Republic v Special Economic Zones Authority & another, Ex-Parte Nova Pioneer Tatu City Primary School Property SEZ Limited

Introduction 1. Before this court is the Notice of Motion dated 1 st November 2024 in which the Ex-Parte Applicant seeks the following reliefs: 1. THAT this Honourable Court be pleased to issue an order of CERTIORARI to remove into this Court for purposes of quashing the decision of the Respondents, as communicated vide the 2nd Respondent’s letters dated 2nd April 2024 and 22nd July 2024, to reject the Ex-Parte Applicant’s application dated 11 th January 2024 for renewal of a Special Economic Zone Enterprise Licence at the Tatu City Special Economic Zone and deny the Ex-Parte Applicant tax incentives and other benefits in respect of the Special Economic Zones activities contemplated and proposed in the said application. 2. THAT this Honourable Court be pleased to issue an Order of MANDAMUS compelling the Respondents to allow the Ex-Parte Applicant’s application dated 11 th January 2024 for renewal of a Special Economic Zone Enterprise Licence at the Tatu City Special Economic Page 2 of 45

page 2 of 45

Zone and issue to the Ex-Parte Applicant a Special Economic Zone Enterprise Licence in respect of the Special Economic Zone Activities contemplated and proposed in the said application. 3. THAT this Honourable Court be pleased to issue an Order of MANDAMUS compelling the Respondents to grant the Ex-Parte Applicant all the rights, tax incentives and benefits particularized in Sections 33, 34 and 35 of the Special Economic Zones Act and the provisions of various fiscal legislation namely the Income Tax Act, the Value Added Tax Act, the Excise Duty Act, the Stamp Duty Act, the Miscellaneous Fees and Levies Act in respect of the Special Economic Zone Enterprise Licence so issued and the Special Economic Zone activities contemplated and proposed in the Ex-Parte Applicant’s application dated 11 th January 2024. 4. THAT this Honourable Court be pleased to issue an Order of PROHIBITION prohibiting the Respondents, their agents, servants and/or officers acting under them or otherwise from denying the Ex-Parte Applicant Page 3 of 45

page 3 of 45

any of the rights, tax incentives and benefits particularized in Sections 33, 34 and 35 of the Special Economic Zones Act and the provisions of various fiscal legislation namely the Income Tax Act, the Value Added Tax Act, the Excise Duty Act, the Stamp Duty Act, the Miscellaneous Fees and Levies Act in respect of the Special Economic Zone Enterprise Licence so issued and the Special Economic Zone activities contemplated and proposed in the Ex-Parte Applicant’s application dated 11th January 2024. 5. THAT this Hnourable Court be pleased to grant such orders or writs as may be fair, just, necessary and appropriate in the circumstances 6. THAT the costs of this application be borne by the Respondents. 2. The application is premised on the grounds on the face of it and the averments of the Director, Christopher Khaemba in the Supporting Affidavit sworn on even date and the supplementary affidavit sworn on 24th February 2025. 3. The application was met with vehement opposition. The Respondents, through the replying affidavit of their Chief Page 4 of 45

page 4 of 45

Executive Officer, Kenneth Chelule sworn on 16 th January 2025, sought to have the application dismissed with costs and further to have the 1st Respondent’s decision dated 11th January 2024 upheld as lawful and procedurally fair. Background 4. The dispute begins with a licence. On 19 th January 2023, the Ex-Parte Applicant (hereinafter ‘Applicant’) was granted what it describes as its first enterprise licence by the Respondents. The licence was to remain in force for one year, until 18th January 2024, and authorised the Applicant to construct and lease commercial premises, including educational facilities, on Land Parcel No. 4A-NR02. 5. The Applicant states that, acting upon the licence and within the period for which it remained in force, it committed substantial resources towards the development of the premises. The Applicant estimates the investment at approximately USD 4.5 million. 6. Upon completion, the premises were, according to the Applicant, leased to Nova Pioneer Tatu City Primary School. Page 5 of 45

page 5 of 45

It is the Applicant's contention that the investment was made in reliance upon the authority conferred by the first licence and upon the understanding that the activities thereby authorised were permissible within the applicable regulatory framework. 7. The Applicant further contends that throughout the validity of the first licence, the Respondents did not raise any objection, whether legal, procedural or otherwise, to the activities being undertaken pursuant thereto. Neither, it says, did the Respondents amend, suspend or revoke the licence. 8. As the expiry of the licence approached, the Applicant applied for its renewal on 11 th January 2024. By a letter dated 2nd April 2024, the Respondents declined the renewal of the licence. The reason given was that the proposed activities that is the construction and leasing of educational facilities, were said not to be permissible under the Special Economic Zones Act (SEZ Act) and were thus ineligible for the incentives available under the special economic zone regime. Page 6 of 45

