identified for determination, were: whether there was meaningful and effective public participation during the legislative process and whether the impugned sections were constitutionally invalid.
Issues:
- Whether there was reasonable, meaningful and efficient public participation during the legislative process leading to the enactment of the Privatisation Act.
- Whether a provision that side stepped the oversight role of the National Assembly was unconstitutional
- Whether it was necessary to seek concurrence of the senate during enactment of the Privatisation Act
- Whether the privatization of KICC (Kenya International Conference Center), a national monument and cultural heritage, was Constitutional
Held
- The legislative process leading to enactment of the Privatisation Act fell within the ambit of Article 10 and for that reason, the 4th respondent was bound to comply with the requirement of public participation. Further, Article 118 also required Parliament (in the instant case the 4th respondent), to conduct its business in an open manner. Its sittings and those of its committees must also be open to the public and it should facilitate public participation and peoples’ involvement in the legislative process and other business, including the business of the committees.
- Once the petitioners attacked the legislative process on grounds that it did not meet the constitutional threshold of public participation, the burden fell on the 4th respondent to show to the satisfaction of the Court, that the legislative process complied with the constitutional requirements. That was because it was the 4th respondent’s constitutional obligation to ensure that there was public participation during the conduct of its business and those of its committees: a constitutional burden that the 4th respondent must discharge.
- The 1st and 4th respondents argued that National Assembly Standing Orders gave guidelines on how the 4th respondent should conduct public participation which was complied with when invites were sent out on 15th August 2023. Standing Orders were procedural rules which guided and informed how the 4th respondent should, at a minimum, conduct its business, including public participation. Standing Orders did not, however, override the Constitution and were not a substitute to constitutional edict on public participation as expounded by courts. The 4th respondent should facilitate public participation that was reasonable, meaningful and effective both qualitatively and quantitatively.
- To facilitate public participation would mean and include taking deliberate positive measures and steps that would make it possible for the public to attend and, thereafter, accord them an opportunity to contribute their views on the Bill. When conducting public participation, the 4th respondent was not doing a favour to the public but fulfilling a constitutional command. In that respect, the 4th respondent was required to disseminate information to the public about the Bill; invite those interested to know about the Bill and give them reasonable opportunity to participate and have a say on it. There was no evidence for example, that information was disseminated before the notice was put out in the newspaper on June 12, 2023, inviting members of the public to submit memoranda. The 1st and 4th respondents merely stated that that the Bill was published.
- The copy of the Bill attached to the replying affidavit was the one that was published in the Kenya Gazette and was in English Language. Similarly, the notice dated June 12, 2023 and published in the Daily Nation of the same day calling on members of the public to submit memoranda, was in English language. It was not clear whether there was a Kiswahili version of that Bill and the notice at least for those who did not understand English language for effective dissemination of information. For that reason and from the report, only six memoranda were received and out of those six, three were from institutions affiliated to the government.
- The 4th respondent seemed to have put more focus on a few specific and targeted stakeholders, not more than six, without explaining the reasons why and how they were selected. In other words, the 4th respondent reduced public participation on such an important legislation to selected few at round table discussion and completely ignored and shut out members of the public who may not have heard about the Bill or could not send memoranda by post or email, but would still have had something to say on the legislation if they had been given a reasonable opportunity to do so. Failing to indicate to the public that it would hold a session for public participation was a significant omission on the part of the Committee.
- It was possible to argue, and it was understandable, that not every member of public had to attend and give views during public participation. However, the Constitution contemplated that the public had totake centre stage in governance issues. They had to, therefore, be given a reasonable opportunity to participate in the affairs that affect them, including legislative processes. Public participation must not be reduced to a ritual meant to merely fulfil a constitutional requirement. It must be real, meaningful and effective so that it can influence that legislative process: Anything less, if accepted, would make the whole essence of public participation a farce.
- The 4th respondent had not demonstrated that the primacy of Articles 10 and 118(1) (b) of the Constitution was met during the legislative process leading to enactment of the impugned Act. Limiting public participation to selected few stakeholders, and four participants to be precise, majority of them representing government institutions could not, by any stretch of imagination, be considered reasonable, meaningful and effective public participation both quantitatively and qualitatively as envisioned by the Constitution and elaborated in court pronouncements.
