Directives issued by the Kenya Ports Authority, on the transportation of cargo from the port of Mombasa via the Standard Gauge Railway to an Inland Container Depot at Nairobi, are constitutionally infirm.

William Odhiambo Ramogi & 3 others v Attorney General & 4 others; Muslims for Human Rights & 2 others (Interested Parties)

Petition 159 of 2018

(Consolidated with Petition 201 of 2019)

High Court at Mombasa

L Achode, J Ngugi, P Nyamweya, E Ogola & A Mrima, JJ

November 6, 2020

Reported by Beryl Ikamari

Constitutional Law - constitutional petition - parties - interested parties - whether an interested party in a constitutional petition could frame new issues for determination by the court.

Constitutional Law - institution of a constitutional petition - exhaustion doctrine - exceptions to the exhaustion doctrine - whether dispute settlement mechanisms provided for under the Competition Act would give rise to an application of the exhaustion doctrine to oust the High Court's jurisdiction, where a constitutional petition related to matters provided for under the Competition Act and also alleged violations of fundamental rights and freedoms - Constitution of Kenya 2010, article 159; Competition Act, No 12 of 2010, sections 31.

Constitutional Law - national values and principles of governance - public participation and fair administrative action - exercise of statutory power - whether a decision which affected importers, transporters and users of the port of Mombasa and related to the transportation of cargo from the port of Mombasa to other destinations, required public participation and a fair hearing to be afforded to the affected parties - Constitution of Kenya 2010, articles 10 and 47.

Constitutional Law - fundamental rights and freedoms - enforcement of fundamental rights and freedoms - socio-economic rights - right to livelihoods - proof required in order to establish a claim on breach of the right to livelihood - Constitution of Kenya 2010, article 43.

Constitutional Law - devolution - division of functions between the National Government and the County Government - whether the Take or Pay Agreement between the Kenya ports Authority and the Kenya Railways Corporation, which in part dealt with transportation of cargo from the port of Mombasa, violated constitutional provisions on distribution of functions between different levels of Government - Constitution of Kenya 2010, article 174, the Fourth Schedule, part 2, paragraph 5(e).

Evidence Law - admissibility - hearsay evidence - newspaper articles - whether newspaper articles were admissible evidence, where the author of the article never gave testimony in court as to what he or she had perceived when writing the article.

Brief facts

Petition 159 of 2018 challenged a clause in an agreement between the 3^rd respondent (Kenya Ports Authority) and the 4^th respondent (Kenya Railways Corporation). The clause obligated the 3^rd respondent to consign to the 4^th respondent, as a carrier, a set volume of freight and other cargo pursuant to the commencement of the operations of the Standard Gauge Railway (SGR) to the 3^rd respondent's Inland Container Depot (ICD) at Embakasi. The 1^st to 3^rd petitioner alleged that the clause violated various constitutional provisions including fundamental rights and freedoms. In general, they complained that the clause threatened the socio-economic rights of the petitioners and residents of Mombasa County under article 43 of the Constitution.

The impugned clause was part of what was known as the Take or Pay Agreement which entailed a public policy decision as it had the effect of transferring port services from Mombasa to Nairobi. The petitioners alleged that the residents and youth of Mombasa County and its environs were most affected by the loss of jobs and relocation of employment opportunities.

Mombasa High Court petition No. 201 of 2019 challenged two directives issued by the 3^rd respondent (Kenya Ports Authority) and directed at members of the 4^th petitioner (Kenya Transporters Association Limited) and they were about the consignment of cargo and the location of the clearance depot for cargo arriving at the port of Mombasa. The first directive, issued on March 15, 2019, notified the general public that from the date of the directive, shipping lines would not be allowed to endorse a Bill of Lading to importers' Container Freight Station (CFS) of choice. The second directive, issued on August 3, 2019, stated that all imported cargo for delivery to Nairobi and the hinterland would be conveyed by SGR and cleared at the ICD - Nairobi. It was argued by the petitioners that the directives supported monopolistic tendencies with regard to the transport of containers from the port of Mombasa to other destinations. The 4^th petitioner said that it went contrary to the Competition Act and the Consumer Protection Act. The 4^th petitioner added that importers of cargo had a right to choose the mode of transportation for their cargo from the port of Mombasa to a destination of their choice. They said that the directives violated the socio-economic rights of the residents of Mombasa and Kenya in general.

Mombasa High Court petition No 159 of 2018 and Mombasa High Court Petition No 201 of 2019 were consolidated and canvassed through written submissions and oral arguments.