page 6 of 45

9. The Applicant thereafter invoked the statutory dispute resolution mechanism under section 37(1) of the SEZ Act to challenge the Respondents’ decision. The appeal did not, however, result in a reconsideration of the impugned decision. By a further letter dated 22 nd July 2024, the Respondents communicated that the rejection of the Applicant's application for renewal would stand. 10. Dissatisfied with that outcome, the Applicant subsequently instituted judicial review proceedings before the High Court (Judicial Review Miscellaneous Application No. E139 of 2024). The High Court, by its judgment delivered on 22 nd August 2025, determined that it lacked jurisdiction to entertain the matter and consequently referred the proceedings to this Court for determination. 11. The controversy has travelled a considerable distance, but its destination is a narrow one, whether the power to decide was exercised within the bounds of the law. Applicants case 12. The Applicant contends that the impugned decision by the respondents is irrational, unreasonable, amounts to an Page 7 of 45

page 7 of 45

arbitrary exercise of the respondents’ statutory mandate and is a violation of the doctrine of legitimate expectation. The contention is advanced on several grounds. 13. Firstly, the Applicant contends that the impugned decision is based on a misunderstanding of the SEZ Act. They submit that the first licence authorized the construction and leasing of commercial premises including educational facilities, which activities were at the time considered to be eligible to be undertaken by a special economic zone enterprise. 14. The Applicant contends that the statutory provisions governing the grant of enterprise licences remained unchanged between the issuance of its first licence and its application for renewal. The first licence, issued on 19 th January 2023, expressly authorised the construction and leasing of commercial premises, including educational facilities, and was neither amended, suspended nor revoked while it remained in force. The Applicant maintains that the licence was not issued in error or on the basis of an activity prohibited by law, but reflected the Respondents' position Page 8 of 45

page 8 of 45

that the proposed activities were permissible under the SEZ regime. 15. At the forefront of the Applicant's case is its contention that the Respondents misunderstood the statutory scheme under the SEZ Act. It submits that there was no intervening legislative or other material change rendering the activities previously authorised under the first licence unlawful or impermissible. Against that background, the Applicant challenges the Respondents' subsequent refusal to renew the licence. It contends that, having previously authorised the activities in question, the Respondents could not subsequently regard them as impermissible without identifying a change in the law or circumstances capable of justifying that departure. [[[ 16. The Applicant characterises that departure as irrational and unreasonable, an arbitrary exercise of statutory power and a frustration of the legitimate expectation arising from the Respondents' previous conduct. 17. The Applicant further invokes the doctrine of legitimate expectation. It contends that, having obtained the first Page 9 of 45

page 9 of 45

licence and made substantial investments in reliance upon the regulatory position reflected therein, it was reasonable to expect that the same position would not be departed from at the point of renewal without an intervening change in law or circumstances. The Applicant submits that an unexplained departure of that nature creates regulatory uncertainty and undermines the predictability upon which investors necessarily rely when committing capital on the basis of regulatory approvals. 18. The Applicant further contends that the impugned decision is unreasonable and irrational because it is at odds with both global best practices and the East African Community Special Economic Zones Policy. It submits that the Policy envisages mixed-use and integrated ecosystems within special economic zones, expressly recognising the role of educational institutions and the convergence of educational, residential and working spaces. The Applicant therefore argues that excluding educational facilities from the permissible activities within an SEZ is inconsistent with the policy framework governing the development of such zones. Page 10 of 45

page 10 of 45

19. The Applicant contends that the principles guarding against abuse of power, arbitrariness, irrationality and unreasonableness, as set out above, apply equally to natural and juristic persons. It therefore urges the Court to vindicate those principles and protect it from what it characterises as unfair and unlawful administrative treatment. 20. The Applicant further invokes the protection afforded by the Constitution against unlawful interference with protected rights and interests. It contends that the impugned decision infringes its rights and freedoms under Articles 27, 40, 47 and 50 and, at the same time, threatens its legal and beneficial interests in the premises. Those interests, it submits, cannot be disregarded merely because the Respondents have exercised a statutory power. 21. The Applicant also challenges the decision-making process on procedural grounds. It contends that the Respondents reached the impugned decision without affording it adequate notice of the proposed adverse action, an opportunity to be heard, or access to the material relied Page 11 of 45

