A Sh4.7 billion legal dispute between Kwale Sugar International Company (Kiscol) and the Kenya Bureau of Standards (Kebs) has taken a twist after the national regulator applied for an order to compel the miller to deposit Sh135 million in court as security for costs.
Kebs has cited Kiscol’s alleged financial instability for its action, saying the firm is embroiled in various other cases and may not be able to pay the costs of the suit.
The legal dispute arose after a multi-agency team led by Kebs destroyed a consignment of sugar owned by Kiscol.
Kiscol sued in 2018 and amended its case in June 2024 to claim special damages of $36.4 million (Sh4.7 billion) from the government.
Other defendants in the suit are the Kenya Revenue Authority, the Attorney-General, the Ministry of Trade, the Directorate of Criminal Investigations, and the Inspector-General.
It is also seeking an unspecified amount of general damages and interest at court rates of 14 percent per year from the date of filing suit until payment in full.
Court papers show that in asking for the deposit of the costs, Kebs' apprehension is pegged on claims that the company is yet to pay an advocate's fee note of Sh663,810 awarded by the Court of Appeal in 2022 in a previous constitutional petition.
Kebs also says the sugar miller is facing a pending insolvency petition at the High Court in Milimani, Nairobi, and that the miller is “substantially foreign owned and controlled by legal persons in Mauritius”.
“The first defendant/applicant (Kebs) is verily apprehensive that the plaintiff/respondent (Kwale Sugar) will not be able to pay the colossal costs consequential upon its claims in this case being dismissed,” says Kebs Managing Director Esther Ngari in the court papers.
She adds that the company’s audited financial statements from 2016 to 2021 indicate financial instability coupled with the insolvency petition.
The petition originates from a claim for payment of compensation for 8995 bags of sugar destroyed by the government.
Kebs was part of a multi-agency team that visited and sealed off Kiscol’s factory, warehouses, stores, and lorries that had been loaded with sugar deemed non-compliant.
The case is pending determination, and a hearing is set to resume on October 22, 2025.
On November 7, 2019, the High Court in Mombasa declared that Kebs, together with the DCI, Ministry of Trade, and other State agencies, violated the company’s constitutional rights.
The court had ruled that the seizure of the factory, warehouses, and stores was illegal and unconstitutional and granted a mandatory injunction compelling Kebs to lift the seizures and renew the company’s standardization permit with respect to Kwale sugar.
The company had also been awarded Sh10 million compensation for loss suffered as a result of the seizure of its sugar consignment and closure of its factory.
However, Kebs appealed, and the Court of Appeal ordered a retrial of the petition at the High Court.
But pending full determination of the petition, Kebs wants the security of costs deposited with Ms Ngari, saying that the State agency is apprehensive that if the company loses the court case and is ordered to pay expenses, it would be difficult to recover the costs.
She argues that, based on factors related to the financial situation of the company, this is an appropriate case for the issuance of an order for security for costs.
“That it is only with respondent’s inability to pay the paltry taxed costs in Court of Appeal Civil Appeal No. 2 of 2020 at Mombasa in June 2025 and the readvertisement of the insolvency petition No.007 of 2019 on August 11, 2025 that it became imperative and self-evident that security for costs are just and reasonable to be sought and provided for in this case and thus this application is filed timeously,” explains the MD.
She argues that the matters in contention in court relate, among others, to Kebs’ discharge of its statutory mandate, which is in the public interest.
Kebs advocates, Wekesa & Simiyu Advocates, argue that the instruction fees, getting up fees, drawings, perusal, and attendances computed up to August 2025 in the claim sought by the company ranged at Sh135 million.
“It is just that the plaintiff provides security for costs to Kebs in this case to ensure, as a way of enhancing the right to fair hearing under Article 50 of the Constitution, 2010, the Defendant/Applicant is not left without recompense for costs that will and might be awarded to it in the event that the Plaintiff/Respondent is unable to pay the same due to it being insolvent or for whatever reason it is unable to pay the costs,” said the advocates.
