ISL Kenya Limited v Export Processing Zones Authority
The bottom line
#A Kenyan court ruled that a landlord who never handed over the property cannot terminate the lease, keep the deposit, or demand rent.
What this practically means
#Executive summary
#Questions the Court framed
#The issues the Court set itself to decide, in its own words.
- 1.Whether there was a valid and binding contract between the parties
- 2.Whether the Defendant waived its right to insist on strict compliance with payment timelines
- 3.Whether the Defendant placed the Plaintiff in a position where it could perform the development obligation
- 4.Whether the Defendant lawfully terminated the agreement
- 5.Whether the Plaintiff is entitled to the reliefs sought
- 6.Whether the Defendant is entitled to rental arrears of USD 33,128.05
- 7.Whether the Defendant is entitled to general damages
- 8.Who should bear the costs of the suit
Key legal issues
#Validity of the Letter of Offer as a binding contract
The Letter of Offer dated 30th June 2021 was a valid and binding agreement, though it conferred no registered leasehold interest
The Letter of Offer contained an express provision that pending execution and registration of the standard lease, all covenants, conditions and rent would be deemed incorporated in the letter. Both parties signed it, the Plaintiff paid the stipulated sums, and the Defendant received and retained those payments and later invoked the letter's terms to terminate and counterclaim. Conduct of both parties evidenced an intention to be bound.
Waiver of payment timelines
By accepting and retaining late payments without objection, the Defendant waived strict payment timelines
Relying on Yusuf Mohammed Jiwa, the court held that the Defendant received the delayed payments, continued to engage with the Plaintiff, never rejected payments for lateness, and never communicated that the agreement had ended. Its conduct amounted to acceptance of performance on varied terms, so it could not later rely on the original timelines as breached.
Whether the Plaintiff could perform the development obligation
The Plaintiff was not placed in a position to perform the development obligation; failure to develop was not a breach
The specific property was never handed over, the map allegedly shown was not produced, and repeated requests to be shown the property and its beacons went unanswered. DW1 confirmed non-handover. The due diligence obligation did not relieve the Defendant of the duty to identify the premises. Development of unidentified land was impossible.
Lawfulness of termination
The termination was not lawful: the development breach was not established, service of the notice was not proved, and the notice failed section 75 requirements
There was no evidence of service of the 26th September 2023 notice in 2023; the 2025 letter could not act retrospectively. Further, the notice did not require the Plaintiff to remedy the breach or make compensation as required by section 75 of the Land Act. The development breach itself could not arise where the property was never made available.
Refund of Security Deposit
The Plaintiff is entitled to a refund of the Security Deposit of USD 6,129, but not the non-refundable Standard Premium
The lease was never executed or registered and the Defendant did not lawfully terminate. The Defendant showed no contractual entitlement to retain the Security Deposit where its own failure to perform prevented completion. The Standard Premium was expressly non-refundable and PW1 acknowledged this in cross-examination.
Counterclaim for rent arrears
The Defendant is not entitled to USD 33,128.05 in rental arrears
Rent payable from 1st August 2022 was connected to premises the Plaintiff was to occupy and develop. Since the Defendant never handed over the premises, the 'as-is-where-is' clause could not dispense with the obligation to make the identified premises available. Rent cannot be claimed for unavailability caused by the Defendant itself.
Legal principles established
#- An unregistered letter of offer or lease agreement is enforceable as a contract between the parties even where registration is required
- Acceptance and retention of delayed payments without objection amounts to waiver and estoppel from insisting on original timelines
- A party cannot claim breach of an obligation the performance of which it made impossible by its own failure to hand over the subject property
- Service of a termination notice must be proved; a later letter cannot retrospectively validate an unserved notice
- A forfeiture notice must require the lessee to remedy the breach and make compensation as required by section 75 of the Land Act
- General damages are not recoverable for breach of contract
- Rent cannot be demanded for premises never made available to the lessee
Court orders
#- 1.The Plaintiff's claim for specific performance is dismissed
- 2.The Defendant shall refund to the Plaintiff USD 6,129 (the Security Deposit) within sixty (60) days from the date of judgment
- 3.The Plaintiff's claims for general damages and a permanent injunction are dismissed
- 4.The Defendant's Counter-Claim is dismissed
- 5.The Plaintiff shall have the costs of the suit and the Counter-Claim
The bench
#One judgment of the whole court — no separate or dissenting opinions.
Wrote the judgment
- Jurisdiction invoked
- Original jurisdiction of the Environment and Land Court under Article 162(2)(b) of the Constitution (land dispute)
Relief refused
#Specific performance of the lease agreement
Discrepancy between property description in prayer and agreement, and unresolved circumstances of the transaction
General damages for breach of contract
General damages not recoverable for breach of contract; losses not quantified or proved
Permanent injunction over the suit property
No established proprietary or possessory interest to protect
Refund of the Standard Premium of USD 23,698.80
Expressly non-refundable under the Letter of Offer, acknowledged by PW1
Costs
The Plaintiff shall have the costs of the suit and the Counter-Claim.
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.
a) The Plaintiff's claim for specific performance is dismissed.
b) The Defendant shall refund to the Plaintiff the sum of USD 6,129 being the Security Deposit paid under the Letter of Offer dated 30th June 2021, within sixty (60) days from the date hereof.
d) The Defendant's Counter-Claim is dismissed
e) The Plaintiff shall have the costs of the suit and the Counter-Claim.
In the premises, the Plaintiff's suit succeeds in part.
The Defendant cannot properly found a claim of non-development upon the Plaintiff's failure to develop premises which, on its own evidence, had not been specifically identified and handed over to the Plaintiff.
I therefore find that the Defendant did not lawfully terminate the agreement with effect from 25th December 2023.
an agreement of a lease or unregistered lease where the statute requires registration, though not conferring any legal or equitable estate is nevertheless enforceable as contract between the parties
Issues in the judgment
#Property description discrepancy between pleadings and prayer
Paragraph numbering is disordered and duplicated throughout the judgment
Plaintiff's case on payments inconsistent: plaint claims USD 23,698 as Security Deposit component while evidence shows partial payments totalling USD 6,129
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "ISL Kenya Limited v Export Processing Zones Authority", Case Analysis (2026). ELCLC No. E073 of 2025. Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2026/5621/eng@2026-09-17
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.