page 11 of 45

upon in reaching the decision, contrary to the procedural safeguards prescribed by the Fair Administrative Action Act. 22. The Applicant further challenges the Respondents' reliance on the amendments introduced by the Finance Act, 2023, particularly their contention that the amendments created classifications customs-controlled of areas customs-controlled and which educational excluded non- facilities from SEZ incentives. 23. The Applicant contends that those amendments only took effect on 31st July 2024, following the Supreme Court's decision in Petition Nos. E031, E032 and E033 of 2024, and therefore came into force after the impugned decisions had already been made. It follows, in the Applicant's submission, that the Respondents could not properly rely on the amendments as a basis for the decisions under challenge. 24. The Applicant contends that the Respondent’s inconsistent and arbitrary regulatory decision-making erodes investor confidence by depriving investors of the certainty and predictability necessary to make and sustain long-term investments. Page 12 of 45

page 12 of 45

25. The Applicant contends that, as a consequence of the Respondents' actions, it has endured considerable hardship and uncertainty arising from the inconsistent manner in which its enterprise licence has been handled. It further contends that it stands to suffer substantial prejudice, including the potential loss of its investment, if the impugned decision is allowed to stand. 26. The Applicant therefore urges the Court to allow the application and grant the reliefs sought. Respondents’ case 27. There is little dispute about what happened at the beginning. The Respondents acknowledge that they granted the Applicant an enterprise licence on 19th January 2023. It permitted the Applicant to construct and lease commercial premises, including educational facilities, within the designated Special Economic Zone on Parcel No. 4A-NRO2, approximately 6.5 acres in extent, forming part of Precinct 4A, Land Reference No. 28867/1, Tatu City. 28. The Respondents state that this was a considered decision. Before granting the licence, they assessed the Page 13 of 45

page 13 of 45

proposed activities and found them to be aligned with the objectives of the SEZ Act. The licence was accordingly issued for one year, from 19th January 2023 to 18th January 2024. They also concede that the licence was neither amended nor revoked during its validity. 29. The Respondents case, however, is that the issuance of the first licence did not confer an entitlement to its renewal and that the subsequent application fell to be considered within the statutory and regulatory framework applicable at the time of renewal. 30. The Respondents attribute their subsequent position to a more rigorous examination of the statutory framework governing Special Economic Zones. They contend that the grant of an enterprise licence is not determined merely by the absence of an objection to a proposed activity, but by whether that activity fundamentally advances the objectives of the SEZ Act and falls within the category of activities contemplated as eligible under the statutory regime. 31. The Respondents case is that, on 11th January 2024 the applicant submitted a renewal application form and upon Page 14 of 45

page 14 of 45

applying that more exacting interpretation, the Applicant's proposed activities could not properly qualify for the renewal sought. 32. The Respondents say that the first licence was granted for a defined period and came to an end when that period expired. They contend that the first licence issued to the applicant conferred no vested right to its continuation beyond its stipulated term, nor could it give rise to a legitimate expectation of automatic renewal. Each renewal application, they submit, must stand on its own merits and be determined according to the prevailing interpretation and application of the SEZ legal framework. 33. The Respondents acknowledge that the Applicant was previously granted an enterprise licence authorising the construction and leasing of commercial premises, including educational facilities. They nevertheless contend that the earlier grant did not determine the Applicant's entitlement to renewal. Their case is that, upon reconsideration of the applicable statutory framework in the exercise of their mandate under the SEZ Act, they concluded that the Page 15 of 45

page 15 of 45

construction and leasing of educational facilities were not activities contemplated for a Special Economic Zone Enterprise within the Zone. 34. The Respondents maintain that advising the Applicant to pursue alternative activities permitted under the SEZ Act was a proper exercise of their statutory mandate. They contend that the advice was necessary to safeguard the integrity of the Special Economic Zones programme and ensure that the incentives established under the statutory framework remain confined to activities properly qualifying for them. 35. The Respondents acknowledge receiving the appeal from the applicant vide a letter dated 25 th June 2024 urging them to review the decision issued on 2nd April 2024. The further confirm that they upheld their decision via a letter issued on 22nd July 2024. 36. The Respondents reject the suggestion that their decision was arbitrary or unreasonable, maintaining that they acted within the powers conferred upon them by law. Page 16 of 45

