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Supreme CourtPartially AllowedPetition E031, E032 & E033 of 2024 (Consolidated)

Cabinet Secretary for the National Treasury and Planning & 4 others v Okoiti & 52 others; Bhatia (Amicus Curiae)

Supreme Court of Kenya
29 October 2024
Martha Karambu KoomeMartha K. KoomePhilomena Mbete MwiluPhilomena M. MwiluMohammed Khadhar IbrahimMohamed K. IbrahimSmokin Charles WanjalaSmokin C. WanjalaNjoki Susanna NdunguNjoki NdunguWilliam OukoIsaac Lenaola W. Ouko
40,110 words in judgment
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AI-assisted case brief
·~160 min to read original · ~4 min brief

The bottom line

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Supreme Court upheld most of Finance Act 2023 but struck down some provisions.

What this practically means

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The Supreme Court ruled that most of the Finance Act 2023 is constitutional. It overturned the Court of Appeal's decision that had struck down the entire Act. However, the Court agreed that certain sections—those amending the Kenya Roads Act and the Unclaimed Financial Assets Act—were unconstitutional because they were not properly connected to a money Bill. The Court also clarified that Parliament does not need to hold fresh public participation when it makes changes based on views already collected.

Executive summary

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The Supreme Court of Kenya partially allowed a consolidated appeal against the Court of Appeal's judgment that had declared the entire Finance Act, 2023 unconstitutional. The core issue was whether the legislative process leading to the Act's enactment complied with the Constitution. The Supreme Court set aside the Court of Appeal's blanket declaration of unconstitutionality, finding that the legislative process was largely constitutional. The Court held that where new substantive amendments are introduced in a Bill pursuant to views gathered during public participation, Parliament is not required to undertake fresh public participation, especially given the time-sensitive nature of a Finance Bill. It further held that the legislative process is not an 'administrative action' under Article 47(2), and while there is no express obligation on Parliament to give reasons for accepting or rejecting public views, it must put in place reasonable measures for consideration, which the National Assembly did through its detailed Committee Report. The Court also clarified that estimates of revenue are not required to be included in the Appropriation Act, as the Appropriation Bill only contains estimates of expenditure. The Court upheld the High Court's finding that sections 76, 78, and 87 of the Act were unconstitutional as they were extraneous to a money Bill. The Court dismissed cross-appeals seeking a refund of taxes collected under the Act. The Court provided extensive guidelines on the considerations for declaring a statute unconstitutional and the circumstances under which a court may issue a suspended declaration of invalidity to avoid a legal vacuum. The final orders set aside the Court of Appeal's declaration of the entire Act as unconstitutional, upheld the mootness of the affordable housing levy issue and the unconstitutionality of the specific extraneous sections, and ordered each party to bear their own costs.

Questions the Court framed

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The issues the Court set itself to decide, in its own words.

  1. 1.Whether the court has jurisdiction to hear and determine SC Appeals Nos E032 and E033 of 2024.
  2. 2.Whether the Finance Act, 2023 was subject to the concurrence process under Article 110(3) of the Constitution.
  3. 3.Whether fresh public participation should be undertaken where Parliament amends provisions of a Bill or introduces new provisions in a Bill after initial public participation.
  4. 4.Whether Parliament has an obligation, upon conclusion of the public participation exercise, to provide detailed reasons for accepting or rejecting views, and whether failure to give reasons vitiates the legislative process and invalidates the legislation passed.
  5. 5.Whether the Appropriation Act, 2023 contained the estimates of revenue.
  6. 6.Whether the question of the validity of Section 84 of the Finance Act, 2023 (Affordable Housing Levy) is moot.
  7. 7.Whether a court has jurisdiction to test the legality of policy positions taken by the Executive and Parliament in the legislative process; and if so, whether the impugned sections of the Finance Act relating to various tax legislations are unconstitutional.
  8. 8.What considerations should a court take into account in declaring a statute as unconstitutional, and what consequential orders ought a court issue upon making a declaration of unconstitutionality of a statute or parts thereof?
  9. 9.What remedies should issue?

Key legal issues

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01

Whether fresh public participation is required when Parliament introduces new provisions in a Bill after initial public participation.

Holding

Where new substantive amendments are introduced pursuant to views gathered during public participation, Parliament is not required to undertake fresh public participation. This is especially so for a time-bound Finance Bill.

