Why Treasury bet on local law expertise for Sh6bn London battle

To understand the gravity of this legal battle, one must look at why the government took the drastic step of rescinding the Sh6.09 billion transaction in late 2023. The deal, executed in the final days of the previous administration, involved the buyback of a 60 percent stake in Telkom Kenya from Jamhuri Holdings Ltd, a subsidiary of the UK-based private equity firm Helios Investment Partners.

Investigations by the Cabinet and the Ethics and Anti-Corruption Commission (EACC) flagged significant procedural gaps. Specifically, the transaction allegedly lacked the mandatory authorisations from the Attorney- General, the Controller of Budget, and key regulators like the Communications Authority of Kenya.

Furthermore, because Telkom Kenya is a strategic custodian of the country’s fiber-optic infrastructure and government data, the State argued that the lack of transparency in the deal posed a direct risk to national security and taxpayer value.

When a State agency enters a contract with an international investor, the agreements often include a "choice of law" clause. In this case, the battleground is London, governed by the rules of the London Court of International Arbitration.

Legal experts explain that while the Attorney-General’s office is the government’s primary counsel, international arbitration is a specialised theater of war. It requires a firm with the infrastructure to handle massive digital evidence, deep knowledge of English Law, and the agility to operate across international time zones.

Public interest often focuses on the selection process for these appointments, particularly regarding the significant budgetary allocations required. However, the procurement of legal services for a Sh6 billion case is a rigorous, multi-staged gauntlet governed by the Public Procurement and Asset Disposal Act.

The Treasury does not simply pick a firm; the process involves technical benchmarking where firms must prove they have successfully handled sovereign-grade disputes. The government also conducts capacity audits to evaluate "bench strength," ensuring enough partners and associates are dedicated to the matter.

Historically, African nations felt compelled to hire London or New York firms to be taken seriously in international courts. This legal capital flight saw billions of shillings leave the continent annually. The selection of G&A Advocates is being cited by industry insiders as evidence that African firms have come of age.

The firm has built a track record on some of Kenya's most significant financial milestones, including providing counsel during the Safaricom IPO and the issuance of the Eurobond.

Central to the Treasury’s confidence is the proven scalability of local firms to meet global demands. G&A Advocates, for instance, has demonstrated its ability to operate beyond Nairobi through a network of affiliates in key global financial and legal hubs, including the UK, the US, the UAE, and South Korea.

This international reach suggests that the local firms can provide the same seamless, cross-border service once reserved for Western conglomerates, while maintaining the "contextual intelligence" a foreign firm might lack.

This shift toward indigenous expertise mirrors a broader continental trend where African governments are increasingly securing landmark victories through local legal architects. Nigeria recently provided a blueprint for this strategy in its successful fight to overturn an $11 billion arbitration award in the P&ID case.

While the battle took place in London, the victory was anchored by a robust strategy that leveraged Nigerian legal minds to dismantle claims that had threatened the nation’s economy. Similarly, the Government of Ghana has recorded significant successes in energy-sector arbitrations in Paris and London by placing Ghanaian counsel at the heart of their defense strategy.

By appointing an indigenous firm with experience in complex international claims and capital markets, the Treasury is betting on home-grown entities to navigate the complexities of the London seat.

It is a move that keeps legal expertise and taxpayer money within the borders, while asserting that Kenyan lawyers are now ready to lead on the global stage. As the London tribunal prepares to hear the case, all eyes will be on the legal team to see if this bet on local excellence pays off for the Kenyan taxpayer.

Ultimately, the National Treasury’s choice comes at a time of heightened scrutiny over government spending. However, legal experts argue that the cost of losing far outweighs the cost of premier representation.

By appointing an indigenous firm with experience in complex international claims and capital markets, the Treasury is betting on home-grown entities to navigate the complexities of the London seat.

It is a move that keeps legal expertise and taxpayer money within the borders, while asserting that Kenyan lawyers are now ready to lead on the global stage. As the London tribunal prepares to hear the case, all eyes will be on the legal team to see if this bet on local excellence pays off for the Kenyan taxpayer.

Eric Gumbo is a partner at G&A Advocates LLP