- In dispersing power among State organs, the Constitution conferred on Parliament the exclusive mandate to make laws. In that regard, the 4th respondent was not beyond the reach of national values and principles in Article 10(2) read with Article 118. The 4th respondent was bound to conduct reasonable, meaningful and effective public participation that met the constitutional threshold before enacting laws.
- The impugned legislation, as important as it was to the country, did not meet an important constitutional threshold of public participation. The 4th respondent failed in its constitutional obligation to conduct real, reasonable, meaningful and effective public participation during the legislative process. The National Assembly violated an important constitutional step in the legislative process thus, the Act failed the constitutional validity test.
- There was a general, but rebuttable presumption principle that a court should presume a statute enacted by the legislature to be constitutional, unless the law was clearly unconstitutional or a fundamental right was violated. The burden was, however, on the person alleging unconstitutionality to prove the invalidity. That was because it was assumed that the legislature, as the people’s representative, understood the problems people face and, therefore, enacted legislations with the intention of solving the problems.
- The court should examine the purpose or effect of a statute. The purpose of enacting a legislation, or the effect of implementing such legislation, may lead to nullification of the statute or its provision if found to be inconsistent with the constitution.
- Section 6(a) of the Privstisation Act merely stated the objects of privatisation so as to encourage people or entities outside government to take active role and participate in the economy by changing production and services to the private sector rather than the government-public. That was, turning ownership of public entities from the government to the private sector, including private individuals. Under section 6(c), the object was to reduce the demand for government resources in the entities to be privatised. While under section 6(g), the object was to improve the efficiency of the economy by making it more responsive to market forces. The petitioners’ argument that section 6(a), (c) and (g) established purposes that were not in line with the Bill of Rights more so, Article 43(1) was not correct.
- Where a petitioner argued that a provision contravened the Constitution, he must show, prima facie, that indeed that was the case. The petitioners had not shown how section 6(a), (c), and (g) violate Article 43(1), namely: the right to highest attainable standard of health, access to adequate housing, and reasonable sanitation, freedom from hunger and adequate food of acceptable quality, clean and safe water, social security and education.
- Privatisation meant that the government would be shedding off its ownership or part of it in public entities. The objects and purposes of privatisation as stated in section 6 could not be said to contravene Article 43(1) as read with Article 19 of the Constitution as the petitioners perceived it. In any event, the petitioners had not shown that without the purposes of privatisation in section 6, the rights under Article 43(1) were achievable.
- Article 201 of the Constitution was on the principle of public finance generally. Article 201 (c) stated that the burdens and benefits of the use of resources and public borrowing shall be shared equitably between present and future generations. The petitioners had not demonstrated how the purposes in the impugned sections violate the principle in that Article. The fact that burdens and use of resources be shared equitably would also mean the losses incurred by those entities be shared equitably. At that stage, there was no evidence that any would be resources from privatisation would not be used in accordance with Article 201(c).
- Provisions of section 7 of the Privatisation Act were different from those in section 9 of the same Act. Whereas the role of the Cabinet Secretary was mainly on policy formulation, the functions and or role of the Authority was on implementation of the Act. There wasn’t any real or potential tension between sections 7 and 9 that would render the sections unconstitutional.
- The purpose of seeking ratification under the Act, was to give the 4th respondent, as the people’s representative, an opportunity to check whether the proposed privatisation was in the public interest. Although the intendment of section 22(3) was to ensure that the 4th respondent made a prompt decision on the request to ratify the privatisation programme without delay, the effect of section 22(5) to deem ratification to have been given on expiry of ninety days, was to side step the role of the National Assembly to check whether the privatisation programme was really in the best interest of the people. During the hearing, counsel for the respondents were at pains to explain why ratification should be deemed to have been given and not declined.
- It could not be gainsaid that the 4th respondent exercised a constitutional mandate in oversighting State organs. Further, section 22(3) of the Act affirmed that role and assigned to the 4th respondent the discretion to ratify the privatisation programme or not. Purporting to deem ratification to have been given was to run away from the 4th respondent’s critical constitutional role which was against Kenya’s constitutional philosophy.
- It was also inconceivable and unfathomable that the 4th respondent easily acquiesced to ceding one of its core constitutional mandates at the altar of expeditious privatisation. The Constitution did not contemplate a situation where Parliament would not oversight a State organ for whatever reason. It was, therefore, a dereliction for the 4th respondent to purport to leave privatisation of public entities in the hands of the executive branch without any oversight by the very institution the people entrusted that role with.
