LEGAL ALERT: Reprieve for lenders as Court strikes down S.47 of the Land Laws (Amendment Act) 2016

LEGAL ALERT: Reprieve for lenders as Court strikes down S.47 of the Land Laws (Amendment Act) 2016

Posted on December 16th, 2021


  • Tom O. Onyango, MBS

  • Renice Midar, ACIArb

“Equal justice under the law is perhaps the most inspiring ideal of our society; it is one of the ends for which our entire legal system exists”

U.S. Supreme Court Justice Lewis Powell Jr.

This dictum on ‘equal justice under the law’ as espoused by Justice Powell was recently tested in Kenya in Malindi Law Society & 12 others v Attorney General & 2 others, Consolidated Petition Numbers 19 & 291 of 2016. The Petition sought to challenge various aspects of the Land Laws (Amendment) Act, 2016.

The President had on 31st August 2016, assented to the Land Laws (Amendment) Bill 2015 to amend the Laws relating to land to align them with the Constitution, to give effect to Articles 68(c) (i) and 67 (2) (e) of the Constitution, to provide for procedures on eviction from land, and for connected purposes.

By a Petition dated 6th October 2016, the Malindi Law Society sought a declaration from the High Court that Sections 2, 38, 47, 48 and 98 of the Land Laws (Amendment) Act, 2016 were unconstitutional, null and void.

One of the more troubling amendments was Section 47. That Section 47 of the Land Laws (Amendment) Act had amended Section 12 of the Land Act and introduced the concept of controlled land, defined as land which is:

(a) within a zone of twenty-five kilometres from the inland national boundary of Kenya;

(b) within the first and second row from high water mark of the Indian Ocean, and

(c) any other land as could be declared controlled under any statute.

Under section 47(2), no transaction in controlled land, can be dealt with without the prior approval of the Cabinet Secretary (“the CS”). The CS was further required to seek the approval of the relevant authorities before sanctioning any transaction.

The import of this was to introduce new regulatory burdens on non-citizens with land interests particularly at the coastal strip whenever they sought to deal in their land, for example by way of charging or subleasing the same. With the slow nature of bureaucratic processes, this disrupted business owners’ ability to obtain funds from lenders occasioning further damage to the hospitality sector and the economy of the coastal region generally.

Aside from the regulatory hurdle, the amendment was seen as an unjustified infringement on land ownership rights contrary to the express provisions of Article 40 of the Constitution which provides for the protection of rights to property. The amendment was premised as operationalizing Article 65 of the Constitution which bars non-citizens from holding land other than on leasehold basis, which in any event cannot be for a period that exceeds 99 years. However, under the article the only limitation to non-citizens’ ownership rights had to do with duration and not location.

Article 40 states explicitly that:

(1) Subject to Article 65, every person has the right, either individually or in association with others, to acquire and own property:

(a) of any description; and

(b) in any part of Kenya.

(2) Parliament shall not enact a law that permits the State or any person—

(a) to arbitrarily deprive a person of property of any description or of any interest in, or right over, any property of any description; or

(b) to limit, or in any way restrict the enjoyment of any right under this Article on the basis of any of the grounds specified or contemplated in Article 27(4).

Article 27(4) in turn states that:

The State shall not discriminate directly or indirectly against any person on any ground, including race, sex, pregnancy, marital status, health status, ethnic or social origin, colour, age, disability, religion, conscience, belief, culture, dress, language or birth.

When the High Court handed down its decision on 29th October 2021, it held unequivocally that Section 12A of the Land Act was unconstitutional. Section 12A, which was introduced through an Amendment to the Land Act 2016, states as follows:

“Controlled land.

(l) In this part-

“controlled land” means land in Kenya which is-

(a) within a zone of twenty-five kilometres from the inland national boundary of Kenya;

(b) within the first and second row from high water mark of the Indian Ocean;

(c) any other land as may be declared controlled land under any law or statute.

“ineligible person” means-

(i) an individual who is not a Kenyan citizen;

(ii) the government of a country other than Kenya or a political subdivision of a country other than Kenya, or any agency of such government or political subdivision, or

(iii) a body corporate which has non-citizens as shareholders shall be deemed to be a non-citizen.

“interest” has the meaning assigned to it in the Act and interest in land shall include transfer, lease, licence, charge, exchange, partition or other disposal of or dealing with any controlled land.

“corporation” means a body incorporated with or without a share capital under any written law in Kenya and the expression includes a limited liability partnership;

(2) No transaction in controlled land, including a transfer for a consideration or by way of trusts, gift inter vivos or otherwise to an ineligible person, shall be dealt with without the prior written approval of the Cabinet Secretary.

(3) In deciding whether to approve or not approve an application, the Cabinet Secretary shall seek the approval of the relevant authorities.”

The Court in Malindi Law Society & 12 others v Attorney General & 2 others held that, from a perusal of section 47 of the Land Laws (Amendment) Act, the same had far reaching implications on the ownership rights to property.

The exercise of the ownership right to property would be greatly limited within the defined controlled land and it was therefore incumbent upon the State to demonstrate that the limitation was justifiable, and that the societal need therefore outweighed the individuals’ right to enjoy the right or freedom to deal with their properties, even in cases where the individual in question is a non-citizen. There was no reasonable justification to warrant section 47.

This decision should provide much-needed relief to property owners and lenders alike. The uncertainty created by the Amendment had meant that lenders were unsure if they could continue to charge lands at the coastal strip or whether the proprietors would be able to continue servicing the existing lending facilities without the ability to further charge or otherwise dispose of. Furthermore, would proprietors be able to renew expiring leases and thereby be able to stay in business? The answer, for now, is yes.

The decision highlights the importance of stakeholder engagement in developing laws as part of the public participation requirements. As observed in Save Lamu v NEMA, it is important for stakeholders to take an active part in public participation and state their objections early and clearly when repressive amendments are being considered.

The decision also underscores the need for lenders to take a keen interest in discussions surrounding land and other laws and to always have adequate representation to ensure their rights and interests are not unduly affected.

Should you require further information and guidance on this please get in touch with Mr. Tom Onyango ( ), Renice Midar ( , or any member of our Real Estate and Banking Team.