Reasoning

The court distinguished between substantive and minor amendments. It held that requiring fresh public participation for amendments that give effect to public views would be circuitous and negate the principle that public participation must be real and meaningful. The time-sensitive nature of a Finance Bill, which must be passed within 61 days under section 39A of the PFM Act, makes it unreasonable to require a fresh round of public participation for such amendments.

p. 56
02

Whether Parliament has an obligation to provide detailed reasons for accepting or rejecting views from a public participation exercise.

Holding

There is no express legal obligation on Parliament to provide reasons for accepting or rejecting proposals made during public participation. However, as a matter of good practice, Parliament must put in place reasonable measures to consider and treat the proposals received.

Reasoning

The court held that the legislative process is not an 'administrative action' under Article 47(2) of the Constitution. The national values and principles in Article 10(2) are open-textured and do not prescribe specific duties like giving reasons. The court found that the National Assembly's Departmental Committee Report, which thematically addressed proposals, was a reasonable measure that met the threshold of transparency and accountability.

p. 59
03

Whether the Appropriation Act, 2023 was required to contain the estimates of revenue.

Holding

The estimates of revenue are not required to be included in the Appropriation Act. The preparation and tabling of the estimates of revenue and expenditure precede the preparation and tabling of the Appropriation Bill.

Reasoning

The court interpreted Article 221(6) of the Constitution and section 2 of the PFM Act, which define an Appropriation Act as providing for the provision of money to pay for the supply of services. The court found that the estimates of revenue were tabled and considered by the National Assembly before the Appropriation Bill was prepared, and the National Assembly followed the prescribed procedure.

p. 86
04

What considerations should a court take into account when declaring a statute unconstitutional and what consequential orders should issue?

Holding

A court must consider the effect of a declaration of unconstitutionality and, where necessary, suspend the application of that declaration for a prescribed time to allow Parliament to remedy the defect, especially to avoid a legal lacuna, uncertainty, or chaos.

Reasoning

The court outlined guidelines for declaring a statute unconstitutional, including the presumption of constitutionality and the need to juxtapose the offending provision against the Constitution. It further provided criteria for issuing a suspended declaration of invalidity, drawing from comparative jurisprudence, to ensure a just and equitable remedy that balances the rights of the litigant with the public interest in avoiding disruption.

p. 13

Legal principles established

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  • Parliament need not hold fresh public participation when amendments arise from views already gathered.
  • Legislative power is not administrative action, so Parliament does not have to give reasons for accepting or rejecting public views.
  • Estimates of revenue are not part of the Appropriation Act; they are prepared and tabled before the Appropriation Bill.
  • Courts generally avoid policy matters but can review constitutionality of any law under Article 165 of the Constitution.
  • When declaring a law unconstitutional, courts must consider the effect and may suspend the declaration to allow Parliament to fix the law.

Court orders

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  1. 1.The preliminary objection on this court’s jurisdiction is overruled.
  2. 2.The consolidated appeal partially succeeds to the following extent: (a) We hereby set aside the Court of Appeal’s finding declaring the entire Finance Act, 2023 unconstitutional. (b) We uphold the following findings by the Court of Appeal: (i) That the question relating to section 84 (Affordable Housing Levy) introduced by the Finance Act, 2023 before the Court of Appeal was moot. (ii) That sections 76 and 78 of the Act amending section 7 of the Kenya Roads Act, 1999; Section 87 of the Act amending section 28 of the Unclaimed Financial Assets Act, 2011 are unconstitutional as they were neither incidental to nor directly connected to a money Bill.
  3. 3.The 15th -19th & 22nd and 38th - 49th respondents’ cross appeals are hereby dismissed.
  4. 4.Each party will bear their costs of the consolidated appeal and cross appeals.
  5. 5.We hereby direct that the security for costs deposited in the consolidated appeal be refunded to the depositor(s).

The bench

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One judgment of the whole court — no separate or dissenting opinions.

Martha Karambu Koome
Martha K. KoomeCJ
Currently serving
majority

Wrote the judgment

Philomena Mbete Mwilu
Philomena M. MwiluDCJ
Currently serving
majority
Mohammed Khadhar Ibrahim
majority
Smokin Charles Wanjala
Smokin C. WanjalaSCJ
Currently serving
majority
Njoki Susanna Ndungu
Njoki NdunguSCJ
Currently serving
majority
William Ouko
Isaac Lenaola W. OukoSCJ
Currently serving
majority
On appeal from
Court of Appeal at Nairobi
Civil Appeal No. E003 of 2023 (Consolidated with E016, E021, E049, E064 & E080 of 2023)
Jurisdiction invoked
Article 163(4)(a) of the Constitution
Consolidated with
SC Petition No. E032 of 2024, SC Petition No. E033 of 2024

Relief refused

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Refund of all taxes collected under the impugned provisions of the Finance Act, 2023

The Court of Appeal erred in declaring the entire Act unconstitutional, and the prayer for refund of taxes paid as sought, fails.

p. 84

Costs

Each party will bear their costs of the consolidated appeal and cross appeals.

