East African Development Bank v Thousand Palms Beach Hotel Ltd
The bottom line
#Kenya's Court of Appeal confirmed the East African Development Bank is absolutely immune from Kenyan lawsuits unless it waives that immunity in writing.
What this practically means
#Executive summary
#Key legal issues
#Whether the EADB enjoys absolute immunity from all legal proceedings under Articles 44 and 45 of the Charter and section 3 of the EADB Act
Yes. The Bank is clothed with absolute immunity against every form of legal process except where it expressly waives its immunity in writing, and no such waiver was granted.
The Court held that section 3 of the EADB Act gives Articles 44 and 45 of the Charter the full force of law in Kenya. Article 44(1) confers immunity from every form of legal process unless expressly waived in writing, and Article 45 shields the Bank's assets from execution. The statute is purposively designed to enable Kenya to meet her treaty obligations, and the Bank never waived its immunity in the matter.
Whether the immunity is limited to suits by member States and persons claiming under them
No. The immunity extends to third parties, such as the respondent hotel, contracting with the Bank under Article 43.
The Court rejected the trial Judge's reading, adopted from the Ugandan Concorp decision, that immunity provisions protect the Bank only against coercive state action by members. Article 44(2)'s reference to members does not limit or waive the general immunity in sub-article (1); the immunity extends to other persons or body corporates with whom the Bank contracts in exercise of its powers under Article 43.
Whether the Bank waived its immunity, including by agreeing to arbitration under clause 7.03 of the Loan Agreement
No waiver was established; the arbitration clause provides an alternative dispute resolution mechanism and does not erode the absolute immunity.
Clause 7.03 of the Loan Agreement provides for arbitration, which the Court read as compatible with, not a waiver of, Article 44(1) immunity. Relying on CERN and Lord Denning's formulation, submission to arbitration by an international organization does not entail waiver of immunity; national courts may intervene only to support the arbitral process under the Arbitration Act. Nothing on record showed a waiver of immunity to court process.
Whether Articles 44 and 45 of the Charter and the EADB Act conflict with the Constitution's rights and fundamental freedoms
The Court declined to determine this issue, as it touches on the merits of the suit and would pre-empt the trial court.
The Court held that adjudicating the constitutional conflict between the immunity provisions and Articles 25(c), 48 and 50(1) would pre-empt or embarrass the trial court in determining the competing claims. It observed only that the respondent is not left without access to justice, having recourse to the contractual dispute resolution mechanism in clause 7.03.
Legal principles established
#- The East African Development Bank enjoys absolute immunity from all legal proceedings under Articles 44 and 45 of the EADB Charter as incorporated by section 3 of the EADB Act, unless it expressly waives that immunity in writing; that immunity extends to third parties who contract with the Bank, not merely to member States and persons claiming under them
- An arbitration clause in a contract with an immune international organization does not operate as an implied waiver of statutory immunity; the organization's submission to arbitration is shielded from national court intervention absent an express waiver
- Statutory immunity of an international organization from legal process is not rendered contrary to public policy or unconstitutional merely because the organization has legal capacity to contract; parties contracting with it must pursue the dispute resolution mechanism agreed in their contract
- Courts will not issue their process against a statutorily immune party unless the immunity is waived or the immune party consents to submit to the jurisdiction of the Kenyan courts
Court orders
#- 1.The appeal is allowed with costs to the appellant
- 2.The Ruling and Orders of the High Court of Kenya at Mombasa (P. J. Otieno, J.) dated 6th June 2016 are set aside
- On appeal from
- High Court of Kenya at Mombasa
- Mombasa HC Civil Suit No. 8 of 2011 (ruling dated 6th June 2016)
- Jurisdiction invoked
- Appellate jurisdiction of the Court of Appeal over an interlocutory appeal from the High Court (impugned ruling of 6th June 2016 dismissing the appellant's Motion to strike out the Plaint for want of jurisdiction based on statutory immunity)
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "East African Development Bank v Thousand Palms Beach Hotel Ltd", Case Analysis (2024). Civil Appeal (Mombasa), Memorandum of Appeal dated 16th August 2021 (arising from Mombasa HC Civil Suit No. 8 of 2011). Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2024/639/eng@2024-06-07
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.