Cape Holdings Limited and two of its directors have moved to the High Court, challenging the enforcement of a Sh10.68 billion decretal sum, arguing that more than Sh9 billion of the amount comprises unconstitutional compound interest that continued to accrue even after an arbitral award had been set aside.
The constitutional petition, filed against Synergy Industrial Credit Limited and the Attorney General, has been certified urgent by the High Court.
Justice Patricia Nyaundi Mande directed the petitioners to serve the petition and notice of mention on all respondents by the close of business on June 26 and scheduled the matter for mention on June 29, 2026, for directions on the hearing of the petition.
The company, together with Vinay Bipinchandra Sanghrajka and Bipinchandra Bhaichand Sanghrajka, wants the court to declare that the computation, accrual and enforcement of the decree violate their constitutional rights to property, equality, dignity and fair treatment.
According to the petition, the dispute stems from a 2015 arbitral award requiring Cape Holdings to pay Synergy Industrial Credit Sh1.66 billion together with compound interest at 18 per cent per annum. The petitioners state that although the High Court set aside the award on March 11, 2016, the Court of Appeal reinstated it on November 6, 2020.
They argue that despite the award having been nullified during that period, interest continued to accrue, pushing the decretal sum to Sh10,678,959,601.49 as at March 2026, of which Sh9,012,841,418.50 is compounded interest.
"The constitutional questions raised in the Petition are weighty, novel and time-sensitive. They include whether interest can constitutionally accrue during a period when the underlying obligation had been annulled by a court of competent jurisdiction," the petition states.
The petition also challenges the constitutionality of Section 44A(4) of the Banking Act, arguing that excluding court decrees and judgment debtors from protection under the in duplum principle violates Articles 24, 27 and 40 of the Constitution.
The petitioners further claim that enforcement of the decree has extended beyond Cape Holdings' assets to property jointly owned by the second and third petitioners and the interested party, including land on Bendera Lane in Nairobi's Spring Valley.
"The Interested Party is not a judgment debtor, director or shareholder of the 1st Petitioner. The fact that personal property belonging to persons who are not judgment debtors is now affected by enforcement steps demonstrates the practical gravity and constitutional urgency of the questions raised," the petition says.
They contend that because the decretal amount continues to attract compound interest at 18 per cent annually, the debt increases every day, causing ongoing prejudice while the constitutionality of the decree remains unresolved.
The petitioners are asking the High Court to determine whether the continued accrual of interest during the period the arbitral award had been set aside, the exclusion of judgment debtors from the in duplum principle and the enforcement of the Sh10.68 billion decree are unconstitutional.
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