The Kenya Capital Markets Tribunal is facing a severe operational crisis due to a lack of quorum, leaving several high-profile corporate disputes and regulatory appeals in limbo. According to sources, the Tribunal has been without the required quorum to hear and determine appeals since mid-May 2023. This has resulted in a backlog of cases, causing uncertainty in the investment space.
The appointment of Tribunal chairperson Paul Lilan as a judge of the Court of Appeal in January, coupled with the expiry of the terms of members and subsequent delays in State reappointments, has affected operations. Lilan had been appointed chairman of the Tribunal for a three-year term in May 2023, following the revocation of the appointment of former Chairperson Adrian Kamotho Njenga. The National Treasury appointed Njenga in April 2023, but revoked the appointment a month later, appointing Lilan and other members instead.
The Judicial Service Commission advertised positions for the chairperson and two non-advocate members in July 2023, with an August 13, 2023 deadline for applications. However, the appointments have not been made, contributing to the ongoing paralysis. The Capital Markets Tribunal settles complaints from persons aggrieved by directions or actions imposed by the Capital Markets Authority or the Investor Compensation Fund Board.
The Tribunal also makes inquiries into referred matters and issues formal, binding written awards or decisions. It was reconstituted in June 2023 after years of inactivity, aiming to address deeper issues around corporate governance failures, board responsibility, and market conduct. Before its reconstitution, disputes arising from regulatory action in the capital markets were largely taken to courts.
These cases were often framed as judicial review or constitutional matters, focusing on whether due process had been followed in taking regulatory action. However, this oversight left unresolved issues around corporate governance and market conduct. The Capital Markets Tribunal's role is crucial in addressing these concerns, but its current operational crisis is affecting its ability to function effectively.
The backlog of cases at the Tribunal has significant implications for the investment space, as it creates uncertainty and delays in resolving disputes. Sources close to the Tribunal have expressed concerns about the impact of the paralysis on the capital markets. The Tribunal's inability to hear and determine appeals is affecting the smooth operation of the markets.
Efforts are being made to address the crisis, with the Judicial Service Commission having advertised positions for the chairperson and members. Once the appointments are made, the Tribunal will be able to resume its operations and address the backlog of cases. This will help restore confidence in the capital markets and ensure that disputes are resolved efficiently.
Key points
- The Kenya Capital Markets Tribunal has been without quorum since mid-May 2023.
- The Tribunal's paralysis has resulted in a backlog of cases, causing uncertainty in the investment space.
- The Judicial Service Commission has advertised positions for the chairperson and members to address the crisis.