Issues

1. Whether an interested party could introduce and frame new issues for consideration by the court.
2. Under what circumstances would the exceptions to the doctrine of exhaustion arise?
3. When would a decision which was made by an organization pursuant to an exercise of its statutory power require public participation before it was implemented?
4. Whether the impugned directives on the transportation of cargo from the port of Mombasa were issued after a process that was constitutional and in line with public participation requirements and the right to fair administrative action.
5. What would a litigant have to demonstrate in order to establish a claim that his or her right to livelihood had been violated?
6. Whether the Take or Pay Agreement, as pertained to the transportation of cargo from the port of Mombasa, violated article 174 of the Constitution as read together with paragraph 5(e) of Part 2 of the Fourth Schedule of the Constitution, which related to the distribution of functions between the National Government and the County Governments.
7. What was the probative value of newspaper articles as evidence?

Held

1. The consolidated petition did not place reliance on articles 6(2), 6(3) and 27 of the Constitution but the 1^st and 2^nd interested parties sought to rely on those provisions. The question as to whether an interested party could introduce new issues for consideration by the court arose. The principle established in the courts' jurisprudence was that an interested party was a peripheral party in a suit and such a party could not introduce new matters for the court's consideration.
2. The framing of issues that were not otherwise pleaded in the consolidated petition was an unacceptable attempt by the 1^st and 2^nd interested parties to expand the scope of the proceedings. The court would therefore not consider submissions based on alleged violations of articles 6(2), 6(3) and 27 of the Constitution.
3. The exhaustion doctrine served the purpose of ensuring that there was a postponement of judicial consideration of matters to ensure that a party was, first of all, diligent in the protection of his own interest within the mechanisms in place for resolution outside the courts. That encouraged alternative dispute resolution mechanisms in line with article 159 of the Constitution.
4. The Competition Act provided various dispute resolution procedures that were available to an aggrieved party. Parties were obligated to exhaust those mechanisms before approaching the courts.
5. There were exceptions to the exhaustion doctrine. In exceptional circumstances, the High Court could determine that the exhaustion requirement would not serve the values enshrined in the Constitution or law and allow the suit to proceed before it. The court would consider the suitability of the appeal mechanism available in the context of the particular case and determine whether it was suitable for the determination of the issues raised. Additionally, the court had jurisdiction to consider grievances from parties who lacked an adequate audience before a statutory forum  or who did not have the quality of audience before the forum which was proportionate to the interests the party wished to advance.
6. Where a suit sought to enforce fundamental rights and freedoms and it was demonstrated that the constitutional violations were not mere bootstraps or merely framed in the Bill of Rights language as a pretext to gain entry to the court, that suit would not be barred by the exhaustion doctrine. That was especially so because the enforcement of fundamental rights and freedoms was a question that could only be determined by the High Court.
7. Although the 4^th petitioner's case against the 5^th respondent, largely concerned the Competition Act, the ripple effect was the subject of the violation of fundamental rights and freedoms. The issues relating to the Competition Act and fundamental rights and freedoms were intertwined. The statutory dispute resolution mechanisms under the Competition Act could not be construed to oust the court's jurisdiction, as the nature of the issues raised qualified as an exception to the exhaustion doctrine. The exhaustion doctrine was relevant but inapplicable given the nature of the grievance and the public interest involved.
8. The consolidated petitions involved polycentric issues and multiplicity of parties including questions related to the fundamental rights of the petitioners which warranted an exception to the doctrine of exhaustion.
9. The 5^th respondent (the Competition Authority of Kenya) had commenced investigations into the 4^th petitioner's complaints relating to restrictive trade practices arising from the impugned directives on the transportation of cargo from the port of Mombasa. Therefore, the 5^th respondent did not ignore the issues raised by the 4^th petitioner and ought not to have been sued.
10. The 4^th petitioner sought an order of mandamus directing the 5^th respondent to take immediate action to demolish the monopolistic tendency with regard to the transportation of containers from the port of Mombasa to other destinations in Kenya. That was tantamount to asking the court to direct the Competition Tribunal on what finding to make, an act which would amount to usurping the domain of the Tribunal. The order of mandamus would not be granted.
11. The Bill of Rights had an underlying value of freedom which was a right to be afforded an opportunity to choose from a range of options voluntarily. While the Constitution placed premium on the value of freedom, it had not inscribed "freedom of contract" as a fundamental right. The enumerated rights and freedoms in the Constitution did not include the rights to make certain economic choices which could trammel the state's police powers to direct health, security and economic activities.
12. In its various principles as well as in its structure and variety of civil, political, social, economic, cultural and group rights, the Constitution plainly envisaged a directive role of the state in respecting, promoting, and fulfilling the various enumerated fundamental rights of individuals and groups. Such a directive role, of necessity, meant that the state had leeway to regulate and limit the freedom to contract by individuals in order to achieve other public interest objectives including the objective of achieving the social and economic rights of citizens.
13. The 4^th petitioner wrongly assumed that the state, through the respondents, had no right or constitutionally-protected and legitimate governmental interest in regulating the mode of transport for containers as part of the Government’s efforts to fulfill the collective social and economic rights of all citizens. The truth was that the state had legitimate governmental interests, permitted by the Constitution, to impose certain reasonable restraints on freedom of contract. However, while the state had much leeway to impose reasonable limitations to the freedom to choose economic activities in the common good, such limitations had to be reasonable, non-discriminatory, non-oppressive and procedurally imposed for them to pass constitutional muster.
14. A party that claimed that a fundamental right or freedom had been violated had the burden of demonstrating the following four things: -

