Kenya and Uganda have won a major legal battle against a $2 billion compensation claim filed by the defunct Rift Valley Railways (RVR) consortium at the London Court of International Arbitration (LCIA).
The case arose from the cancellation of a 25-year concession deal signed in 2006, which had allowed RVR to operate and manage the 2,350-kilometre Kenya-Uganda railway, according to Business Insider.
Both governments terminated the concession in 2017, pointing to RVR’s consistent failure to meet key obligations related to investment, maintenance, and operations outlined in the agreement.
The companies behind the suit, Rift Valley Railways Investments (RVRI) and KU Railways Holdings (KURH), had taken legal action against Kenya for ending the contract.
But Kenya argued that RVR had failed to maintain railway assets, meet agreed freight targets, and pay concession fees, all of which were conditions clearly stated in the contract.
“This outcome not only upholds the integrity of Kenya’s legal and commercial commitments but also protects the Kenyan taxpayer from what would have been a staggering financial liability,” read a statement from the Attorney General’s office on Friday.
“This win reaffirms Kenya’s resolve to uphold lawful governance, protect public resources and maintain international credibility.”
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The arbitration was launched in 2020 by KU Railway Holdings Ltd (formerly Sheltam Rail Company Pty) and RVR Investments Ltd, accusing Kenya and Uganda of breaching the terms of the concession and demanding $2.005 billion in damages.
But the two countries countered that the companies had failed to deliver on key requirements, such as presenting and carrying out a solid investment program to rehabilitate the railway tracks, modernise locomotives, and restore the wagon fleet to meet design speed standards.
The investment (Kenya Secures Deal To Protect $2 Billion In Foreign Investment) plan was supposed to bring strong economic and social benefits to both countries and support broader regional goals for development and poverty reduction.
In its final ruling, the LCIA tribunal dismissed the claims, backing Kenya and Uganda and affirming their decision to cancel the contract based on RVR’s failure to perform.
The ruling ends a long-running infrastructure dispute that had come to reflect the challenges of public-private partnerships in the region and strengthens both Nairobi and Kampala’s legal position as they pursue better investment options for regional transport projects.
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Image Credit: Business Insider Africa