Quotable passages

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Verbatim from the judgment, each located to the page it appears on in the official PDF — so these can be cited and checked directly.

we hold that where new amendments, though substantive, are introduced pursuant to views gathered during public participation, then in such circumstances, Parliament is not required to undertake fresh public participation.
p. 56 Public Participation in Legislative Process
the exercise of legislative power does not amount to administrative action, and article 47(2) of the Constitution cannot be the basis for an obligation on Parliament to provide reasons for accepting or rejecting views gathered during public participation in the law-making process.
p. 85 Nature of Legislative Power
In line with article 221(6) of the Constitution estimates of revenue are not a component of the Appropriation Act. The preparation and tabling of the estimates of revenue and expenditure precede the preparation and tabling of the Appropriation Bill.
p. 86 Budget Process and Appropriation Act
Generally, courts should refrain from intervening in policy matters. However, the High Court under article 165 of the Constitution retains residual jurisdiction to determine the constitutionality of any law, policy matter or decision within the meaning of article 165(3)(b) & (d) of the Constitution.
p. 86 Jurisdiction over Policy Matters
Each party will bear their costs of the consolidated appeal and cross appeals.
p. 88 Costs Order

Key timeline

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2023-06-26
Finance Act 2023 enacted by Parliament.
2023-07
Petitions filed in High Court challenging the Act.
2024-07-26
Supreme Court delivers judgment, partially allowing appeal and upholding most provisions.

Practical implications

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For lawyers

Challenge Finance Act provisions carefully

When challenging a Finance Act, focus on provisions that are not incidental to a money Bill. The Supreme Court struck down sections amending the Kenya Roads Act and Unclaimed Financial Assets Act on that ground. Also, arguments about inadequate public participation will likely fail if Parliament shows it considered views thematically.

For businesses

Most tax changes remain valid

Businesses should comply with the majority of the Finance Act 2023, including the Affordable Housing Levy (though its constitutionality was not decided). Only the struck-down sections on road levy and unclaimed assets are void. Plan your tax and compliance obligations accordingly, and watch for any new legislation to replace the invalid parts.

For individuals

Know your rights on public participation

You have a right to be heard during the making of laws, but Parliament does not have to explain why it rejected your specific suggestion. The Court said a committee report that groups views thematically is enough. If you want to challenge a law, focus on whether the process was genuinely open, not on whether your idea was adopted.

Frequently asked questions

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Is the Finance Act 2023 still valid in Kenya?+

Yes, most of it. The Supreme Court upheld the Act except for sections that amended the Kenya Roads Act and the Unclaimed Financial Assets Act, which were struck down as unconstitutional.

Does Parliament have to hold fresh public participation when amending a Bill in Kenya?+

No, if the amendments are based on views already collected during public participation. The Supreme Court said requiring a new round would be impractical, especially for time-sensitive Finance Bills.

Can I challenge a law in Kenya because Parliament didn't give reasons for rejecting my views?+

No. The Supreme Court ruled that Parliament is not required to give reasons for accepting or rejecting public views. The legislative process is not administrative action, so Article 47(2) does not apply.

What happens to the unconstitutional parts of the Finance Act 2023 in Kenya?+

The struck-down sections are void. Parliament may need to pass new laws to replace them. The Court did not suspend the declaration, so those provisions are immediately invalid.

Later judgments citing this (7)

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Judgments in the corpus that rely on this one. Where the Court said how it treated the authority, that is shown.

Cite this brief

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Cite this brief

Caselaw, "Cabinet Secretary for the National Treasury and Planning & 4 others v Okoiti & 52 others; Bhatia (Amicus Curiae)", Case Analysis (2024). Petition E031, E032 & E033 of 2024 (Consolidated). Source: https://new.kenyalaw.orghttps://new.kenyalaw.org/akn/ke/judgment/kesc/2024/63/eng@2024-10-29

Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.