Case Summary No. 2

Our second case is World Duty Free Company Limited (“WDF”) v Republic of Kenya and the award was rendered in October 2006. This summary is prepared based on the facts as described in the award.

The dispute arose out of an agreement where between WDF, an Isle of Man company, and the Kenya Airports Authority, acting on behalf of the Government of Kenya for the construction, maintenance and operation of duty-free complexes at Nairobi and Mombasa International Airports (1989 Agreement).

WDF brought a claim to the ICSID, claiming expropriation of its property and a breach of the 1989 Agreement.

WDF submits that from the outset, to be able to do business with the government of Kenya, the CEO and shareholder of WDF was required to make a “personal donation” to the then President of Kenya. This donation amounted to USD 2 million.

WDF further claims that the Government of Kenya instigated to take over the control, shares and assets of WDF. The High Court of Kenya placed it in receivership. The CEO was subsequently arrested, held, and deported to the United Arab Emirates.

The Tribunal ruled that the 1989 Agreement was procured by a bribe, without which no contract would have been concluded between the parties. WDF retained the free choice whether or not to invest in Kenya and whether or not to conclude the Agreement, but WDF chose, freely, to pay the bribe. The bribe is contrary to international public policy of most, if not all, States and also to public policy under English and Kenyan law.

Thus, the Tribunal dismissed the claims on the ground that contracts obtained by corruption cannot be upheld.