High Court judge A. Mabeya made a landmark ruling two weeks ago when he stopped the Principal Secretary in the Ministry of Roads and Transport from interfering with the existing arrangement whereby cargo destined for South Sudan through the Port of Mombasa is handled, stored, and warehoused by Autoports Freight Terminal Limited and Compact Freight System Limited, Autoports is linked to former Mombasa county governor Hassan Joho.
In an affidavit sworn by Salim Juma and Peter Ng’ang’a dated 19/1/2023, the two revealed that they were duly authorized agents of the Kenya Revenue Authority (KRA) to operate Container Freight Stations (CFS). The two firms (Autoports Nairobi Freight Terminal Limited and Compact Freight System Limited) were appointed in 2013 by the Ministry of Roads and Transport and the Kenya Ports Authority to handle, store, and warehouse all the imported and containerized cargo destined for South Sudan, a landlocked country pending clearance by KRA.
In a letter dated 13/12/2022, the Ministry of Roads and Transport instructed the Kenya Ports Authority that all cargo destined for the Republic of South Sudan passing through the Port of Mombasa would be handled, stored, and warehoused by either of the two firms. The appointment was through to a letter dated 9/11/2022 from the Ministry of Transport of the Republic of South Sudan, wherein it was indicated that the petitioners had been thoroughly vetted, including vetting by the parliament of that country, and were found to be competent to discharge such a mandate.
It was further noted that after the appointment, they made huge investments and entered into contracts with third parties, as they had a reasonable and legitimate expectation that the appointment would last for a long time unless they did something wrong to warrant interference with the arrangement, the contract was to run for 7 years. Available information indicates that Compact Freight Systems had invested over Ksh. 1 billion putting in place the necessary infrastructure to carry out the mandate. The infrastructure development related to transportation services, loading and unloading services of containers, expansion of the warehousing space for cargo, maintenance of the state-of-the-art data processing system, and generally improved security in the warehousing facility to ensure that the cargo was safely secured.
However, the Ministry of Roads and Transport had threatened to direct KPA not to honour the said arrangement, which would deny the two firms the opportunity to warehouse cargo destined for South Sudan passing through the Port of Mombasa. The two firms claimed that the intended termination of the contract would breach their social and economic rights and that their respective boards of directors, shareholders, and employees would also suffer losses and lose their dignity should they lose their means of survival.
They argued that the government should uphold the principle of collective responsibility, and any action of the Cabinet was deemed to be the collective action of the entire government. Upon the Cabinet Secretary for Roads and Transport appointment on 13/12/2022, it was not open for the Cabinet Secretary for the Ministry of Industrialization, Trade, and Enterprise Development to thereafter undo what another Cabinet Secretary had done.
However, the replying affidavit sworn by Mohamed Daghar, the Principal Secretary, State Department for Transport within the Ministry of Roads and Transport on 7/3/2023 claimed that South Sudan had the right to access to and from the sea and enjoyed the freedom of transit through the transit states by all means of transport. He further claimed that the Government of Kenya had no mandate to appoint any clearing and forwarding agents, or CFS, for an importer or exporter of transit goods.
In a ruling dated 18th August 2023, Judge A. Mabeya ruled “From the foregoing, the conclusion arrived at by this Court is that the petitioners have laid a basis for the grant of the orders sought in the application”.