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Court of AppealPartially AllowedCivil Appeal No. 134 of 1986· [1993] KECA 27 (KLR)

BELUF ESTABLISHMENT v ATTORNEY-GENERAL [1993] KECA 27 (KLR)

Court of Appeal of Kenya
23 September 1993
GAGachuhiOMOmoloAKAkiwumi
8,581 words in judgment
View original judgmentRead on Kenya Law Watch case
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·~34 min to read original · ~4 min brief

The bottom line

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Kenya's Court of Appeal confirmed that Kenyan courts can award damages in foreign currency when that is the currency of the actual loss.

What this practically means

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Executive summary

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Beluf Establishment, a Swiss company, lost 360 bags of coffee Arabica valued at US dollars 82,643.92 when the Kenya Police unlawfully released the consignment entrusted to them for safe keeping during transit through Kenya in 1977. Liability was admitted before Sheikh Amin J in the High Court, leaving only the assessment of damages, and the trial judge gave judgment in Kenyan shillings (Kshs 687,727/90), holding that the Exchange Control Act and Kenya's economic circumstances prevented judgment in a foreign currency. The Court of Appeal (Akiwumi JA leading, Omolo JA concurring, Gachuhi JA on the bench) unanimously allowed the appeal. It held that the old rule confining Kenyan courts to judgments in Kenyan currency, inherited from English law as stated in Manners v Pearson and applied in Valji, was procedural and had been abandoned in England by Miliangos and Despina R. The Exchange Control Act does not bar foreign currency judgments, since it permits ministerial consent to remit foreign currency to satisfy judgment debts, and the Act was in force in England when Miliangos and Despina R were decided. The circumstances of Kenya and its inhabitants do not preclude the application of the common law principles of restitutio in integrum and reasonable foreseeability, and Kenya's participation in international trade makes isolationist reasoning untenable. The Court entered judgment for US dollars 82,643.92, convertible into Kenya shillings at the rate applicable on the day of payment or enforcement, and awarded the appellant the costs of the appeal. This decision binds subordinate courts and the High Court on the currency of judgment and the conversion date.

Key legal issues

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01

Whether Kenyan courts are confined to giving judgment in Kenyan currency

Holding

No. Kenyan courts applying the common law under section 3(1) of the Judicature Act can express judgments in foreign currency in proper cases.

Reasoning

The former English sterling-judgment rule, imported into Kenya, was procedural and had been abandoned in England in Miliangos. Nothing in the common law principles of restitutio in integrum and reasonable foreseeability is inconsistent with the circumstances of Kenya. Insisting on Kenyan currency makes the judgment creditor a victim of currency fluctuation and produces injustice contrary to full compensation.

p. 12
02

Whether the Exchange Control Act bars foreign currency judgments

Holding

It does not. The Act merely requires ministerial permission to remit money in foreign currency and does not forbid expression of judgments in foreign currency.

Reasoning

The Act, identical in material respects to the English Act, permits with the consent of the Minister the transfer of money out of the country in foreign currency to satisfy judgment debts. The English Exchange Control Act was still in force when Miliangos and Despina R were decided and was never regarded as barring foreign currency judgments. Exchange control permission would be needed to transfer Kenyan shillings abroad anyway.

p. 6
03

Whether the circumstances of Kenya and its inhabitants preclude application of Miliangos and Despina R under section 3(1) of the Judicature Act

Holding

They do not. Kenya trades internationally and cannot isolate itself; applying these principles promotes Kenya's economic and commercial development.

Reasoning

The High Court had reasoned that Kenya's foreign exchange scarcity and level of development made English precedents inapplicable. The Court held this notion inconsistent with Kenya's participation in the international business community. The Kenya shilling is itself subject to fluctuation, and the Foreign Judgment (Reciprocal Enforcement) Act already statutorily recognises foreign currency judgments, so a fortiori Kenyan courts can give them.

p. 9
04

The currency and conversion date for the appellant's damages

Holding

Judgment was entered in US dollars 82,643.92, the currency in which the loss was sustained, convertible at the rate prevailing on the day of payment or enforcement.

Reasoning

The appellant, a Swiss company, paid US dollars 82,643.92 for the coffee lost through the unlawful release by the Kenya Police; that was the currency that most truly expressed its loss. Conversion at the date of payment or enforcement avoids the injustice of currency fluctuation and conforms with restitutio in integrum.

p. 12

Legal principles established

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  • A Kenyan court may, in appropriate cases, express judgment in a foreign currency, namely the currency in which the loss was sustained, applying the common law principles of restitutio in integrum and reasonable foreseeability.
  • The Exchange Control Act (Cap 113) does not prevent Kenyan courts from giving judgment in foreign currency; exchange control permission would be required in any event to remit the judgment debt.
  • The date for conversion of a foreign currency judgment into Kenyan shillings is the date of payment or enforcement of the judgment.
  • The measure of the loss is the currency in which the loss was truly sustained.

Court orders

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  1. 1.The appeal is allowed
  2. 2.Judgment entered for the appellant in the sum of 82,643.92 US dollars at the conversion rate in Kenya shillings applicable on the day of payment or the enforcement of the judgment
  3. 3.The appellant shall have his costs of this appeal
On appeal from
High Court of Kenya at Nairobi
H.C.C.C. No. 2436 of 1978
Jurisdiction invoked
First appellate jurisdiction of the Court of Appeal over a High Court civil judgment (Civil Appeal No. 134 of 1986)

Key timeline

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Practical implications

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Frequently asked questions

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Cite this brief

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Cite this brief

Caselaw, "BELUF ESTABLISHMENT v ATTORNEY-GENERAL [1993] KECA 27 (KLR)", Case Analysis (1993). Civil Appeal No. 134 of 1986. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/1993/27/eng@1993-09-23

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