Court of Appeal dismisses ex-Kenya Re CEO's bid for third five-year term

The Court of Appeal has dismissed an appeal by former Kenya Re-insurance boss Jadiah Mwarania seeking a third five-year term. 

Mwarania, who served as chief executive from 2011, sought to stretch his tenure beyond the standard two-term limit.

Kenya Re’s board initially recommended extending his tenure for a third full term, citing sustained profitability, long experience, new ventures requiring guidance and the Covid-19 pandemic. 

Mwarania had been on terminal leave since December 2022.

However, the National Treasury Cabinet Secretary John Mbadi declined to approve a third term, granting only one-year extensions to facilitate a smooth transition and directing the board to begin recruiting a successor.

Mwarania challenged the decision in the Employment and Labour Relations Court, arguing that the CS had unlawfully interfered with the board’s authority. 

In his petition, he sought declarations that the first respondent lacked legal mandate to direct the third respondent on employment matters, that the directives were unlawful and that he had a legitimate expectation to continue serving for a renewed five-year term commencing April 11, 2021 as resolved by the board. 

He also sought an order restraining the respondents from recruiting or replacing him for five years, general damages for constitutional violations and costs.

The CS and the second respondent, the Attorney General, countered that the third respondent is governed by the State Corporations Act and the Mwongozo Code, which limits CEOs to two terms. 

They argued that the Human Resource and Nomination’s Committee lacked legal mandate to extend the term and that the board itself did not have the power to appoint or extend the CEO’s term without the CS’s approval. 

The third respondent maintained that Mwarania had already served two full terms and voluntarily accepted two one-year extensions, which were explicitly for transition purposes.

In his judgment, Employment and Labour Relations Court judge Nelson Aboudha found that the third respondent reserved the right to terminate or extend the contract. 

While he agreed that the CS could not overrule the board on appointment, he held that Mwarania had voluntarily signed the two extensions without duress, misrepresentation, or fraud and was therefore stopped from claiming a five-year term. 

The judge further found no constitutional violations, describing the petition as essentially an ordinary employment claim.

On appeal, the appellate bench comprising Justices FrancisTuiyott, Nduma Nderi and Munyao Sila upheld the lower court’s decision.

The judges acknowledged that the board had the power to appoint its CEO but was also entitled to seek guidance from the National Treasury and Head of Public Service on government policy.

“The board was free to consult the first respondent as well as the Head of Public Service. There was nothing illegal in doing so,” the court said.

Crucially, the court said that Mwarania had accepted both one-year extensions without protest.

“The appellant voluntarily and out of his own free will, accepted the last one-year term. He was bound by that commitment and he could not now unilaterally extend this one-year term to a five year-term,” the judges ruled. 

The court reaffirmed established principles that fixed-term contracts carry no automatic right to renewal, citing previous jurisprudence.

“The doctrine of legitimate expectation does not arise in the renewal of a fixed-term contract and its non-renewal cannot constitute unfair termination or dismissal.”

The judges also dismissed Mwarania’s attempt to frame the dispute as a constitutional petition.

“Since the appellant couched his suit as a constitutional petition, in our view, the dispute was nothing beyond a mundane employer-employee dispute,” they said, adding that no constitutional rights had been violated to warrant damages.

The court dismissed the appeal with costs.