page 16 of 45

37. The Respondents dispute the Applicant's contention that there was no intervening change in circumstances. They contend that the Finance Act, 2023 introduced significant amendments affecting the SEZ Act, including the classification of Special Economic Zones into customscontrolled and non-customs-controlled areas. They maintain that, although the construction and leasing of educational facilities may constitute a legitimate business activity, it does not, of itself, entitle an enterprise to Special Economic Zone incentives reserved for activities falling within the statutory framework. They further contend that, while the right to education is constitutionally protected, it does not override or alter the 1st Respondent's statutory mandate to regulate Special Economic Zone activities in accordance with the law. 38. The Respondents contend that the Applicant remains at liberty to continue its educational activities outside the Special Economic Zones framework. They further maintain that the impugned decision does not impede the right to education, but rather ensures compliance with the legal Page 17 of 45

page 17 of 45

framework governing eligible activities and incentives within Special Economic Zones. 39. The Respondents reject the suggestion that the impugned decision undermines the investment environment. Their position is that regulatory certainty does not mean that every investor is assured of a favourable outcome. Rather, investors must expect the 1st Respondent to enforce the statutory framework entrusted to it, even where doing so may adversely affect an individual enterprise. 40. The Respondents concede that administrative law safeguards both natural and juristic persons from abuse of power, but deny that its exercise of power in this case was abusive. They maintain that the decision was grounded in a proper interpretation and application of the SEZ Act. 41. The Respondents deny that the impugned decision violated the Applicant's rights under Articles 27, 40, 47 and 50 of the Constitution. They maintain that the decision was made in the lawful exercise of their statutory mandate. Page 18 of 45

page 18 of 45

42. The Respondents contend that the renewal application process itself constituted sufficient notice to the Applicant that its eligibility for renewal would be assessed afresh and that the application could result in an administrative decision. 43. The Respondents further contend that the applicable law and policy documents were publicly accessible and that the renewal process afforded the Applicant an opportunity to present its case. They submit that the impugned decision clearly stated the basis for rejecting the application, namely, that the proposed activities did not fall within the permissible activities under the Special Economic Zones framework. The Applicant subsequently exercised its right to seek review of the decision. The Respondents therefore maintain that the Applicant was afforded adequate notice, an opportunity to be heard and reasons for the decision, and that the process was not procedurally unfair. 44. The Respondents contend that granting the relief sought would dilute the statutory limits governing Special Economic Zones incentives and undermine Page 19 of 45 their allocation to

page 19 of 45

qualifying enterprises. They accordingly urge the Court to dismiss the application with costs and uphold the impugned decision as lawful, reasonable and procedurally fair. Issues for Determination 45. The arguments of both sides have now been heard. I have considered the pleadings, the evidence on record and the parties respective submissions and the relevant authorities. The following issues emerge for determination: i. Whether the Ex-Parte Applicant was afforded adequate notice and a fair hearing. ii. Whether the refusal to renew the Ex-Parte Applicant's enterprise licence was lawful, procedurally fair and regular. iii. Whether the circumstances of the case gave rise to a legitimate expectation on the part of the Ex-Parte Applicant. iv. Whether the Ex-Parte Applicant is entitled to the reliefs sought. Page 20 of 45

page 20 of 45

Analysis and Determination 46. The starting point is the nature and limits of the power exercised by the Respondents. The Court must determine whether that power was exercised within the statutory and constitutional framework governing its exercise. 47. Learned counsel for the Applicant urges the Court to be guided by the Supreme Court's decision in Saisi & 7 others v Director of Public Prosecutions & 2 others [2023] KESC 6 (KLR) in determining the scope of that inquiry. The guidance is apt. The Court is required to examine the legality of the impugned administrative action and the process by which it was reached, while remaining mindful that judicial review is not an appeal on the merits. 48. As the Supreme Court explained in John Florence Maritime Services Limited & another v Cabinet Secretary, Transport and Infrastructure & 3 others [2021] eKLR: Page 21 of 45

page 21 of 45

“Despite the shift from common law to codification in the Constitution and the Fair Administrative Action Act, the purpose of the remedy of judicial review is concerned with reviewing not the merits of the decision in respect of which the application for judicial review is made, but the decision-making process itself.” 49. That distinction frames the inquiry before this Court. The question is whether the Respondents acted lawfully, fairly and within the limits of the power conferred upon them. 50. Discretion is not freedom from legal constraint; it is power exercised within legal constraint. Where statute entrusts a public body with regulatory discretion, it confers not only the authority to decide, but also the boundaries within which that authority must operate. Judicial review polices those boundaries. [[ {{{{{{ 51. The Special Economic Zones Act CAP 517A is the starting point and defines the scope of the Respondents' mandate and the legal framework governing the issuance and renewal of enterprise licences. Page 22 of 45

