Kenya has secured a major legal victory after the London Court of International Arbitration (LCIA) dismissed a Sh258.5 billion ($2 billion) claim filed by two companies over the termination of a railway concession agreement.
The claim had been filed by Rift Valley Railways Investments (RVRI) Ltd and KU Railways Holdings Ltd (formerly Sheltem Rail Company), who accused the Kenyan government of wrongfully cancelling their 25-year concession to operate and manage the Rift Valley Railways network.
The metre-gauge railway line, which stretches from Mombasa to Kampala via Nairobi, Nakuru, Eldoret, Malaba and Jinja, was originally handed to the companies in 2006. But the Kenya Railways Corporation (KRC) terminated the concession in 2017, citing the consortium’s failure to meet key obligations, including maintenance of assets, achieving freight volume targets, and payment of concession fees.
In response, RVRI and KU Railways initiated arbitration proceedings in 2020, accusing both Kenya and Uganda of breaching the Interface and Concession Agreements. They sought massive compensation for the alleged losses.
But in a ruling delivered this week, the LCIA dismissed the entire claim with costs, siding with Kenya’s argument that the termination was lawful and contractually justified.
Solicitor General Shadrack Mose, who led Kenya’s 16-member legal team, hailed the outcome as a “monumental win” for the state.
“The Republic of Kenya has successfully defended a $2 billion international arbitration claim… instituted against the State at the LCIA,” Mose said in a statement on Friday.
The case stemmed from a 2017 Kenyan High Court ruling that instructed KRC to cancel the concession due to persistent non-performance by RVR.
The ruling reaffirms Kenya’s position in global commercial arbitration and could serve as a cautionary tale for future public-private partnerships in the region.