1. To demonstrate that the fundamental right or freedom was recognized as such in the Bill of Rights. If it was within the list of recognized rights and freedoms, the state would be required to justify any abrogation or limitation under article 24 of the Constitution. The state had the onus of showing that the limitation placed on the rights was reasonable and justifiable in an open and democratic society based on human dignity, equality and freedom.
2. Where the right or freedom was not enumerated in the Bill of Rights but was a non-fundamental right or a right generally covered under the general subtext of freedom or liberty under the Constitution or some other penumbral right or freedom under article 19(3)(b) of the Constitution, a person claiming a violation was required to demonstrate that the abrogation or limitation was either unreasonable or oppressive. That could be done by showing either that the particular policy or law in question did not serve any legitimate governmental interest or that the particular policy or law was not rationally related to the articulated governmental interest.
3. Even where a policy or law passed muster under the rational basis test, the state had to demonstrate that the policy or law limiting the non-fundamental right was crafted after a process of public participation or administrative fair hearing in which those most affected by the policy or law had been given an opportunity to air their views and to have those views considered before the policy or law was made final. That was a due process requirement.
4. If the impugned policy or law otherwise violated an enumerated fundamental right or freedom in its effects or impact (as opposed to its text and intent which had to meet the requirements under article 24 of the Constitution), a court would still find the impugned policy or law impermissible.
15. The 4^th respondent did not show that the impugned directives did not serve any legitimate governmental interest. It was shown that the impugned directive sought to implement policy decisions created by the 2^nd respondent with the aim or realizing the socio-economic rights envisaged in article 43 of the Constitution by directing economic activities in a way the Government believed was sustainable and equitable for the whole country. The court was unable to make a finding that the impugned directives were not rationally related to the expressed legitimate governmental goal of driving economic policy in Kenya through the Integrated National Transport Policy for Kenya.
16. Public participation referred to the processes of engaging the public or a representative sector while developing laws and formulating policies that affected them. It could take various forms including consultations.
17. The manner in which a public body exercised its powers was dependent on the resultant effect. If the exercise of statutory powers only impacted on the ordinary day to day operations of the entity, public participation would not be a requirement. Requiring an entity to subject its internal operational decisions to public participation was unreasonable. It was a tall order which would definitely forestall the operations of such an entity. Where the exercise of statutory power transcended the borders of the entity or had a significant effect on the stakeholders or the public, it ought to have been subjected to public participation. That was so because the resultant decision had a significant impact on the public or stakeholders.
18. The Take or Pay Agreement was an internal contractual arrangement between the 3^rd and 4^th respondents. It belonged to the sphere of internal operations of the 3^rd and 4^th respondents over which there was no need for constitutionally mandated public participation. The 3^rd and 4^th respondents were legally competent to conclude the Take or Pay Agreement without triggering the public participation requirement of the Constitution.
19. The operationalization of the Take or Pay Agreement had effects on the internal operations of the two contracting parties and also on the rights and interests of stakeholders and the public. Actions and decisions related to operationalization had to be subjected to public participation.
20. There was no question that the impugned directives radically impacted on the 4^th petitioner and all importers who used the port of Mombasa. It removed any choice from the members of the 4^th petitioner and the port users on what Container Freight Station (CFS) to use and what mode of transportation to employ to the Inland Container Depot (ICD).
21. There was no attempt to subject to impugned directives to public participation. Public participation ought to have been undertaken. A decision removing all sets of options from an economic actor, targeted group, participants in a particular trade or profession and requiring them to channel their economic activities in a particular direction, was, definitionally, one that had to be arrived at after due consultations and meaningful public participation. Due to lack of public participation, the impugned directives were constitutionally infirm and a violation of article 47 of the Constitution which was on the right to fair administrative action.
22. The impugned directives were administrative actions. They affected the legal rights and interests of the 4^th petitioner, importers, transporters, other port users, and stakeholders. As such they had to pass the constitutional and statutory tests of lawfulness, reasonableness and procedural fairness.
23. The impugned directives did not conform to the requirements of article 47 of the Constitution and the Fair Administrative Actions Act. At a minimum the 3^rd respondent was required to do the following to ensure compliance: -

