TONONOKA STEELS LIMITED v EASTERN AND SOUTHERN AFRICATRADE AND DEVELOPMENT BANK [1999] KECA 3 (KLR)
The bottom line
#What this practically means
#Executive summary
#Questions the Court framed
#The issues the Court set itself to decide, in its own words.
- 1.Whether the PTA Bank enjoys absolute immunity from suit and legal process in the municipal courts of Kenya in respect of a private commercial loan agreement
- 2.Whether Legal Notice No. 265 of 1991 under the Privileges and Immunities Act (Cap 179) deprived the High Court of jurisdiction over a dispute arising in Kenya
- 3.Whether the agreed choice of English law and arbitration clauses ousted the jurisdiction of the Kenyan courts
Key legal issues
#Scope of statutory immunity of an international organisation in commercial transactions
The immunity granted to the PTA Bank was for the fulfilment of its public, multinational purposes only, not private functions; Parliament could not have intended absolute immunity for purely private commercial dealings.
The court examined the Bank's Charter objects, holding clause (f) ejusdem generis with clauses (a) to (e). Immunity under the Privileges and Immunities Act and Legal Notice No. 265 of 1991 exists to preserve the Bank's independence and multinational functions. Where the Bank steps outside its mandate and acts as a private commercial lender, it falls under Kenyan law; absolute immunity for private commercial activity would be contrary to public policy and prejudicial to Kenya's interests.
Whether a ministerial Legal Notice could oust the High Court's unlimited original civil jurisdiction
A Legal Notice depriving the High Court of jurisdiction over a cause of action arising in Kenya effectively amends Section 60 of the Constitution and cannot stand; such a dispute belongs to the Kenyan courts.
The court reasoned that the Minister, by Legal Notice No. 265 of 1991, had deprived the High Court of jurisdiction over a dispute whose cause of action arose in Kenya and concerned immovable property in Kenya. That would amount to amending Section 60 of the Constitution by subsidiary legislation. Adopting Lord Denning's dictum in Feihmarn, The, no private stipulation can oust the courts' jurisdiction over matters that properly belong to them.
Effect of foreign choice-of-law and arbitration clauses on Kenyan jurisdiction
A stipulation that disputes be judged by the tribunals of a particular country is not absolutely binding and cannot oust the jurisdiction of the Kenyan courts over matters properly belonging to them.
The court adopted Lord Denning's statement in Feihmarn, The, substituting the Kenyan courts for the English courts: a forum-selection stipulation is a matter the court will normally give effect to, but it is subject to the overriding principle that no one by private stipulation can oust the courts' jurisdiction in matters that properly belong to them. This disposed of the respondent's argument based on the English governing-law clause.
Legal principles established
#- Immunity conferred on an international organisation under the Privileges and Immunities Act does not extend to purely private commercial activities unrelated to the organisation's mandate; a body acting outside its objectives as a private bank is subject to the laws of Kenya.
- The right of access to the Kenyan courts may only be taken away by clear and unambiguous words of Parliament.
Court orders
#- 1.Appeal allowed; the High Court's striking out of the application and suit with costs is overturned (the court concurred in the orders proposed by Lakha JA, which are not reproduced in the judgment)
The bench
#One judgment of the whole court — no separate or dissenting opinions.
Wrote the judgment
Tunoi JA wrote a full judgment holding that the immunity conferred on the PTA Bank under the Privileges and Immunities Act and Legal Notice No. 265 of 1991 could not extend to purely private commercial activities, and that the High Court retained jurisdiction over the suit. He concurred in the orders proposed by Lakha JA.
For these reasons, I agree that this appeal succeeds, and I concur in the orders proposed by Lakha J.A.p. 4
Wrote the judgment
- On appeal from
- High Court of Kenya at Nairobi
- H.C.C.C. No. 267 of 1998
- Jurisdiction invoked
- First appellate jurisdiction over the High Court under the Constitution; the appeal challenged the High Court's ruling on its own jurisdiction under Section 60 of the Constitution and the Privileges and Immunities Act (Cap 179)
Quotable passages
#Verbatim from the judgment, each located to the page it appears on in the official PDF — so these can be cited and checked directly.
For these reasons, I agree that this appeal succeeds, and I concur in the orders proposed by Lakha J.A.
if The PTABank operates outside its mandate and objectives and acts as a private bank then it must, a fortiori, be subject to the Laws of this country.
I agree with Lakha JA that the right of access to the courts of this country may only be taken away by clear and unambiguous words of the" Parliament of Kenya.
the Minister is effectively amending Section 60 of the Constitution which gives the High Court unlimited original jurisdiction in civil matters.
Issues in the judgment
#The judgment as reproduced contains only the judgment of Tunoi JA, who expressly concurs in orders proposed by Lakha JA; Lakha JA's separate judgment and the final orders are not included in the excerpt, so the precise final orders and costs of the appeal cannot be verified.
The coram listing shows only P.K. Tunoi, yet the judgment refers to Lakha JA as having written and proposed orders, indicating an incomplete bench listing or incomplete judgment text.
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "TONONOKA STEELS LIMITED v EASTERN AND SOUTHERN AFRICATRADE AND DEVELOPMENT BANK [1999] KECA 3 (KLR)", Case Analysis (1999). Civil Appeal 255 of 1998. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/1999/3/eng@1999-08-13
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.