TripleOKLaw

CBK wins petition on new currency notes

Case Watch- New Currency Rules Upheld by High Court: CBK Wins Petition on New Notes

Share the Insight

Judgment in Petition No. 210 of 2019 as consolidated with Petition No. 214 of 2019 challenging the new currency rules was delivered on Friday the 27th of September 2019. The Petitioners of the consolidated petitions, Hon. Simon Mbugua and Okiya Omtatah had challenged the constitutionality of among other issues, the new notes and coins issued by the Central Bank of Kenya (CBK) and the withdrawal and demonetization of the old Kshs. 1000 notes.

The Court identified the following issues for determination:

  1. Whether the matter was res judicata;
  2. Whether the design of the new notes were in violation of Article 231 (4) of the Constitution of Kenya 2010 for bearing a portrait of the 1st President of the Republic of Kenya, His Excellency Mzee Jomo Kenyatta;
  3. Whether the withdrawal and demonetization of the Kshs. 1000 note was valid;
  4. Whether the process of issuing the new notes and coins and withdrawing the Kshs. 1000 notes was in contravention to the CBK Act, Statutory Instruments Act and other laws;
  5. Whether there was public participation before coming up with the designs of the new notes and coins;
  6. Whether the Petitioners’ right to legitimate expectation was infringed;
  7. Whether there was a misjoinder of the Governor of the CBK in the Petition;
  8. Who should bear the costs of the Petition?

The court, through a majority decision of 2:1 held as follows:

1. Whether the matter was res judicata.

The Court held that the matter was not res judicata. The Court held that upon analyzing the other Petitions filed in other Courts, the said petitions were either related to other issues or were yet to be heard and fully determined.

2. Whether the design of the new notes were in violation of Article 231 (4) of the Constitution of Kenya 2010 for bearing a portrait of the 1st President of the Republic of Kenya, His Excellency Mzee Jomo Kenyatta.

The Court held that Article 231 (4) of the Constitution had not been violated. It was the majority’s opinion that the image of the statue of the H.E. Mzee Jomo Kenyatta appearing on the notes was not a portrait. The Court extensively defined a portrait and identified two key items that should inform the definition; it should not be frontal and should not be a full representation of the person in question.

The Court held that the images appearing on the notes did not fit this description as it was a full-length image from the head to toe. Also, it does not appear in isolation or independent of the complex.

Further, the Court held that the statue and the KICC tower were an obvious symbolism meant to celebrate 10 years of independence. This was based by the fact that the stature was unveiled on 10th September 1973 with the tower being unveiled a day later. In addition, KICC had been gazetted as a national monument and hence qualified to be used on the notes.

In conclusion the Court held that the images appearing on the Kshs. 200 note promoted a social services theme and hence not in violation with Article 231 (4) of the Constitution.

3. Whether the withdrawal and demonetization of the Kshs. 1000 note was valid.

The Court held that the CBK has the constitutional and statutory mandate to issue new notes and recall old ones. The CBK’s justification in withdrawing the notes, which was that this was meant to guard against money laundering, illicit flows, terrorism and corruption, was found to be sound. There was no need for public participation as an element of surprise was required. Further, the procedure followed was in accordance with the law as a Gazette Notice withdrawing and demonetizing the Kshs. 1000 note was sufficient.

The Court further held, having done comparisons with other states, the period of four months granted by the CBK for withdrawal of the Kshs. 1000 note was sufficient. The CBK, in any event, had the power and discretion to take such an action. The Court found that CBK simply discharged its mandate under the Constitution and the CBK Act.

4. Whether the process of issuing the new notes and coins and withdrawing the Kshs. 1000 notes was in contravention to the CBK Act, Statutory Instruments Act and other laws.

The Court upheld that Section 22 of the Statutory Instruments Act empowered the Attorney General to determine if the impugned notices were statutory instruments. The Court found that the Attorney General has correctly exercised this power and the impugned notices were not statutory instruments. The Petitioners had not prayed that this Court declares this Section unconstitutional and it thus remained applicable.

The Court further held that Article 260 of the Constitution defined a Gazette. However, no format is prescribed either in the Constitution or statute. On this basis, the Court found that the CBK was within its rights to issue a notice pursuant to either Section 22(1) or 22(2) of the CBK Act.

The process therefore followed in issuance of the notes was deemed to be lawful.

5. Whether there was public participation before coming up with the designs of the new notes and coins.

The Court analyzed the various stages that were followed in arriving at the designs of the new notes. It was the Court’s finding that CBK carried out extensive public participation through meetings. It further sought legal opinions from the Attorney General before proceeding to design the notes.

The Court further appreciated that public participation ought to have come to an end at a certain point. Considering issues of national security and stability of the currency, CBK was in order to proceed with the designs approved the Cabinet without subjecting the same to public participation.

The Court ultimately held that CBK had in the present circumstances allowed for adequate and satisfactory public participation.

6. Whether the Petitioners’ right to legitimate expectation was infringed

It was the Court’s finding that there was no legitimate expectation infringed. The CBK has the power and discretion to issue new notes and withdraw the Kshs. 1000 notes and that further the timelines given for the latter were reasonable. In addition, the rationale for the withdrawal of the notes was justifiable.

7. Whether there was misjoinder of the Governor of the CBK in the Petition.

The Court found that the Governor was not a necessary party. The current Governor only assumed office after the notes had been designed and approved by the Cabinet.

8. Who should bear the costs of the Petition?

The Court held that this being a constitutional petition where weighty issues in the public interest had been raised, each party ought to bear its own costs.

Dissenting opinion.

Hon Justice Mrima delivered a dissenting opinion. The Honourable Judge stated that he was agreeable with the bulk of the holding of the majority. However, he disagreed with their interpretation of Article 231 (4) of the Constitution of Kenya. He agreed that this Article had a prohibitive and permissive part. He stated that the permissive part allowed for images only to the extent that the said images were not of recognizable persons. He was of the opinion that Kenyans desired to fully disassociate themselves with notes that bore images of recognizable persons.

Based on the foregoing, the Judge held that he would have issued an Order suspending the Judgment for a period of one year so as to allow new designs that conform with the Constitution are prepared.

Authors

Leave a Comment

Your email address will not be published. Required fields are marked *