page 22 of 45

52. Section 10(1) of the Special Economic Zones Act (SEZ Act) establishes the Special Economic Zones Authority, while section 11(f) confers upon it the responsibility of reviewing applications and granting enterprise licences. 53. The exercise of that mandate is, of course, subject to the requirements of fair administrative action. The Authority remains bound by the legal standards governing the exercise of public power, including the duty to act fairly when its decision is liable to adversely affect the rights or interests of an affected person. 54. That duty is now expressly anchored in Article 47 of the Constitution and given statutory effect by the Fair Administrative Action Act CAP 7L. 55. Section 4 of the Fair Administrative Actions Act sets out the procedural safeguards applicable to administrative action as follows: “(1) Every person has the right to administrative action which is expeditious, reasonable and procedurally fair. Page 23 of 45 efficient, lawful,

page 23 of 45

(2) Every person has the right to be given written reasons for any administrative action that is taken against him. (3) Where an administrative action is likely to adversely affect the rights or fundamental freedoms of any person, the administrator shall give the person affected by the decision– (a) prior and adequate notice of the nature and reasons for the proposed administrative action; (b) an opportunity to be heard and to make representations in that regard; (c )notice of a right to a review or internal appeal against an administrative decision, where applicable; (d) a statement of reasons pursuant to section 6; (e) notice of the right to legal representation, where applicable; (f) notice of the right to cross-examine or where applicable; or (g) information, materials and evidence to be relied upon in making the administrative action. Page 24 of 45 decision or taking the

page 24 of 45

(4) The administrator shall accord the person against whom administrative action is taken an opportunity to– (a) attend proceedings, in person or in the company of an expert of his choice; (b) be heard; (c) cross-examine persons who give adverse evidence against him; and (d) request for an adjournment of the proceedings, where necessary to ensure a fair hearing. (5) Nothing in this section, shall have the effect of limiting the right of any person to appear or be represented by a legal representative in judicial or quasi-judicial proceedings. (6) Where the administrator is empowered by any written law to follow a procedure which conforms to the principles set out in Article 47 of the Constitution, the administrator may act in accordance with that different procedure.” 56. In essence, procedural fairness is not satisfied merely by affording an affected person an opportunity to participate in Page 25 of 45

page 25 of 45

an administrative process. The person must be sufficiently apprised of the proposed action, the reasons informing it and the material upon which the decision-maker intends to act, so as to enable a meaningful response. The question, therefore, is whether the process followed by the Respondents gave the Applicant a fair opportunity to address the matters that ultimately informed the refusal of its renewal application. 57. Counsel for the Applicant invokes section 4(3)(a) of the Fair Administrative Action Act and submits that the Applicant was entitled to prior and adequate notice of the nature and reasons for the proposed adverse action. It is contended that no such notice was given in respect of the Respondents' concerns regarding the legality of the activities authorised under the first licence or their changed interpretation of the Special Economic Zones legal framework before the renewal application was rejected. 58. The Respondents take a different view. They submit that the renewal application itself constituted notice that the Page 26 of 45

page 26 of 45

Applicant's entitlement to continue operating under the Special Economic Zones framework was subject to reconsideration. They further maintain that the Applicant had an opportunity to make its case during the renewal process and subsequently exercised its right of review against the decision. 59. Learned counsel for the Applicant submits that the Respondents' position is untenable. The Applicant contends that notice of a renewal application could not amount to notice that the same activities would be assessed under a materially different legal framework or on criteria not previously disclosed. 60. The Applicant further submits that the requirement of prior notice is integral to the right to fair administrative action and places reliance on Geothermal Development Company Limited v Attorney General & 3 others [2013] KEHC 4725 (KLR) where Majanja J as he then was stated: “As a component of due process, it is important that a party has reasonable opportunity to know the basis of Page 27 of 45

page 27 of 45

allegations against it. Elementary justice and the law demands that a person be given full information on the case against him and given reasonable opportunity to present a response. This right is not limited only in cases of a hearing as in the case of a court or before a tribunal, but when taking administrative actions as well. (See O’Donoghue v South Eastern Health Board [2005] 4 IR 217). Hilary Delany in his book, Judicial Review of Administrative Action, Thomson Reuters 2 nd edition, at page 272, notes that, ‘Even where no actual hearing is to held in relation to the making of an administrative or quasi-judicial decision, an individual may be entitled to be informed that a decision which will have adverse consequences for him may be taken and to notification of the possible consequences of the decision.’” 61. The principle that emerges from the foregoing is that notice must be sufficient to enable an affected person to know the case against them and to respond meaningfully before adverse administrative action is taken. See Republic v National Land Commission & 2 others Ex-Parte Archdiocese of Nairobi Kenya Registered Trustees Page 28 of 45

