High Court orders government to pay Sh24 billion for breach of Kwale sugar deal
The High Court in Mombasa has ordered the government to pay nearly Sh24 billion to Kwale International Sugar Company over a breached land deal that crippled a major sugar project.
The High Court in Mombasa has ordered the government to compensate Kwale International Sugar Company Limited (KISCOL) nearly Sh24 billion after finding that the State’s failure to honour its contractual obligations crippled a multibillion-shilling sugar project at the Coast.
In a judgment delivered by Justice Florence Wangari, the court ruled that the State’s conduct amounted to a fundamental breach of a 2007 agreement that paved the way for the establishment of a large-scale sugar plantation and processing complex in Kwale County.
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The award, estimated at $186 million (Sh24 billion), ranks among the highest financial penalties imposed on the government in recent years.
State assurances
The court found that the investment — jointly owned by Mauritius-based Omnicane Limited and Kenya’s Pabari Group — was based on state assurances that the company would enjoy quiet and uninterrupted possession of 15,000 acres of leased land. The project was valued at about $300 million (Sh38.8 billion) and was expected to generate significant economic activity.
However, the judge noted that soon after the lease was executed, the land became the centre of disputes involving local communities asserting ancestral claims.
“Large sections of the property were occupied, severely restricting KISCOL’s access. Although the company later secured favourable court declarations regarding its title, the government failed to evict the squatters, rendering almost half of the concession unusable.”
Justice Wangari also faulted the State for carving out approximately 2,500 acres of the leased land for use by mining firm Base Titanium without compensating the investor or offering alternative land — a move the court said compounded an already deteriorating situation.
Systemic obstruction
The court found that what began as administrative delays escalated into systemic obstruction, frustrating the company’s attempts to plant cane or construct the planned sugar mill.
The disruptions triggered repeated rounds of debt restructuring, ultimately sinking the flagship project.
The government had argued that it had fulfilled its responsibilities and that the claim was filed out of time. The court rejected both arguments and ordered the payment of Sh24 billion, in addition to interest and legal costs — a figure expected to rise once final calculations are completed.
The decision brings to an end a 13-year dispute between the investors and the State.
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