News & Analysis

Corporate Civil and Criminal Liability for Environmental Non-Compliance in Kenya

Published

2 years ago

November 26, 2021

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By Dr. Kariuki Muigua, PhD (Leading Environmental Law Scholar, Policy Advisor, Natural Resources Lawyer and Dispute Resolution Expert from Kenya)*

Civil liability against corporations for environmental breaches occurs in the form of compensation and damages aimed at bringing the property or person affected by such acts as far as possible to the condition they were before the breaches occurred. Civil remedies for environmental protection can be classified according to their intended function which could be preventive, compensatory, reparatory or natural restitution. In addition to enshrining the right to clean and healthy environment, the Constitution sets out obligations in respect of the environment. Breach of these obligations may result in enforcement of environmental rights under article 70 of the Constitution which empowers the Environment and Land Court to grant civil remedies such as compensation to the victim or orders of injunction to prevent, stop or discontinue any act or omission that is harmful to the environment.

In addition to these remedies, EMCA provides for environmental restoration orders, conservation orders, and easements as part of civil remedies for environmental breaches. Consequently, corporations in Kenya found liable for environmental breaches have been imposed with civil consequences. For instance, in John Mutungu Waititu –vs- China Wuyi (Kenya) Co. Limited (2018) eKLR, the Respondent had leased the Appellant’s land for a period of one year, with the purpose of excavating murram. After excavating the murram, the Respondent failed to push back the top soil in order to make the ground level and leave the ground the way they had found it. This in turn left the land vulnerable and prone to grave environmental degradation. The Court found the Respondent liable and imposed civil remedies including; nominal damages of Kshs. 25,000 and a Restoration order directing the Respondent move to the Appellant’s land and ensure that the same is restored to sound environmental standards not harmful to the environment and to the area residents and animals.

Civil liability for environmental breaches by corporations follows common law principles such as the strict liability rule. The rule was laid down in the case of Rylands vs Fletcher which imposes strict liability on the owner of land for damage caused by the escape of substances to his or her neighbour’s land. Courts in Kenya have applied the strict liability rule and imposed civil liability on corporations for actions that have resulted in damage to the adjacent lands. In Esther Wanjiru Mwangi & 3 Others vs Xinghui International (K) Limited, the defendant dumped large quantities of lead wastes on a road adjoining the Plaintiffs’ land and as a consequence, the hazardous wastes negatively affected the Plaintiff’s crops and animals.

The plaintiffs lost three cows due to indigestion of the poisonous waste material and argued that continued dumping and staying on site of the waste posed real danger to their health as well as to their animals and crops. The court found the Defendant liable for negligence as established in Rylands –vs-Fletcher and granted several civil remedies in favour of the Plaintiffs including Kshs. 270,000/= being the value of the dead cows, an order directing the defendant to remove the dumped lead contaminated soil and waste on the road between its land and the Plaintiffs’ parcels and a mandatory injunction restraining the Defendant from dumping any contaminated waste from its factory to the Plaintiff’s land parcels.

Corporations therefore have to guard against instances of environmental damage since their actions can give rise to civil liability. It is clear that the Courts in Kenya readily apply the Sustainable Development “Polluter Pays Principle” which provides that the polluter bears the expenses of carrying out pollution prevention measures or paying for damage caused by pollution. As a principle of equity, it aims at introducing environmental costs in economic decision making in order to achieve sustainable development. This principle has been enforced by courts in Kenya by compelling corporations to undertake environmental restoration orders and pay damages for environmental pollution and take responsibility for their acts and omissions that affect the environment.

In addition to civil liability, EMCA imposes environmental criminal liability by outlining several environmental offences which including offences related to inspection, offences related to Environmental Impact Assessment, offences related to records and standards and offences related to and also prescribes penalties for these offences. Further, the Act also empowers environmental inspectors appointed under the Act, subject to the Constitution and section 29 of the Office of the Director of Prosecution Act, to institute and undertake criminal proceedings against any person before a court of competent jurisdiction (other than a court martial) in respect of any offence alleged to have been committed by that person under EMCA.

