Asset Recovery Watch

ARW-47
Daniel Arap Moi / World Duty Free Company Limited
Kenya
President (1978-2002)
International Centre for Settlement of Investment Disputes, Washington, D.C.
Location of Recovery Effort
1998
2006
Art.16
No
Other
No
NA
The Article 9(2)(c) of the Agreement of 27th April 1989 provided that any arbitration shall apply English law while Article 10(A) provided that the Agreement shall be governed by Kenyan law. The Tribunal noted that the provisions were "perhaps awkwardly worded. for present purposes, however, no practical difficulty arises from their apparent inconsistency," in voiding the contract under both English and Kenyan laws and public policy. (Award of September 25, 2006, at 49). The Tribunal also held that "Mr. Ali's payment was received corruptly by the Kenyan head of state; it was a covert bribe; and accordingly its receipt is not legally to be imputed to Kenya itself." (Award of September 25, 2006, at 54).
Completed
Final Judgment (No Appeal)
Avoidance of monetary damages in commercial arbitration case filed against Government of Kenya
No
NA

According to the December 2010 Asset Recovery Handbook by the Stolen Asset Recovery Initiative, "In 1989, Kenya initially entered into an agreement with World Duty Free Company (WDF) for construction, maintenance, and operation of duty-free complexes at Nairobi and Mombasa international airports. In obtaining the contract, WDF paid bribes to the former Kenyan president, Daniel arap Moi. Subsequently, in 1998, WDF was placed under receivership by the High Court in Kenya; and a formal judgment and decree was made in 2001, transferring beneficial ownership to the receiver. In disputing the order before the ICSID, WDF claimed that Kenya had unlawfully destroyed its contractual rights through the receivership order. The government of Kenya argued that WDF's procurement of the agreement through bribes was a breach of English and Kenyan laws applicable to the contract, as well as breach of international public policy, and that the government was lawfully entitled to avoid contract obligations." (Source: Asset Recovery Handbook (Stolen Asset Recovery Initiative, December 2010) at 167). The Arbitration Tribunal noted that "former President of Kenya, Mr. Daniel arap Moi, was not a party to these arbitration proceedings and was not legally represented in these proceedings. He was not heard as a witness... The Tribunal decided on the dispute submitted to it on the evidence adduced and the submissions made by the parties to the case." (Source: In the Proceeding Between World Duty Free Company Limited and The Republic of Kenya, ICSID Case No. ARB/00/7, Award of September 25, 2006.) World Duty Free Company Limited, a company incorporated in the Isle of Man, had requested the arbitration on June 16, 2000. The request was registered by the ICSID purusant to Article 36(3) of the ICSID Convention on the Settlement of Investment Disputes between States and Nationals of Other States. World Duty Free was managed by Mr. Nasir Ibrahim Ali; in 1991, the Al-Ghurair family which had owned WDF sold its shares and as a result, Mr. Ali held in his own name 10% of the World Duty Free shares and 90% of the stock was registered in the name of Dinky International SA, whose shareholders were Mr. Ali at 90% and rest owned by his wife. Mr. Ali's $2 million payment to then President Moi is described in his written statement to the Tribunal (Award of September 25, 2006, at 37-38.) The Tribunal wrote, "It remains nonetheless a highly disturbing feature in this case that the corrupt recipient of the Claimant's bribe was more than an officer of the State but its most senior officer, the Kenyan President; and that it is Kenya which is here advancing as a complete defence to the Claimant's [World Duty Free's] claims the illegalities of its own former President. Moreover, on the evidence before this Tribunal, the bribe was apparently solicited by the Kenyan President and not wholly initiated by the Claimant. Although the Kenyan President has now left office and is no longer immune from suit under the Kenyan Constitution, it appears that no attempt has been made by Kenya to prosecute him for corruption or to recover the bribe in civil proceedings." (Award of September 25, 2006, at 59.)

None

Kenyan Anti-Corruption Commission
NA
NA
Kenyan Anti-Corruption Commission
Government of Kenya represented at proceedings by: Attorney General of Kenya, Counsel from law firm of Freshfields Bruckhaus Deringer, Director of Public Prosecutions, Senior Assistant Commissioner Police of Kenya
International Centre for Settlement of Investment Disputes (Washington, D.C.)