1. give notice of the intended directives to the 4^th petitioner, importers, transporters, other port users, and stakeholders;
2. afford an opportunity for the 4^th petitioner, importers, transporters, other port users, and stakeholders to be heard on the question; and
3. give reasons for the decisions made which were embodied in the impugned directives.
24. The social and economic rights provided for in article 43 of the Constitution included the right to the highest attainable standard of health, which included the right to health care services, including reproductive health care, to accessible and adequate housing, and to reasonable standards of sanitation, to be free from hunger, and to have adequate food of acceptable quality, to clean and safe water in adequate quantities, to social security and to education.
25. A petitioner ought to demonstrate with some degree of precision the right it alleged had been violated, the manner it had been violated, and the relief it sought for that violation. The petitioners did not allege that there was an infringement of the specific rights provided for in article 43 of the Constitution but instead focused on demonstrating infringements on their rights to livelihood as the basis of the infringement of article 43 of the Constitution.
26. While the right to work and earn a livelihood was a negative right in the sense that it imposed a duty on the state not to act in certain ways that would infringe on the said rights, the social and economic rights provided for in article 43 were positive rights, which imposed obligations on the state to do as much as it could to secure for its citizens a core minimum of the social and economic rights specified in the article.
27. In order to succeed in a claim relating to the right to livelihood, the petitioners needed to prove that the respondents caused harm or injury to, or limited their work and related activities in cargo handling and transport, either by way of direct actions or by omission to take reasonable steps to prevent such harm and injury.
28. The testimony of the petitioners in their affidavits was not direct. They relied mainly on circumstantial documents from which facts sought to be proved were meant to be logically or reasonably inferred.
29. Some of the evidence related to annexures produced by the 1^st, 2^nd and 3^rd petitioners and they were copies of documents that were neither certified nor produced in accordance with the provisions of section 68 of the Evidence Act as regarded production of secondary evidence.
30. The 4^th petitioner sought to rely on a report titled “The Assessment Report of the Socio-Economic Impact of the Operationalization of the Mombasa – Nairobi Standard Gauge Railway on Port City Mombasa." There were rules regarding the admissibility of expert opinions. In short, by relying on the report, the 4^th petitioner sought to rely on an expert statement of a person who was not a party to the suit without laying a proper basis for such reliance. It was not possible to assign a probative value to the report because the expertise of the authors was not established and there was no attempt made to justify the scientific basis of the method deployed in generating data for the report or the scientific method used to collect the data.
31. The petitioners also relied on newspaper reports as evidence. A newspaper report would be hearsay evidence and inadmissible in evidence in the absence of the maker of the statement appearing in court and deposing to have perceived the fact reported.
32. While the petitioners were successful in demonstrating that the right to a livelihood was inextricably linked to the social and economic rights enumerated in article 43 of the Constitution, in their averments and arguments, the petitioners alternately failed to present relevant evidence probative of the claimed violations. Additionally, they presented evidence which was not only inadmissible, but also of no probative value in proving the allegations made that the impugned agreement and impugned directives affected and infringed the petitioners’ right to livelihood.
33. Under Part 1 of the Fourth Schedule, the functions of the National Government were set out at paragraph 18(f) which provided that the National Government was tasked with transport and communications, including marine navigation. The functions and powers of the County Governments under Part 2 of the Fourth Schedule at paragraph 5(e) was County Transport, including ferries and harbours excluding the regulation of international and national shipping and matters related thereto.
34. From the constitutional text, the county transport function was stated as including ferries and harbours. The text was also explicit that the county function excluded regulation of international and national shipping and matters related thereto which belonged to the National Government.
35. The court would not go beyond restating what the Constitution provided. If the parties desired for the court to pronounce itself on the outer limits of the regulation or policy making function assigned to the National Government under paragraph 5(e) of Part 2 of the Fourth Schedule to the Constitution, they should have provided sufficient material to assist the court in making such a determination. In any event, such a pronouncement could only be made in the context of a concrete case placed before the court for determination.

Petition partly allowed.

Orders:-

1. Claims that the Take or Pay Agreement dated September 30, 2014 and/or the directives by the 3^rd respondent dated March 15, 2019 and August 3, 2019 violated the social and economic rights of the petitioners were not proved and were dismissed.
2. The claim that the Take or Pay Agreement dated September 30, 2014 was in violation of articles 10 and 47 of the Constitution failed and was dismissed.
3. The claim that the directives by the 3^rd respondent dated March 15, 2019 and August 3, 2019 were in violation of articles 10 and 47 of the Constitution for want of public participation and for non-compliance with fair administrative procedures succeeded. The court declared the impugned directives constitutionally infirm. The impugned directives were quashed.
4. Given the potential of order (iii) above to disrupt the orderly operations of the port and the operationalization of the National Transport Policy, the effect of that order was suspended for one hundred and eighty (180) days to afford the respondents an opportunity to regularize the situation.
5. All the other prayers in the consolidated petitions failed and were dismissed.
6. As the matter entailed public interest litigation, each party would bear its own costs.