The Act provides that, when an offence is committed by a body corporate, the body Corporate and every director or officer who had knowledge of the commission of the offence and who did not exercise due diligence, efficiency and economy to ensure compliance with the Act shall be guilty of an offence (emphasis added). Thus, where an Environmental Impact Assessment is required, a corporation should ensure that it is prepared in accordance with EMCA and the Environmental (Impact Assessment and Audit) Regulations, 2003. Where an environmental audit is required, the corporation should conduct it as provided by EMCA and the regulations. Further, corporations in the manufacturing sector should comply with requirements on hazardous wastes and chemicals in handling wastes from their industries.

Environmental compliance is required by corporate organizations under EMCA. The foregoing discussion has demonstrated that breach of environmental compliance may result in civil and criminal sanctions upon an organization. It is clear that the wellbeing if not the survival of any corporate organization may depend on how environmental compliance issues are handled. This relates to the sanctions that may be imposed for breach of environmental compliance requirements such as damages or closure of the corporation. Officers of corporations such as directors and company secretaries have to ensure that all environmental laws, regulations and policies are adhered to. Breach of this duty may result in both civil and criminal liability under EMCA. Corporates need to be aware of the legal provisions in regard to civil and criminal liability and comply accordingly to avoid incurring liability.

*This is article is an extract from an article by Dr. Kariuki Muigua, PhD, Muigua, K., “Providing Legal Advice on Corporate Environmental Compliance in Kenya,” Available at: http://kmco.co.ke/wp-content/uploads/2021/05/Corporate-Environmental-Compliance-in-Kenya-May-2021.pdf. Dr. Kariuki Muigua is Kenya’s foremost Environmental Law and Natural Resources Lawyer and Scholar, Sustainable Development Advocate and Conflict Management Expert. Dr. Kariuki Muigua is a Senior Lecturer of Environmental Law and Dispute resolution at the University of Nairobi School of Law and The Center for Advanced Studies in Environmental Law and Policy (CASELAP). He has published numerous books and articles on Environmental Law, Environmental Justice Conflict Management, Alternative Dispute Resolution and Sustainable Development. Dr. Muigua is also a Chartered Arbitrator, an Accredited Mediator, the Africa Trustee of the Chartered Institute of Arbitrators and the Managing Partner of Kariuki Muigua & Co. Advocates. Dr. Muigua is recognized as one of the leading lawyers and dispute resolution experts by the Chambers Global Guide 2021 and nominated as ADR Practitioner of the Year (Nairobi Legal Awards) 2021.

References

Al Ouran, N.M., ‘Analysis of Environmental Health linkages in the EIA process in Jordan,’ International Journal of Current Microbiology and Applied Sciences, Vol. 4, No. 7, 2015, pp. 862-871.

Climate Change Act, No. 11 of 2016, Government Printer, Nairobi.

Companies Act, No. 17 of 2015, Government Printer, Nairobi.

Constitution of Kenya 2010, Government Printer, Nairobi.

Cortec Mining Kenya Limited v Cabinet Secretary Ministry of Mining & 9 others [2015] eKLR.

Declaration of the United Nations Conference on the Human Environment Stockholm, 16 June 1972, available at https://legal.un.org/avl/ha/dunche/dunche.html (Accessed on 25/11/2021).

Environmental Management and Co-Ordination Act (EMCA), No. 8 of 1999, Government Printer, Nairobi

Environmental (Impact Assessment and Audit) Regulations, 2003 Legal Notice No. 101 (June 13, 2003),

Environment Management and Co-ordination (Air Quality) Regulations, available at http://www.nema.go.ke/index.php?option=com_content&view=article&id=31&Itemid=171 (Accessed on 25/11/2021).

Environment Management and Co-ordination Water Quality Regulations, 2006 Legal Notice No. 120 (September 4, 2006).

Environmental Management: The ISO 14000 family of International Standards, available at https://www.iso.org/files/live/sites/isoorg/files/archive/pdf/en/theiso14000family _2009.pdf (Accessed on 25/11/2021).