page 28 of 45

(St. Joseph Mukasa Catholic Church Kahawa West) [2018] KEHC 8941 (KLR). 62. This is the standard contemplated by section 4(3)(a) of the Fair Administrative Action Act, which requires an administrator to give an affected person prior and adequate notice of the nature and reasons is therefore for the proposed administrative action. 63. Adequacy of notice measured by the opportunity it affords to answer the case before the decision-maker. The Court must accordingly consider whether, before the refusal of the renewal application on 2 nd April 2024, the Applicant was apprised of the grounds upon which the Respondents intended to rely. 64. The 1st Respondent's letter dated 2 nd April 2024 (Annexure KC3) communicated the refusal of the renewal application and set out the reasons for that decision as follows: “However, following an evaluation of your application, we regret to inform you that the proposed zone activity; which entails the construction of the facilities for schools Page 29 of 45

page 29 of 45

does not align with the permissible activities under the SEZ law and therefor does not enjoy incentives. Therefore, due to misalignment with permissible SEZ activities, you are advised to pursue other business activity accepted under SEZ Act. This decision is in adherence to the stringent policy that governs SEZ licensing, reserving the issuance of licenses to companies’ operations applicable in SEZ law” 65. The letter leaves no doubt as to the basis of the refusal. The question is whether that basis had been placed before the Applicant before the Respondents acted upon it. 66. The renewal application was made on 11 th January 2024. That application sought renewal of the existing enterprise licence issued on 19th January 2023 and valid until 18th January 2024. The Respondents rely on the renewal process itself as the occasion on which the Applicant was, or ought to have been, aware that its activities would be reconsidered. 67. That submission, however, requires examination against the substance of the renewal process. The issue is not Page 30 of 45

page 30 of 45

whether the Applicant knew that its licence was due for renewal. It plainly did. The issue is whether it knew that the permissibility of the activities previously authorised under that licence was in question and that this would form the basis upon which renewal might be refused. 68. The Respondents Applicant's renewal were entitled application. to That reconsider power, the however, carried with it the obligation to disclose, before the decision was made, any substantive concern upon which an adverse decision was contemplated. 69. The evidence before the Court does not show that the Applicant was informed that the activities authorised under the first licence were considered impermissible under the SEZ legal framework. That position emerged only in the decision of 2nd April 2024. The Applicant was thereafter able to challenge the decision vide their letter dated 25 th June 2024, but could not at that stage participate in the decisionmaking process which had already produced it. Page 31 of 45

page 31 of 45

70. I therefore find that the Respondents did not satisfy the requirement of prior and adequate notice under section 4(3) (a) of the Fair Administrative Action Act. 71. The Respondents nevertheless contend that the Applicant was afforded an opportunity to be heard during the renewal process and thereafter exercised its right of review. But the chronology cannot be overlooked. The refusal came first on 2nd April 2024. The Applicant's representations came later on 25th June 2024. The review came later still on 22nd July 2024. 72. The Applicant was therefore given an opportunity to contest the decision, but not an opportunity to make its case before the decision was made. That distinction matters. The right to be heard is not satisfied merely because a person is given an opportunity to protest after the event. 73. Accordingly, I find that the Applicant was not afforded a fair opportunity to be heard before the renewal application was refused. Page 32 of 45

page 32 of 45

74. I now turn to the decision itself and the question whether the refusal to renew the enterprise licence was lawful. 75. The Respondents' discretion in determining the renewal application was derived from the SEZ Act and was therefore circumscribed by the statutory framework within which that discretion was conferred. The starting point is accordingly to identify the scope of the Respondents' licensing mandate and the legal parameters governing its exercise. 76. The Respondents rely on section 27(6) of the SEZ Act, which permits a licence to be amended, suspended or revoked in the circumstances prescribed therein. Subsection (6A) further requires the Authority, before suspending or revoking a licence, to give the licensee written notice of the grounds for the intended action and an opportunity to comply or show cause why the licence should not be suspended or revoked. 77. The provision is significant for two reasons. First, the powers it confers are expressly identified. Secondly, where the Authority proposes to interfere with an existing licence Page 33 of 45

