A High Court in Mombasa temporarily stopped the implementation of the regulations to scrap off some shipping lines' destination charges by Kenya Maritime Authority (KMA).
The Kenya Shipping Agents Association (KSAA) sued KMA for issuing a notice to ship agents, shipping lines and cargo consolidators operating at the Port of Mombasa, that gave 18 guidelines on the charges of importation of cargo into the country.
According to KMA, the new guidelines were towards addressing the prevailing cost of destination charges at the port of Mombasa, and improving ease of doing business.
The clearing agents, under their umbrella body, Kenya International Freight and Warehousing Association (Kifwa), had complained that the shipping lines were arbitrarily introducing new charges on imports that had since increased the cost of doing business at the Port of Mombasa.
The charges include; terminal handling charges, international ship and port facilities security code, manifest amendment fees, cross-border fees, equipment management/monitoring fees, and late documentation fees.
Other are container protection essentials, depot charges at drop-off points, logistics fees, import documentation fees, transit corridor fees, administration charges, regional cost recovery charges, and demurrage charges among others.
Kifwa national chairperson Roy Mwanthi said, “All these charges sometimes amount to an additional US $500 per consignment.”
On July 29, President William Ruto directed the Intergovernmental Steering Committee on the Ease of Doing Business along the Northern Corridor and Port Reforms Working Group, to find solutions to some of the teething problems at the Port of Mombasa.
In its report, the committee proposed the removal of several charges imposed by shipping lines, that were making the cost of doing business at the Mombasa Port unbearable.
On October 26, the Maritime Principal Secretary Geoffrey Kainuko, in a meeting with clearing and shipping agents, announced that KMA would regulate the shipping charges.
However, the KSAA chief executive officer Juma Tellah, wrote to Cabinet Secretaries Salim Mvurya (Maritime and Blue Economy) and his Transport counterpart Kipchumba Murkomen on October 30, opposing the decision, saying Kenya is a free-market economy.
“Kenya has a free-market economy that encourages investment, and this is one of the main reasons multi-national companies choose Kenya for their regional headquarters. Therefore, over-regulations will discourage this,” Tellah said.
On October 31, however, KMA acting director general John Omingo went ahead and issued a notice scrapping off various shipping charges, despite the opposition from the shipping agents.
KSAA said they learnt about the new regulation after seeing the notice circulating on social media.
KSAA, through their lawyer John Mbaluto, moved to court, under the certificate of urgency, to seek conservatory orders to stop the implementation of the new directive, pending hearing and determination of their case.
In the court document, KSAA said the effective date of the notice was indicated as October 31, the same day it was issued.
They said a number of the guidelines contained the imperative ‘with immediate effect’ and, therefore apparently required overnight compliance, a matter of obvious impracticability.
They said the guidelines have a direct and deleterious effect on the business of the KSAA members.
“They essentially prohibit the ship agents from imposing numerous charges. The effect is that agents would be rendering services for free, yet they are businesses with obligation to creditors, employees, service providers, government agencies such as Kenya Ports Authority and Kenya Revenue Authority,” they argued.
KSAA described the new regulations as, “Draconian, injurious, unfair, illegal and contrary to the constitution.”
“Unless the matter is not certified as urgent, the KSAA members will suffer irreparable harm, a grotesque violation of their constitutional right, great financial loss and extreme prejudice,”they argued.
Mombasa High Court Anne Ong’ijo, who is hearing the case, granted KSAA the conservatory orders being sought until the matter is heard and determined.
She directed the case to come up for a hearing on December 1.