Environmental protection Agency, ‘Strategic Environmental Assessment,’ Available at http://www.epa.ie/monitoringassessment/assessment/sea/#.Vi5tmGuJ2CA (Accessed on 21/11/2021).

Esther Wanjiru Mwangi & 3 others v Xinghui International (K) Limited, High Court of Kenya at Nakuru, Civil Suit No. 144 of 2009 (2016) eKLR.

John Mutungu Waititu –vs- China Wuyi (Kenya) Co. Ltd, Environment and Land Court at Nyahururu, ELC Appeal No. 25 of 2017, (2018) eKLR.

Kenya Association of Manufacturers & 2 others v Cabinet Secretary – Ministry of Environment and Natural Resources & 3 others [2017] eKLR.

Krstinić, D., Bingulac, N., & Dragojlović, J., “Criminal and civil liability for environmental damage,” Economics of Agriculture 64, no. 3 (2017): 1161-1176.

Muigua K, ‘Strengthening the Environmental Liability Regime in Kenya for Sustainable Development,’ Available at: http://kmco.co.ke/wp-content/uploads/2019/09/Strengthening-the-Environmental-Liability-Regime-in-Kenya-for-Sustainable-Development-Kariuki-Muigua-26th-April-2019.pdf(Accessed on 25/11/2021).

Muigua. K, ‘Legal Aspects of Strategic Environmental Assessment (SEA) and Environmental Management, available at http://kmco.co.ke/wp-content/uploads/2018/08/Legal-Aspects-of-SEA-andEnvironmental-Management-3RD-December-2016.pdf (Accessed on 25/11/2021).

Muigua, K, ‘Towards Meaningful Public Participation in Natural Resource Management in Kenya’ available at http://kmco.co.ke/wp-content/uploads/2018/08/TOWARDS-MEANINGFUL-PUBLICPARTICIPATION-IN-NATURAL-RESOURCE-MANAGEMENT-IN-KENYA.pdf (Accessed on 25/11/2021).

Muigua. K, ‘Role of the Company Secretary in Environmental Compliance’ available at http://kmco.co.ke/wp-content/uploads/2018/08/078_ROLE-OF-THE-C-S-IN-ENVIRONMENTALCOMPLIANCE.pdf (Accessed on 30/11/2019).

Rylands vs Fletcher [1861-73] ALL ER REP 1.

Save Lamu & 5 Others v NEMA & another, Tribunal Appeal No. NET 196 of 2016.

Sustainable Development Goals, available at https://www.undp.org/content/dam/undp/ library/ corporate/brochure/SDGs_Booklet_Web_En.pdf (Accessed on 25/11/2021).

Vícha, O, The Polluter-Pays Principle In OECD Recommendations And Its Application In International And EC/EU Law, Czech Yearbook of Public & Private International Law, Vol. 2, 2011, pp. 57-67.

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News & Analysis

The Roles of the Three Parts of the Permanent Court of Arbitration

Published

2 days ago

May 30, 2023

Admin

H.E. Amb. Marcin Czepelak, the Fourteenth Secretary-General of the Permanent Court of Arbitration (PCA)

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News & Analysis

Brief History of the Permanent Court of Arbitration (PCA)

Published

7 days ago

May 26, 2023

Admin

By Dr. Kariuki Muigua, PhD, C.Arb, Current Member of Permanent Court of Arbitration (PCA) Representing the Republic of Kenya.

The Permanent Court of Arbitration (PCA) is a 124 Years Old Intergovernmental Organization currently with 122 contracting states. It was established at the turn of 20^th Century during the first Hague Peace Conference held between 18^th May and 29^th July 1899. The conference was an initiative of then Russian Czar Nicholas II to discuss peace and disarmament and specifically with the object of “seeking the most effective means of ensuring to all peoples the benefits of a real and lasting peace, and, above all, of limiting the progressive development of existing armaments.” The culmination of the conference was the adoption of a Convention on the Pacific Settlement of International Disputes, which dealt not only with arbitration but also with other methods of pacific settlement, such as good offices and mediation.

