The Republic of Kenya has successfully defeated a claim estimated to be worth US$2 billion in arbitration proceedings brought against it by mining investor Cortec Mining Kenya Limited, a wholly owned subsidiary of TSXV-listed Pacific Wildcat Resources Corp.
Kenya was represented by DLA Piper and DLA Piper Africa member firm, IKM Advocates.
The claims in the case related to the alleged expropriation of a mining licence purportedly granted to the claimants in respect of niobium and rare earth deposits at Mrima Hill, a heavily protected area in Kwale County, Kenya.
The claimants alleged that the State unlawfully revoked a mining licence relating to Mrima Hill which had purportedly been granted to them in early 2013.
According to the claimants, this revocation was a direct expropriation contrary to the terms of the Bilateral investment treaty (BIT between the UK and Kenya dated 13 September 1999
Throughout the proceedings, the Republic of Kenya maintained that the claimants had failed to comply with the applicable legal and regulatory provisions relating to the grant of mining licences under Kenyan law, such that the alleged licence was void ab initio for illegality and did not exist as a matter of Kenyan law.
This was the finding that had already been made by the Kenyan courts both at first instance and on appeal.
The Tribunal agreed with the State’s position, finding that “the BIT protects only lawful investments, and that the claimants have failed to establish any compensable investment that was lawfully issued in accordance with the laws of Kenya”.
In addition, the Tribunal noted that, on the claimants’ own evidence, the alleged mining licence was procured by the claimants’ lobbying of government officials. Whilst the claimants “were clearly effective at the political level […] this case ultimately turns on their success (or lack of it) in respect of compliance with the law”.
The Tribunal found that the claimants’ attempts to by-pass statutory requirements “showed serious disrespect for the fundamental public policies of the host country in relation to the environment and resource development.”
The Tribunal dismissed all of the claimants’ claims and ordered the claimants to pay the Republic of Kenya costs and ICSID fees in excess of $3.5 million.
Kamau Karori the lead partner in this matter for the IKM team noted that the decision demonstrated: ” The concurrence by the tribunal with the decision by the Kenyan Courts that the licence was not issued in accordance with Kenyan laws will also come as a welcome endorsement for the work of the Kenya Judiciary.”
The arbitration took place under the auspices of the World Bank’s International Centre for Settlement of Investment Disputes (ICSID), with the hearing taking place in Dubai in January 2018. The Tribunal issued its award on 22 October 2018.