National Treasury Cabinet Secretary Henry Rotich

National Treasury Cabinet Secretary Henry Rotich

High Court Judge George Odunga gave the orders after International Air Transport Association (IATA) moved to court on grounds that airlines would lose a lot of revenue from ticket sales if a decision by Competition Authority of Kenya ( CAK) was not challenged.

CAK had barred the international airlines regulator from insuring airlines against ticket sale losses but IATA could not challenge the same before the tribunal as it did not have chair as required by law.

?On this premise, I find merit in the Notice of Motion dated November 5, 2014 and grant an order of mandamus directed at the Cabinet Secretary in charge of the Ministry of National Treasury, compelling him to exercise his powers under Section 71(2) of the Competition Act, and specifically to appoint the Chairman of the Competition Tribunal. The said appointment to be undertaken in any event within 60 days from the service of this orders.? Justice Odunga ordered.

In the case filed by IATA?s Lawyer Michi Kirimi, the court heard that CAK had barred IATA from signing a deal with Saham Assurance in which the insurer was to provide airlines with the Default Insurance Plan (DIP). This plan is intended to help mitigate risk of losses if travel agents fail to remit money from air ticket sales.

Without a chairperson, ?The applicant [IATA] cannot properly exercise the right of appeal or seek any interim measures of protection? and faces a real threat of having the airline business in Kenya disrupted by the action of the first respondent [CAK],? said Mr Kirimi in the court papers. He also wants the CS compelled to lift CAK?s orders.

Mr Rotich did not respond to the case; he never gave a reason as to why he had not appointed the chair.

The judge noted that: ?This Court cannot fathom the reason warranting the second respondent (Rotich) being absolved from the performance of his statutory duties.Taking into account the fact that the members of the Tribunal are already in the office. To keep them in the office with no work to do while entitling them to draw allowances from the public coffers is clearly contrary to Article 201(d) and (e) of the Constitution.?

According to IATA African Region Vice President Raphael Kuuchi, several insurance companies had shied away from providing DIP cover as the market segment was small, but it had turned out to be a lucrative line of business.

He said this had seen two other insurance firms express their desire to provide the plan ? ICEA-Lion and Explico. The court heard that the two have, however, not yet fully supplied the information required by IATA.

DIP agreement

Mr Kuuchi said he got a letter from CAK on September 22 after IATA expressed its intentions to renew the DIP agreement with Saham on an exclusive basis. ?The first respondent ( CAK) ordered that IATA should stop and desist from renewing the agreement with Saham and the same order was to remain until investigations were concluded.? the court heard.

Kuuchi said he wrote to the authority informing it of the repercussions of failing to renew the agreement with Saham, previously known as Mercantile Assurance Company. The court heard that this company is the only DIP provider in the country.

He said the decision had created uncertainty in the airlines industry as travel agents unable to obtain alternative financial security would be forced to effect a partial or complete shutdown of their businesses.

Throughout the correspondence between IATA and CAK, the authority held on its grounds that the regulator would not renew the agreement.

By Kamau Muthoni, The Standard

LEAVE A REPLY

Please enter your comment!
Please enter your name here

This site uses Akismet to reduce spam. Learn how your comment data is processed.