Kenya wins Sh258.5 billion railway dispute in London court
The two companies alleged Uganda and Kenya had breached agreements relating to the construction and management of the Rift Valley Railways line, intended to run from Mombasa to Kasese in western Uganda, passing through major towns including Nairobi, Eldoret and Kampala.
Kenya has secured a major international legal victory after the London Court of International Arbitration (LCIA) dismissed a $2 billion (approximately Sh258.5 billion) claim brought against it by two foreign companies over a failed railway project.
The companies, KU Railways Holdings Limited (KURH), formerly Sheltam Rail Company (PTY), and RVR Investments (PTY) Limited (RVRI), had sued both the Kenyan and Ugandan governments in 2020.
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They alleged the two states had breached agreements relating to the construction and management of the Rift Valley Railways line, intended to run from Mombasa to Kasese in western Uganda, passing through major towns including Nairobi, Eldoret and Kampala.
KURH, one of the principal parties in the case, is an Egyptian-owned firm controlled by Qalaa Holdings (formerly Citadel Capital), which is listed on the Egyptian Stock Exchange. It was the lead investor in the Rift Valley Railways consortium.
In a statement, Solicitor General Shadrack J. Mose confirmed that Kenya had successfully defended the multi-billion-dollar claim. He announced that the case had been dismissed in its entirety and that the tribunal had awarded legal costs in favour of the State.
“This victory has spared the Republic of Kenya, and by extension the Kenyan taxpayer, from what would otherwise have been a significant financial burden,” said Mose, who led the legal defence team.
He noted that Kenya had faithfully adhered to the terms of the railway concession, but the companies had failed to meet their obligations, including securing funding, achieving freight targets and paying agreed fees.
The dispute arose from agreements signed between 2006 and 2011, under which Kenya and Uganda transferred railway operations to the Rift Valley Railways consortium for 25 years of freight services and five years of passenger services. However, repeated failures by the companies led to the termination of the concession in 2017.
The 1,660-kilometre railway was to run from Mombasa through Nairobi, Nakuru, Eldoret, Malaba, Jinja and Kampala, ending in the western Ugandan town of Kasese. Under the concession, the Kenya Railways Corporation (KRC) and Uganda Railways Corporation (URC) agreed to transfer their railway assets to RVR in exchange for 11.1 per cent of gross revenue throughout the concession period.
Although the companies later sought compensation through arbitration, the London tribunal ultimately ruled in favour of Kenya and Uganda, dismissing the claim in full and awarding legal costs to Kenya.
Kenya’s legal team included prominent lawyers such as Prof. Githu Muigai, Prof. Albert Mumma, and UK-based King’s Counsel Michael Sullivan.
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