The Supreme Court of Kenya in Supreme Court Petition E032 of 2024 held that the Finance Act, 2023 is constitutional, save for sections 76, 78, and 87.
The Supreme Court reversed the Court of Appeal’s determination that the Finance Act 2023 was entirely unconstitutional.
Highlights of the decision
Where Parliament, following the outcome of a public participation process substantively amends clauses of a Bill (which subsequently become sections of an Act upon passage) no fresh public participation needs to be undertaken.
Parliament exercises legislative power (law-making) and administrative power (e.g., conducting investigations, approving state officers’ appointments, etc). When exercising legislative as opposed to administrative power, Parliament is not bound to give reasons for accepting or rejecting views gathered during the public participation exercise that must precede its exercise of legislative power.
However, the Court noted that Parliament should, as a good practice, provide reasons for its acceptance or rejection of views expressed during the public participation exercise.
The Court also pronounced itself on three broad, related questions arising from a suit seeking orders that a statute is unconstitutional.
Firstly, the Court set out the factors that a court should consider when examining the constitutionality of an Act. These factors are, among others, the premise that there is a presumption of constitutionality, the object and purpose of a statute and the mischief it intends to cure, and the effect of a declaration of unconstitutionality. On the effect of a declaration of unconstitutionality, the Court held that a court may issue a suspensory order where the effect would be far-reaching.
Secondly, on the issue of a suspensory order suspending a declaration of unconstitutionality, the Supreme Court delineated the factors that a court should consider.
Broadly, a court should weigh the consequences that would be consequent upon a declaration of unconstitutionality. Among other factors, a court should be guided by whether there would be legal uncertainty, injustice, undue hardship, and the overall possible disruptive effects to the continuity of the government of a declaration of unconstitutionality.
Thirdly, on the length of the suspensory period, a court should look at the government’s previous conduct, whether there is any related legislation (possibly, legislation that may cure the unconstitutionality), and the nature and severity of the infringement on the Constitution.
A further interesting question the Court faced was whether taxes already paid are refundable. The Court ruled in the negative: the taxes are not refundable.
This is a landmark decision that will shape the practice of constitutional law in Kenya’s courts.
