The High Court has declared unconstitutional a law that required businesses to pay a financial deposit before challenging government tender decisions, saying the requirement unfairly denied many contractors and suppliers access to justice.

🇰🇪 Breaking It Down

In a landmark ruling in a case filed by the Law Society of Kenya (LSK), Justice Bahati Mwamuye said forcing bidders to deposit a percentage of a tender's value before lodging procurement disputes created an unfair barrier, particularly for businesses that could not afford the upfront payment.

The decision struck down Sections 167(2) and 175(2) of the Public Procurement and Asset Disposal Act, as well as Regulations 203 and 218, meaning businesses will no longer be required to make the mandatory deposits before their procurement cases can be heard.

The judge acknowledged that the government has a legitimate interest in discouraging baseless procurement cases but said it cannot do so by introducing financial requirements that prevent genuine complainants from seeking justice.

📌 What You Need to Know

Justice Mwamuye said the strength of a procurement challenge should be determined by its legal and factual merits rather than the financial ability of the person filing the case.

The judge further observed that existing safeguards, including strict statutory timelines, limited standing to challenge procurement decisions, dismissal of unmeritorious claims, and awards of costs, already provide sufficient protection against abuse of the procurement review process.

The ruling is expected to benefit thousands of contractors, suppliers, and small and medium-sized enterprises (SMEs) that have previously struggled to challenge disputed government tenders because they could not afford the mandatory deposits.

Businesses owned by youth, women and persons with disabilities are also expected to benefit , with the court noting that financial barriers disproportionately affected smaller enterprises seeking fair competition in public procurement.

However, the court upheld Regulation 204, allowing parties appearing before the Public Procurement Administrative Review Board (PPARB) to continue being represented by advocates or representatives of their choice. It also ruled that the procurement regulations had undergone adequate public participation before they were enacted.

The ruling comes against the backdrop of recurring disputes over the award of public tenders, with procurement processes frequently attracting legal challenges over alleged irregularities, lack of transparency and claims of unfair competition. In many cases, smaller firms have argued that financial barriers made it difficult to pursue legitimate complaints before procurement review bodies and the courts.

📰 Source: Kenyans.co.ke