page 33 of 45

on account of non-compliance, the Act prescribes both the grounds upon which it may do so and the procedural safeguards that must precede the exercise of that power. 78. The present case, however, does not concern the suspension, revocation or amendment of the Applicant's existing licence. It concerns its renewal. The question is therefore whether the Respondents could properly rely on the same alleged incompatibility of the Applicant's activities with the SEZ legal framework as a basis for refusing renewal, notwithstanding that those activities had previously been authorised under the licence. 79. The statutory treatment of renewal is set out in section 27 of the SEZ Act. It expressly provides for an application for renewal, prescribes the circumstances in which the Authority may renew the licence, identifies the matters to be considered in evaluating licensing applications, and requires the Authority to render its decision within a prescribed period. Subsections (1) to (4) provide: “27. Application and issue of licence Page 34 of 45

page 34 of 45

(1) A person who, intends to carry on business as a special economic zone developer, operator or enterprise, shall apply in the prescribed form to the Authority for an appropriate licence or for a renewal of the licence. (2) On receiving an application for licence or for a renewal of a licence, the Authority, may on the recommendation of the Commissioner of Customs and upon payment of the prescribed fee, issue to the applicant the appropriate licence or renew the licence. (3) In evaluating applications for special economic zone developer, operator and enterprise licences, the Authority shall assess the specific engineering and financial plans, financial viability, and environmental and social impact of the applicant's proposed special economic zone project, as appropriate. (4) The Authority shall expeditiously render its decisions on licensing under this Act within one month from the date on which the duly completed Page 35 of 45

page 35 of 45

application form is submitted together with relevant supporting documents.” 80. Section 27 makes provision for the renewal of an enterprise licence and prescribes the framework within which such an application is to be considered. The Applicant’s application was refused on the ground that the proposed activity was not permissible under the SEZ Act. The question is whether that conclusion was supported by the statutory framework governing the renewal of an enterprise licence. 81. The Respondents anchor their position on section 29(2)(b), which requires the proposed enterprise to engage in activities eligible to be undertaken by a special economic zone enterprise. That brings the real question into focus, was the activity for which the Applicant sought renewal legally ineligible at the material time? 82. The Applicant's first enterprise licence expressly authorised the construction and leasing of commercial premises, including educational facilities. It was neither amended nor revoked during its validity. The Respondents Page 36 of 45

page 36 of 45

nevertheless contend that the first licence did not confer an entitlement to renewal and that the application fell to be determined under the law applicable at the time of renewal. That proposition is unobjectionable. The material consideration is whether, under that law, the activity previously authorised had ceased to be eligible. 83. The Respondents rely on amendments introduced by the Finance Act, 2023. The Applicant contends that the relevant amendments only took effect on 31 st July 2024, following the Supreme Court's decision in Petition Nos. E031, E032 and E033 of 2024 (paragraph 33 of the Supplementary Affidavit). The impugned decisions of 2nd April 2024 and 22nd July 2024 preceded that date. 84. The Finance Act, 2023 amended section 4(4) of the SEZ Act during the currency of the Applicant's first licence, recognising that a special economic zone may comprise both customs-controlled and non-customs-controlled areas. The Respondents rely on that distinction to contend that educational facilities may be undertaken in a non-customscontrolled area, but would not attract SEZ incentives. They Page 37 of 45

page 37 of 45

do not contend that the construction and leasing of educational facilities is unlawful. Their case is instead that the activity does not qualify for the incentives available under the SEZ regime. Section 29(2)(b) requires a proposed enterprise to engage in activities eligible to be undertaken by a special economic zone enterprise, but does not expressly provide that an otherwise permissible activity ceases to qualify for an enterprise licence merely because it is undertaken in a non-customs-controlled area. 85. That distinction is material. The application before Respondents was for renewal of an enterprise licence, not merely for the grant of Special Economic Zones incentives. The Respondents were therefore required to demonstrate a statutory basis for refusing renewal on the ground advanced. 86. As the Supreme Court reiterated in Kenya Revenue Authority v Export Trading Company Limited [2022] KESC 31 (KLR), “the question of legality or the lawfulness of an act lies at the core of article 47(1).” The 2nd April 2024 decision stated that the proposed activity did not align with Page 38 of 45

page 38 of 45

permissible SEZ activities and therefore did not enjoy SEZ incentives. It did not, however, identify the statutory provision that made the absence of such incentives a basis for refusing renewal of the enterprise licence. 87. The 22nd July 2024 decision purported to uphold that conclusion by invoking section 5(6) of the SEZ Act. There is no such provision. 88. Section 5 of the SEZ Act sets out the criteria for designating special economic zones and determining project proposals that qualify for licensing; it does not prescribe the “SEZ activities” or “permitted schemes” relied upon by the Respondents. The Respondents’ decision therefore rested on a statutory premise that does not exist. It cannot, in those circumstances, be sustained as a lawful exercise of statutory power. 89. I turn to the procedure followed in determining the Applicant's renewal application. Section 27(4) of the SEZ Act imposes a clear temporal requirement on the licensing process. Once a duly completed application, together with the relevant supporting documents, is submitted, the Authority is required to render its decision within one month. Page 39 of 45

