Friday, November 06, 2020

In a decision that highlights the ever increasing power struggle between the two Houses of Parliament, on 29th October 2020, a 3 Judge Bench of the High Court in Petition No. 284 of 2019:  The Senate vs The Speaker of the National Assembly & Another (“the Petition”) nullified 23 Acts of Parliament (“the Laws”) enacted by the National Assembly without reference to and input of the Senate as required under Article 110(3) of the Constitution of Kenya, 2010 (“the Constitution”). The Court further ordered the cessation of any further consideration of all pending Bills for which there was no reference to the Senate as required under the Constitution.

The Petition, which lists all the Laws that were nullified can be found here.

Some of the affected Laws include:

  1. The Tax Laws (Amendments) Act, No. 9 of 2018 which introduced amendments in relation to income tax, value added tax and stamp duty;
  2. the Capital Markets (Amendments) Act, No. 15 of 2018 which introduced various amendments to the Capital Markets Act, Cap 485A
  3. the Computer Misuse and Cybercrime, Act, No. 5 of 2018 which provided for the detection, prohibition, prevention, response, investigation and prosecution of computer and cybercrimes;
  4. the Statute Law (Miscellaneous Amendments) Act, 2018 which introduced amendments to the Industrial Property Act, 2001, the Copyright Act, 2001, the Anti-Counterfeit Act, 2008 and the Protection of Traditional Knowledge and Cultural Expressions Act, 2016; and
  5. the Statute Law (Miscellaneous Amendments) Act, 2019 which introduced amendments to several Acts of Parliament including the Value Added Tax Act, 2013 (No. 35 of 2013).

We will in our subsequent updates issue a summary on the implication of the High Court’s decision on some of the laws.

The court suspended the nullification of the Laws for a period of 9 months from the date of the decision (29 October 2020) to allow time for the National Assembly to comply with the provisions of Article 110 (3) of the Constitution and regularise the Laws.

In this regard, the Laws will continue to apply for the period of 9 months during which the nullification has been suspended.

Undoubtedly, this decision could have potentially serious ramifications for business operations in the country, if the matters raised by the court are not remedied. One of the concerns the decision raises is the status of some of the acts done and rights created under some of the Laws. For instance, the implications for businesses with respect to income tax, value added tax and stamp duty paid and (or) collected under the Tax Laws (Amendments) Act, No. 9 of 2018.

Operations such as the supply of medical products to counties may also be impacted as the decision declared section 4 of the Kenya Medical Supplies Act, which provided that only Kenya Medical Supplies Authority (KEMSA) could supply medical products to Counties, unconstitutional. The court held that the provision was contrary to Articles 6, 10, 43(1), 46(1) 73(1), 110(3), 189(1), and 227(1) of the Constitution. It is expected that this will therefore potentially open the supply of medical products to counties by other private entities.

Should the National Assembly fail to comply with the provisions of Article 110 (3) of the Constitution and regularise the Laws as directed by the Court, the Laws will automatically stand nullified.

We note that the National Assembly has expressed intentions of appealing the decision. In the meantime, both Houses have suspended all legislative businesses in light of the decision and pending any further directions that may be given by the Court of Appeal.