Corporate Case

High Court declares 23 laws unconstitutional, Null and Void

On 29th October, 2020 the High Court declared 23 Statutes enacted by the National Assembly without consideration of the Senate to be unconstitutional, null and void. This arose from a petition filed by the Senate against the National Assembly.

Key Issues for Determination

The key issue in the Petition was the interpretation of Article 110 of the Constitution 2010 which talks about how Bills concerning County Governments are to be passed. It defines a Bill concerning County Government and prescribes the procedure for the enactment of such Bills into law. Its interpretation has been disputed, and this is what necessitated the Senate to file the Petition.

While determining the Petition, the High Court affirmed the Supreme Court’s Advisory Opinion on a similar issue by holding that concurrence of Speakers of both Houses of Parliament is a mandatory preliminary step in the legislative process. (In the Matter of the Speaker of the Senate & Another (Advisory Opinion Reference No. 2 of 2013) eKLR).

The High Court asserted the position that passage of any law without concurrence of the Speakers of Both Houses is unconstitutional, and went further to hold that neither of the Speakers can make a decision on whether a Bill concerns counties without consulting the other Speaker.

Which Laws are Affected?

The following 23 Acts of Parliament that had been passed by the National Assembly without reference to the Senate were therefore declared unconstitutional, null and void:

  1. The Public Trustee (Amendment) Act, No. 6 of the 2018
  2. The Building Surveyors Act, 2018, No. 19 of 2018
  3. The Computer Misuse and Cybercrime, Act, No. 5 of 2018
  4. The Statute Law (Miscellaneous Amendment Act), No. 4 of 2018
  5. The Kenya Coast Guard Service Act. No. 11 of 2018
  6. The Tax Laws (Amendments) Act, No. 9 of 2018
  7. The Statute Law (Miscellaneous Amendments) Act, No. 18 of 2018
  8. The Supplementary Appropriation Act, No. 2 of 2018;
  9. The Equalization Fund Appropriation Act No. 3 of 2018
  10. The Sacco Societies (Amendment) Act, 2018 No. 16 of 2018
  11. The Finance Act, No. 10 of 2018
  12. The Appropriations Act, No. 7 of 2018The Capital Markets (Amendments) Act, No. 15 of 2018
  13. The National Youth Service Act No. 17 of 2018
  14. The Supplementary Appropriations Act, No. 13 of 2018
  15. The Health Laws (Amendment)Act, No. of 5 of 2019
  16. The Sports (Amendment) Act, No. 7 of 2019
  17. The National Government Constituency Development Fund Act, 2015
  18. The National Cohesion and Integration (Amendment) Act, 2019
  19. The Statute law (Miscellaneous Amendment) Act, 2019
  20. The Supplementary Appropriation Act, No. 9 of 2019
  21. The Appropriations Act, 2019
  22. The Insurance (Amendment) Act, 2019

Fate of Pending Bills

The High Courtordered immediate cessation of consideration of all Bills that are pending before either House for which joint concurrence by the Speakers of both Houses as to whether the Bills concern counties has not been demonstrated. This is to allow for such Bills to be subjected to the mandatory joint concurrence process.

Such Bills include the Startup Bill 2020, The County Licensing (Uniform Procedures) Bill 2019, Prompt Payment Bill 2020, the Investment Promotion Bill 2020, the Street Vendors (Protection of Livelihood) Bill 2019 and the Health (Amendment) Bill 2020.

Impact of Judgment

One House of Parliament can no longer unilaterally make a decision on a Bill, or pass laws without concurrence of the other House.

Owing to the significant impact the judgment would have if all the 23 laws are declared null and void immediately, the Court suspended its judgment for 9 months to give time to the National Assembly to remedy the unconstitutionality of the above laws. This means the judgment will take effect in July 2021. After July 2021, these laws shall cease to have legal effect if they won’t have been passed through Senate for concurrence.

It also means that pending Bills in either House that had not gone through concurrence of both Houses cannot proceed as they are, until there is concurrence of both Houses.

Some of the Affected Laws that Touch on Businesses

  1. The Finance Act No. 10 of 2018

This Act introduced:

  1. The amendment of the Banking Act to lift the interest cap in order to increase access to credit, especially among the lower income retail consumers and small and medium enterprises.
  2. The amendment of the Central Bank Act to give the Central Bank of Kenya power to regulate mortgage refinance and bring mortgage refinance companies within the Bank’s reporting framework.
  3. The amendment of the Stamp Duty Act to exempt all instruments executed for purposes of collection and recovery of tax from duty.
  • The Tax Laws (Amendments) Act, No. 9 of 2018

The Act made several amendments to tax related statutes:

  1. An amendment to the Income Tax Act introduced a tax on winnings and enhanced tax incentives for first time home owners under the Stamp Duty Act.
  2. The Value Added Tax Act was also amended to move some items from zero rated status to exempt status in order to limit zero rating to exports. These include water supplied by national or county governments, protective equipment used in hospitals, clinics and fire fighting and supply of flour.
  • The Sacco Societies (Amendment) Act, 2018 No. 16 of 2018

The Act sought to provide for the usage of ICT in collecting and receiving statutory reports with an aim of reducing the regulatory reporting burden on SACCOs and ensuring a faster, efficient and accurate reporting, monitoring and analysis of SACCOs financial status at any given time.

  • The Capital Markets (Amendments) Act, No. 15 of 2018

The Act sought to facilitate the punishing of persons involved in embezzlement activities and further ensure that administrative enforcement action set out is sufficiently explicit in application to key employees of listed companies.

  • The Health Laws (Amendment)Act, No. of 5 of 2019

The Act made various amendments to various health-related statutes. A key highlight was the amendment of the Kenya Medical Supplies Authority Act 2013 that required national or county public health facilities to only procure drugs and medical equipment from KEMSA.

  • The Insurance (Amendment) Act, 2019

The amendment to the Act protects policyholders where an insurer is in distress and its assets are placed under statutory management.

  • The Building Surveyors Act, 2018, No. 19 of 2018

The Act regulates the activities and conduct of building surveyors and establishes a Building Surveyors Registration Board whose role will be to register building surveyors.

  • The Computer Misuse and Cybercrime, Act, No. 5 of 2018

The Act provides a framework to prevent and control the threat of cybercrime and offences that are committed by means of computer systems.

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