page 39 of 45

The provision gives concrete effect, in the licensing context, to the constitutional requirement that administrative action be expeditious. 90. The Applicant's renewal application was made on 11 th January 2024, yet the Respondents did not render their decision until 2nd April 2024. No explanation has been offered for the delay or for the failure to comply with the statutory timeframe. The Respondents were entitled to consider the application and determine whether the statutory requirements for renewal had been met, but they were required to do so within the period prescribed by law. In the absence of any explanation or justification for the delay, the decision was not rendered within the statutory period and the process consequently fell short of the requirement for expeditious administrative action under Article 47 of the Constitution. 91. The foregoing disposes of the legality and regularity of the decision. There remains the Applicant's claim of legitimate expectation. The claim is founded on the first enterprise licence, which expressly authorised the construction and Page 40 of 45

page 40 of 45

leasing of commercial premises, including educational facilities, and was neither amended nor revoked during its validity. 92. Legitimate expectation is concerned with fairness in the conduct of public authorities. Where an authority, by what it has said or consistently done, leads a person reasonably to expect that a particular benefit, treatment or course of action will continue, it may be unfair for the authority, without good reason, to depart from that position. 93. The doctrine was considered by the Supreme Court in Communications Commission of Kenya & 5 others v Royal Media Services Limited & 5 others [2014] eKLR, where the Court, drawing from comparative authority, identified four requirements for a legitimate expectation: there must be an express, clear and unambiguous promise; the expectation must be reasonable; the representation must have been made by a competent and authorised decision-maker; and no legitimate expectation may arise contrary to clear provisions of the law or the Constitution. Page 41 of 45

page 41 of 45

94. The Applicant's case proceeds in part from the fact that the first licence was neither amended nor revoked and that the circumstances giving rise to it remained substantially unchanged. 95. That submission, however, overlooks a material intervening development. The Finance Act, 2023 amended section 4(4) of the SEZ Act during the pendency of the first licence, introducing, among other things, the distinction between customs-controlled and non-customs-controlled areas within a special economic zone. The statutory framework applicable at the time of the renewal application was therefore not identical to that which obtained when the first licence was issued. 96. In any event, the first licence was valid for one year. It authorised the Applicant's activities for that period but did not contain an express assurance that the licence would be renewed upon expiry. In the circumstances, I am unable to find an express, clear and unambiguous promise of renewal capable of grounding a legitimate expectation. Page 42 of 45

page 42 of 45

97. The first requirement of the doctrine is therefore not satisfied. The claim accordingly fails at the first hurdle, and I find that the Applicant has not established a legitimate expectation of renewal of its enterprise licence. 98. The question that remains is what relief properly follows from the Court's findings. The impugned decisions cannot be sustained. The 2nd April 2024 decision proceeded on the basis that the Applicant's proposed activity was impermissible under the SEZ Act, but the Respondents did not identify a statutory provision supporting that conclusion. The 22nd July 2024 decision did not cure the defect; it sought to uphold the earlier decision by reference to section 5(6), a provision which does not exist in the Act. The decisions were consequently reached on an erroneous statutory basis. The order of certiorari is therefore warranted to quash both decisions. 99. The law cannot sustain a decision reached contrary to it. But quashing the impugned decision does not confer upon this Court the power to grant the licence which the Respondents failed to issue to the Applicants. The Applicant Page 43 of 45

page 43 of 45

asks the Court to go further and compel the Respondents to approve the renewal, issue the enterprise licence and confer the associated statutory and fiscal benefits. That would require the Court to assume the licensing function entrusted by statute to the Respondents. 100. The result is therefore a limited but necessary one. The impugned decisions are quashed. The application for renewal of the licence is remitted to the Respondents for fresh consideration in accordance with the law. The orders compelling the grant of the licence and the associated incentives are declined. So too is the order of prohibition. 101. The Applicant shall have the costs of this application. 102. It is so Ordered Dated, signed and delivered, at Malindi this 22 nd day of September, 2026 …………………….. J. M. ONYANGO JUDGE Page 44 of 45

page 44 of 45

In the presence of: Mr. Obaga for the Applicant No appearance for the Respondent Court Assistant: Happy. Page 45 of 45

page 45 of 45