High Court orders State to pay Kwale Sugar Ksh.24B over breached land deal

The High Court in Mombasa has ordered the Kenyan government to pay approximately $186 million (Ksh.24 billion) to Kwale International Sugar Company Limited (KISCOL) after finding that the State fundamentally breached its contractual obligations and derailed a major agricultural project in the coastal region.

The ruling, delivered last week by Justice Florence Wangari, is one of the largest financial awards issued against the government in recent years.

The court held that the state failed to honour key commitments under a 2007 agreement, and that this failure ultimately doomed the $300 million (Ksh.39 billion) venture.

KISCOL, a joint venture between Mauritian multinational Omnicane Limited and Kenya’s Pabari Group, had leased 15,000 acres in Kwale County for a large-scale sugar plantation and mill intended to spur economic growth and create jobs.

Central to the deal was the government’s undertaking to guarantee the company “quiet and peaceful possession” of the land.

Instead, the court found that the project site quickly fell into conflict. Local communities claiming ancestral ownership occupied substantial parts of the leased land, severely limiting KISCOL’s access.

Although the company later secured favourable court rulings on land title, the State failed to remove the squatters, leaving nearly half the concession inaccessible.

The situation worsened when the government excised about 2,500 acres of the lease for a separate mining project by Base Titanium, without providing compensation or substitute land.

Justice Wangari said what began as administrative negligence escalated into a full-blown crisis that crippled the investor’s ability to plant sugarcane or construct the milling facilities. The disruptions forced KISCOL into repeated and expensive debt restructurings.

The government argued that it had met its obligations and that the claim was time-barred, but the court rejected those defences in entirety. It ordered the state to pay Ksh.24 billion plus interest and costs, an amount expected to rise significantly.

Government officials said they were reviewing the decision but acknowledged that its message aligns with Kenya’s stated commitment to upholding contractual obligations.

KISCOL legal adviser Benson Musili welcomed the outcome, calling it “a monumental victory for the principle that when governments make commitments, they must honour them.”

“It affirms that Kenya’s courts will uphold the law equally, even against the state,” Musili said of the verdict.

The decision closes a 13-year legal battle for Omnicane and the Pabari Group, whose flagship project collapsed under unmet government promises. The State has 14 days to appeal.