- Legislation, or a provision whose purpose may be constitutional would still fail constitutional validity and would not be saved if its effect was offensive to the Constitution. Section 22(5) defied the doctrine of separation of powers and undermined one of the key constitutional mandates of the 4th respondent to oversight the executive. Section 22(5) thus, fails the constitutional test of validity.
- Section 29 provided for the methods of privatisation which had to include—initial public offer of shares; sale of shares by public tender; sales resulting from the exercise of pre-emptive rights; or such other method determined by the Cabinet. Those methods were inconclusive. The petitioners had not demonstrated how those methods would result into discrimination and, therefore, violate Article 27. Initial Public Offers (IPOs) were used before in the privatization of public entities without any questions being raise. There was no constitutional infringement.
- It was clear from both the long title to the Act and section 6, that the Act dealt with privatisation of public entities belonging to the national government and not county governments. In that regard, it was the national government that would be shedding off its hold in those entities and not the county governments. The fact that some, if not all the entities, were domiciled within counties and while some may have something to do with devolved functions, what was to be privatised was ownership and not the functions. There was no reason for faulting the legislative process in excluding the Senate’s concurrence.
- Sections 30 and 31, dealt with privatisation proposals and approvals respectively and, therefore, nothing much turned on their being constitutionally invalid. Section 45 merely provided an opportunity to object to determinations of the privatisation or implementation of the privatisation programme. Section 46 on the other hand, afforded a party aggrieved with the decision of the Authority on the objection, to appeal to the Review Board established under section 47. To the extent that section 45 gave an opportunity to lodge an objection before the Privatisation Authority, was not a limitation of rights. Hence, there was no contravention of or inconsistency with, the Constitution.
- The National Assembly might delegate legislative authority and, in the instant case, delegated that authority to the Cabinet Secretary. While exercising that authority, the Cabinet Secretary had to be alive to the principles in Article 10 and the Statutory Instruments Act. Such delegation of authority had not contravened the Constitution. In any case, decisions made by the Authority were appealable before the Review Board whose decisions were further reviewable by the High Court.
- Section 48 provided for the composition and qualifications of members of the Review Board. The Review Board established under the Act (section 48) was not a tribunal contemplated by the Constitution. It did not, therefore, fall within the ambit of Article 159 of the Constitution which vested judicial authority in courts and tribunals and its members were appointed by the Judicial Service Commission. In that respect, section 48 had not infringed on the independence of the judiciary and the mandate of the Judicial Service Commission to appoint members of tribunals within the judiciary.
- Section 64 was in tandem with Article 94(6). There was limitation of its scope in that the regulations be in the Act and for the effective implementation of the provisions therein and nothing more. Furthermore, the Constitution itself was clear that law and policy-making must comply with the principles in Article 10. The making of regulations must also comply with the provisions of the Statutory Instruments Act. In the circumstances, there was no irreconcilable tension between section 64 and Article 94(6) of the Constitution.
- Some of the entities identified for privatization were of strategic value to the country. However, whether to privatise or not, was an executive decision. The court would only intervene if it was demonstrated that the privatisation programme violated the Constitution and or the law.
- KICC was a monument thus, a cultural heritage that must be conserved and protected as required by the Act. KICC was a national monument and formed part of the country’s cultural heritage. The government held KICC in trust for the people and had an obligation to preserve and protect it for their use and enjoyment. The Constitution required the State to promote national heritage. In that regard, privatising KICC was not the same as promoting that heritage. The Privatisation Act could not, therefore, override both the Constitution and the National Museums and Heritage Act.
- The purported privatization of KICC, including the statue of the founding President, was a violation of the government’s obligation under Article 11(2)(a) of the Constitution read with the Monuments and Heritage Act.
Petition allowed.
Orders
Orders
- A declaration was issued that the National Assembly did not conduct reasonable, meaningful, adequate and or and effective public participation before passing the Privatisation Act, 2023. The entire Privatisation Act, 2023 was, therefore, unconstitutional, null and void.
- A declaration was issued that section 22(5) of the Privatisation Act, 2023 was inconsistent with the Constitution and was unconstitutional, null and void.
- A declaration is hereby issued that the decision to privatise Kenyatta International Conference Centre, (Kenyatta International Convention Centre) a national monument, contravened Article 11(2) of the Constitution as read with the provisions of the Monuments and Heritage Act and was, therefore, unconstitutional, unlawful null and void.
- Each party will bear own costs