Kenya Sugar Board Abdicated Statutory Duty Over Export Licence

Republic vs Kenya Sugar Board Ex-parte Mumias Sugar Company Ltd (2012) Eklr www.Kenyalaw.org

High Court at Nairobi

JR Casa No 160 of 2011

W.K Korir J.

July 11, 2012

The High Court sitting in Nairobi has ruled that the Kenya Sugar Board decision denying Mumias Sugar Company Limited an export permit was influenced by external forces. This was apparently due to the fact that a letter purporting to bar Mumia sugar company from effecting the said export came from the Permanent Secretery, Ministry of Agriculture, rather than the Kenya Sugar Board. Justice Korir , held that the Kenya Sugar Board abdicated and abandoned its responsibility of issuing export licences through a stranger, the Permanent Secretary, even though it pretended to have made a decision to Mumias Sugar Company Ltd by itself.

The decision was as a result of an application triggered by a letter from the Permanent Secretary Ministry of Agriculture declining to grant Mumias Sugar Company export permit. The applicant brought Judicial review proceedings seeking inter-alia orders of certiorari and mandamus to quash the decision of the Kenya Sugar Board declining to grant it an export permit to export 15,000 metric tonnes of sugar to Czarnikow Group Ltd in London under the EPA-EBA government to government agreement and to compel the Kenya Sugar Board to comply with the provisions of the Sugar Act (Cap 342) respectively.

The EPA-EBA is an economic partnership agreement entered between the European union and the East African Community. Under the said trade agreement, partner states of the East African Community are allowed to export certain goods duty free including sugar to member states of the European Union. Each member state of the East African Community is allocated a certain quota of sugar export to the European Community.

The applicant through a verifying affidavit submitted that Sections 4 (2) (f),6,7,and 8 of the Sugar Act (Cap 342) as read with regulations 3(3) and 4 of the Sugar (imports, exports and By-products) Regulations; 2008 and the first schedule of the Sugar Act, paragraph 7 conferred the authority to licence exporters of sugar exclusively on the Kenya Sugar Board. Further, that it also sets parameters to be considered by the Board in deciding whether or not to grant the licence, arguing that it was an irrelevant consideration when the Sugar Board declined to grant it a permit to export 15000 metric tonnes of sugar to Czarnikow Group London under the EPA – EBA agreement due to failure to obtain the necessary concurrences by certain arms of government. The applicant also submitted that there was a legitimate expectation on its parts since it was the accredited exporter of sugar on behalf of the Kenyan Government under the agreement.

The respondent (Sugar Board) on their part opposed the application by submitting that the EPA – EBA agreement was a government to government agreement which envisaged the participation of the agreement of the government of Kenya through the Ministry of Agriculture. It also argued that the respondent was exporting sugar as an agent of the government and the grant of an export licence was not automatic. In addition, it submitted that the government had also exhausted its quota for export to the European Union for that particular year and further that the Board was unable to perform its duties at the time the applicant applied for export licence owing to an order issued by the Kisumu High Court staying the composition of the Sugar Board. The respondent also submitted that the applicant had failed to join a material and relevant party namely the Minister of Agriculture and by extension the Attorney General.

In reply to the respondent's (Sugar Board) submissions the applicant argued that the High Court decision was made much later after the application for the export permit. It was further submitted that the respondent’s claim that there was no Board in place only confirmed that no decision had been made on its application for an export permit. The High Court after hearing rival submissions considered inter-alia who was the proper person to have granted an export permit under the Sugar Act and whether the Sugar Board had an obligation to have consulted with the parent ministry.

Justice Korir was of the view that from the reading of the Sugar Act and the regulations therein, it clearly showed that the Sugar Board was the body mandated by the law to issue sugar import and export licence and that the Minister of Agriculture or the officers under him had no authority when it came to issuance of export licence. The court observed that although the Permanent Secretary in the Ministry of Agriculture was a member of the sugar board, it could not have been assumed that the function of issuing import and export licence had been delegated to him since there was no evidence of such delegation.

The court was further of the view that the sugar board did not make any decision. It simply communicated the decision of the Permanent Secretary to the Ministry of Agriculture to the applicant and that even if the Board had made the decision, then that decision was tainted because it was influenced by external forces and therefore the Board took extraneous factors into consideration when making its decision. The Judge however stated that it was not wrong for a Board to consult the parent ministry before making its decision on certain matters and those consultations were proper and a pointer to good governance. What was important was how the respondent handled the fruits of such consultations, the court stated.

The court further observed that the fact that the Permanent Secretary had to write to the Board supported the fact that the Board never made a decision on the application, that had it made such a decision then the views of the Permanent Secretary would have been found in the minutes of the meeting which had discussed the application and not in the said letter. As to whether the applicant ought to have enjoined the Minister and the Attorney General, the court held that the board was a legal entity which could sue and be sued and that there was no need to have enjoined the Minister and the Attorney General in the proceedings.

In view of the aforesaid the court held that the board had clearly displayed a lethargic and lukewarm attitude towards its mandate and that it had a duty of issuing export licences. It had abdicated and abandoned its responsibilities to a stranger. Ultimately the court issued an order of mandamus directing the respondent to consider the applicant’s application in accordance with the Sugar Act and make the said decision within forty five days (45).