Kenya and Uganda win $2bn railway arbitration case in London

Kenya and Uganda have secured a major legal victory after the London Court of International Arbitration (LCIA) dismissed a $2 billion claim filed by Rift Valley Railways (RVR) consortium over a terminated railway concession.

The dispute stemmed from a 25-year agreement signed in 2006,granting RVR the right to manage and operate the 2,350-kilometer Kenya-Uganda railway line. Both governments canceled the deal in 2017,citing RVR’s repeated failures to invest in infrastructure,maintain assets,and meet freight targets. Claimants KU Railways Holdings (KURH) and Rift Valley Railways Investments (RVRI) launched arbitration in 2020,alleging wrongful termination and breach of contract. However,the LCIA ruled in favor of Kenya and Uganda,confirming that the states were within their rights to terminate the concession due to non-performance.

The tribunal also awarded significant costs to both countries,including KES 950 million (US$ 7.3 million) to Kenya and US$ 3.6 million to Uganda. Kenyan officials hailed the outcome as a win for good governance and a safeguard for public resources. “This victory has saved the Republic of Kenya,and by extension the Kenyan taxpayer,from incurring what would otherwise have been a significant financial burden,” said Solicitor General Shadrack Mose. The case highlights the importance of enforcing performance standards in public-private partnerships. With this ruling,Kenya and Uganda aim to move forward with new infrastructure investments,including the ongoing development of standard gauge railways to replace aging colonial-era lines.