Kenyan lawyers welcome Court of Appeal ruling clarifying foreign companies’ rights to bring proceedings
On 31 July, the Kenyan Court of Appeal overturned a High Court decision in Stichting Rabobank Foundation v Ava Chem Limited & Anor, providing important clarification on the ability of foreign companies to institute proceedings before Kenyan Courts even where they were not locally registered under the Companies Act.
The recent decision of the Court of Appeal in Stichting Rabobank Foundation v Ava Chem Limited and Christopher Irungu Mwangi [2026] KECA 1550 (KLR) is of key importance for international lenders and foreign investors operating in or financing businesses in Kenya, say some of the country’s leading corporate law experts.
The Court of Appeal overturned the High Court decision from July 2024 that struck out a lawsuit by Stitching Rabobank, a Dutch bank trying to recover roughly 230,000 USD from a Kenyan borrower and its director. Shocking credit markets at the time, the High Court had ruled a foreign company could not sue in Kenya without local registration under the Companies Act, regardless of its incorporation elsewhere.
The original Stitchting decision in the High Court, noted Dominic Indokhomi, Cynthia-Amutete, and Elvis-Wakaba of Bowmans Kenya last year, caused real concern among foreign investors and companies, and was seen as a barrier to justice, and a deterrent to international business with Kenyan entities.
Then in July 2025, the High Court at Nairobi held in Bruton Gold Trading LLC v Anne Atieno Amadi & Others [2025] KEHC 12657, that a foreign company’s legal existence is established in its country of origin, and registration in Kenya under the Companies Act was not a prerequisite for a foreign company to have the right to sue in Kenya.
In the Bruton Gold case, the High Court held a foreign company’s legal personality travelled with it, the right to sue was constitutional in nature regardless of local registration status, and while unregistered foreign companies couldn’t “carry on business” in Kenya, that was different from pursuing remedies in Kenyan courts.
While the latter case provided some relief for foreign companies, it still left matters in an unpredictable state, given the duelling High Court approaches.
The recent Court of Appeal decision overturning the High Court’s approach in Stitchting, removes a significant source of uncertainty for international lenders, investors and counterparties doing business with Kenyan entities, say Milly Jalega Odari and Leonard Githua of DLA Piper Africa, Kenya (IKM Advocates),
“The Court confirmed that a foreign company’s right to access Kenyan courts does not depend on local registration and that a cross-border loan does not, by itself, amount to “carrying on business in Kenya,” they wrote in an insights piece examining the key findings and practical implications of the Court of Appeal decision.
For Odari and Githua, key findings of the Court of Appeal ruling (which is not yet published in full), include that registration and access to the courts are separate questions, with a clear distinction drawn between three concepts the High Court treated as interchangeable:
Legal personality: a foreign company’s legal personality derives from the law of its place of incorporation and is not extinguished by a failure to register in Kenya under section 974 of the Companies Act;
Capacity to sue: whether a legal person (including a company) may invoke the courts - section 974 does not expressly or implicitly bar an unregistered foreign company from instituting proceedings in the Kenyan courts.
Regulatory compliance: whether or not a foreign company has met the registration requirements for ‘carrying on business’ in Kenya can lead to possible penalties prescribed by the Act (ie fines for the corporate entity and its officers), not any additional sanction of denying access to courts.
The Court of Appeal also said that entering a transaction with a Kenyan company, without more, does not constitute ‘carrying on business’ in Kenya for a foreign lender. Whether registration is required will depend on the nature and extent of the foreign lender’s activities in Kenya.
Writing a newsflash last week following the Court of Appeal decision, Bowmans Kenya partners Dominic Indokhomi and Cecil Kuyo noted that the ruling provides greater certainty for international lenders and investors financing Kenyan businesses, in terms of their legal standing to bring cases if needed before the Kenyan courts.
“International financiers should nevertheless continue to assess whether their activities amount to carrying on business in Kenya and therefore require registration,” wrote Indokhomi and Kuyo, assisted by associates Elvis Wakaba and Adhiambo Wameyo. “The decision does not remove those regulatory obligations, but it confirms that non-registration, by itself, is not a defence to an enforcement claim.”