The aim of the conference was to “strengthen systems of international dispute resolution” especially international arbitration which in the last century had proven effective for the purpose with number of successful international arbitrations being concluded among Nations. The Alabama arbitration of 1871-1872 between the United Kingdom (UK) and the United States (US) under the Treaty of Washington of 1871 culminating in the arbitral tribunal’s award that the UK pay the US compensation for breach of neutrality during American Civil War which it did had demonstrated the effectiveness of arbitration in settling of international disputes and piqued interest of many practitioners in it as a mode of dispute resolution during the latter years of the nineteenth century.

The Institut de Droit International adopted a code of procedure for arbitration in 1875 to answer the need for a general law of arbitration governing for countries and parties wishing to have recourse to international arbitration. The growth of arbitration as a mode of international dispute resolution formed the background of the 1899 conference and informed its most enduring achievement, namely, the establishment of the PCA as the first global mechanism for the settlement of disputes between states. Article 16 of the 1899 Convention recognized that “in questions of a legal nature, and especially in the interpretation or application of International Conventions” arbitration is the “most effective, and at the same time the most equitable, means of settling disputes which diplomacy has failed to settle.”

In turn, the 1899 Convention provided for the creation of permanent machinery to enable the setting up of arbitral tribunals as necessary and to facilitate their work under the auspices of the institution it named as the Permanent Court of Arbitration (PCA). In particular, Article 20 of the 1899 Convention stated that “[w]ith the object of facilitating an immediate recourse to arbitration for international differences which it has not been possible to settle by diplomacy, the signatory Powers undertake to organize a Permanent Court of Arbitration, accessible at all times and operating, unless otherwise stipulated by the parties, in accordance with the rules of procedure inserted in the present Convention.” In effect, the Convention set up a permanent system of international arbitration and institutionalized the law and practice of arbitration in a definite and acceptable way.

As a result, the Permanent Court of Arbitration (PCA) was established in 1900 and began operating in 1902. The PCA as established consisted of a panel of jurists designated by each country acceding to the Convention with each country being entitled to designate up to four from among whom the members of each arbitral tribunal might be chosen. In addition, the Convention created a permanent Bureau, located in The Hague, with functions similar to those of a court registry or secretariat. The 1899 Convention also laid down a set of rules of procedure to govern the conduct of arbitrations under the PCA framework.

The second Hague Peace Conference in 1907 saw a revision of the 1899 Convention and improvement of the rules governing arbitral proceedings. Today, the PCA has developed into a modern, multi-faceted arbitral institution perfectly situated to meet the evolving dispute resolution needs of the international community. The Permanent Court of Arbitration has also diversified its service offering alongside those contemplated by the Conventions. For instance, today the International Bureau of the Permanent Court of Arbitration serves as a registry in important international arbitrations. In 1993, the Permanent Court of Arbitration adopted new “Optional Rules for Arbitrating Disputes between Two Parties of Which Only One Is a State” and, in 2001, “Optional Rules for Arbitration of Disputes Relating to Natural Resources and/or the Environment”.

Reference

PCA Website: https://pca-cpa.org/en/about/introduction/history/ (accessed on 25^th May 2023).

News & Analysis

Former KCB Company Secretary Sues Over Unlawful Dismissal

Published

4 months ago

January 19, 2023

Admin

Former KCB Group Company Secretary Joseph Kamau Kania who has sued the Bank for Unlawful Dismissal

Former KCB Group Company Secretary Joseph Kamau Kania has sued the lender seeking reinstatement or be compensated for illegal sacking almost three years ago. Lawyer Kania was the KCB Group company secretary until restructuring of the lender in 2021 that saw some senior executives dropped.

Through the firm of Senior Counsel Wilfred Nderitu, Kamau wants the court to order KCB Group to unconditionally reinstate him to employment without altering any of the contractual terms until his retirement in December 2025.

In his court documents filed before Employment and Labour Relations Court, the career law banker seeks the court to declare the reorganization of the company structure a nullity and amounted to a violation of his fundamental right to fair labour practices as guaranteed in Article 41(1) of the Constitution. He further wants the court to declare that the position of Group Company Secretary did not at any time cease to exist within the KCB Group structure.

