Kenya ordered to pay US$185.69M to KISCOL in land lease dispute
High Court issues major award to KISCOL over breached land lease obligations and state failure to protect project site.
KENYA – The High Court has directed the Kenyan government to pay approximately KES 24 billion (US$185.69M) to Kwale International Sugar Company Limited (KISCOL) after ruling that the state failed to uphold its obligations in a long-running land lease dispute.
Justice Florence Wangari delivered the judgment at the Mombasa High Court, finding that the government did not provide the investor with peaceful possession of the leased land as required under the agreement.
The final award is expected to rise once interest and legal fees are factored in.
KISCOL, a joint venture between Mauritius-based Omnicane Limited and Kenya’s Pabari Group, initiated a US$300 million integrated sugar project in 2007.
According to court records, the company secured a 15,000-acre leasehold in Kwale County to develop an irrigated sugar estate and processing complex intended to boost agricultural activity in the region.
Soon after the project commenced, local residents claiming ancestral ownership occupied parts of the land, preventing full development. Despite securing favourable outcomes in earlier land-related disputes, KISCOL maintained that government agencies did not enforce evictions or safeguard the investment.
The court agreed, noting that the state had committed—both formally and through conduct—to guarantee “quiet and peaceful possession” of the site.
The ruling also highlighted that the government excised about 1,000 hectares of the leased property for mineral extraction activities by Base Titanium without compensating KISCOL or reallocating equivalent land. This, the court found, further hindered the company’s operations.
As a result of restricted land access and prolonged interruptions, KISCOL faced repeated financial restructuring as it struggled to meet obligations to lenders. The disruptions contributed to mounting interest charges and operational losses.
The government argued that it had delivered vacant possession at the outset and asserted that KISCOL bore responsibility for managing any subsequent occupations.
It also contended that the claim was statute-barred and filed a counterclaim seeking cancellation of the lease. Justice Wangari rejected these arguments, ruling that the state had breached explicit contractual and legal duties.
Following the judgment, KISCOL Legal Adviser Benson Musili described the decision as a significant affirmation that agreements with investors must be honoured. He stated that the ruling reinforces confidence in the judicial system’s willingness to uphold contractual commitments.
The government has 14 days to file an appeal.
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