In a significant legal victory, Kenya and Uganda have successfully fended off a $2 billion claim filed by the defunct Rift Valley Railways (RVR) consortium at the London Court of International Arbitration (LCIA).
- Kenya and Uganda successfully defended a $2 billion claim at the London Court of International Arbitration.
- The dispute arose from the 2017 termination of a 25-year concession agreement with Rift Valley Railways.
- Governments cited failures in investment, maintenance, and operational benchmarks as reasons for contract termination.
The dispute stemmed from the cancellation of a 25-year concession agreement signed in 2006, which had granted RVR the right to operate and manage the 2,350-kilometre Kenya-Uganda railway line.
Both governments terminated the agreement in 2017, citing RVR’s repeated failure to meet investment, maintenance, and operational benchmarks outlined in the contract.
Rift Valley Railways Investments (RVRI) and KU Railways Holdings (KURH) sued Kenya over the termination of a concession to manage and invest in its freight railway.
However, Kenya cited RVR’s failure to maintain assets, meet freight targets, and pay concession fees as detailed in the concession agreements.
“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,” said a press statement from the AG’s office on Friday.
“This win reaffirms Kenya’s resolve to uphold lawful governance, protect public resources and maintain international credibility.“
Concessionaire lapses behind $2bn railway row
The arbitration case was initiated in 2020 by KU Railway Holdings Ltd (formerly Sheltam Rail Company Pty) and RVR Investments Ltd, which accused Kenya and Uganda of breaching the terms of a 25-year railway concession and demanded $2.005 billion in compensation.
However, both countries argued that the concessionaires had failed to fulfill key contractual obligations.
These included presenting and executing a credible investment program involving the rehabilitation of railway tracks, the upgrading and modernisation of locomotives, and the restoration of the wagon fleet to ensure efficient operations at design speeds.
The proposed investment plan was intended to generate substantial economic and social benefits for both Kenya and Uganda, supporting broader regional efforts to drive growth and reduce poverty.
The LCIA tribunal dismissed the claims, siding with the two East African states and upholding their right to terminate the contract due to RVR’s non-performance.
The ruling brings closure to a long-running infrastructure saga that had become a symbol of stalled public-private partnerships in East Africa. It also reinforces Nairobi and Kampala’s legal footing as they seek new and more effective investments in regional transport infrastructure.