He further urged the Employment Court to declare that the recruitment and appointment of Bonnie Okumu, his former assistant, as the Group Company Secretary, in relation to the contemporaneous termination of his employment, was unprocedural, insufficient and inappropriate to infer a lawful termination of his employment.

“A declaration that the factual and legal circumstances of the Petitioner’s termination of employment were insufficient and inappropriate to infer a redundancy against him, and that any redundancy declared by the KCB Group in relation to him was therefore null, void and of no legal effect and amounted to a violation of his fundamental right to fair labour practices as guaranteed in Article 41(1) of the Constitution,” seeks lawyer Kamau.

Kamau says he was subjected to discriminatory practices by the KCB Bank Group in violation of his fundamental right to equality and freedom from discrimination as guaranteed in Article 27 of the Constitution and the termination of his employment was unfair, unjustified, illegal, null and void.

Lawyer Kamau further seeks the court to declare that the Non-Compete Clause in the 2016 Contract is unenforceable by the KCB Group as against him and is voidable by him as against the Bank ab initio, byreason of the termination of the Petitioner’s employment having been a violation of Articles 41(1) and 47(1) and (2) of the Constitution, and of the Employment Act.

He also wants the Employment Court to find that finding that KCB’s group legal representation by Messrs of Mohammed Muigai LLP Advocates law firm in respect of his claim for unlawful termination of employment resulted in a clear conflict of interest by reason of the fact that a Founding and Senior Partner at the said firm lawyer Mohammed Nyaoga is also the Chairman of the CBK’s Board of Directors.

“A Declaration that the circumstances of KCB’s legal representation by Messrs. Mohammed Muigai LLP Advocates resulted in a violation of the Petitioner’s fundamental right to have the employment dispute decided independently and impartially, as guaranteed in Article 50(1) of the Constitution,” seeks lawyer Kamau.

Kamau is seeking damages against both KCB Group and Central Bank of Kenya jointly and severally for the violation of his constitutional and fundamental right to fair labour practices.

He wants further wants court to declare that CBK is liable to petitioner on account of its breach of statutory duty to effectively regulate KCB Group to ensure that KCB complied with the Central Bank of Kenya Prudential Guidelines and all other Laws, Rules, Codes and Standards, and that, as an issuer of securities, it complied with capital markets legislation.

Kamau through his lawyer Nderitu told the court that he was involved in Shareholder engagement in introducing the Group aide-mémoire that significantly improved the management of the Annual General Meetings, including obtaining approval without voting through the Memorandum and Articles of Association of Kenya Commercial Bank Limited among others.

He said that during his employment at KCB Bank Kenya and with the KCB Group, he initially worked well with former KCB CEO Joseph Oigara until 2016 when the CEO allegedly started sidelining him by removing the legal function from his reporting line.

He further claims he was transferred from the Group’s offices at Kencom House to its offices Upper Hill under the guise that the Petitioner was merely to support the KCB Group Board.

He adds that at that point his roles were given to Okumu for reasons that were not related to work demands. He stated that Oigara at one time proposed that he should leave his role in the KCB Group and go and serve as the Company Secretary of the National Bank of Kenya Limited, a subsidiary of the Group, a suggestion which he disagreed with to Oigara’s utter annoyance.

Kamau stated that his work was thenceforth unfairly discredited, leading to his being taken through a disciplinary process whose intended outcome failed miserably, and the Petitioner was vindicated.

“More specifically, the Petitioner contends that the purported creation of a new organizational structure towards the end of 2020 was in fact Oigara’s orchestration targeted to remove certain individuals by requiring them to undergo interviews in the pretext that new roles were created, and amounted to a further violation of the Petitioner’s fundamental right to fair labour practices under Article 41(1) of the Constitution,” said in his court documents.

He further adds that this sham reorganization demonstrates how the role of the KCB Group Company Secretary purportedly ceased to be and was then very briefly replaced with a new role of the KCB Group General Counsel. The role of KCB Group Company Secretary then ‘resurfaced’ immediately thereafter, in total violation of legal and regulatory requirements.