Leiden Law Blog

The case against Uber Kenya Limited before the High Court of Kenya in Nairobi

Posted on by Cees de Groot in Private Law
The case against Uber Kenya Limited before the High Court of Kenya in Nairobi

In August 2016 more than 30 plaintiffs brought a claim against Uber Kenya Limited before the High Court of Kenya in Nairobi. In a further amended claim of 26 October 2016 they sued Uber Kenya Limited in more detail ‘as trading as and/or for and on behalf of Uber BV, Uber International Holding BV and Uber International BV’. The claimants were Kanuri Limited, a company engaged in taxi driving services, and a number of individual taxi drivers. The claimants had entered into online contracts with the Uber group of companies which stipulated that they would transport Uber clients at a minimum rate of 60 Kshs (or KES: Kenyan shilling) per kilometre with a minimum fare of 300 Kshs. Under the contracts, Uber would receive 25% of the fare proceeds. However, in July 2016, Uber reduced the minimum rate to 35 Kshs per kilometre and 200 Kshs per trip. In the opinion of the claimants, these reduced rates were for them ‘unsustainable and in disregard of local market factors thus unfair, draconian and […] in breach of the contract’. In the course of the trial Uber Kenya Limited argued that the proceedings should be halted because the claimants had concluded the online contracts not with Uber Kenya Limited but with Uber BV, a private limited company registered in Amsterdam in the Netherlands, that was not sued as a defendant in the case. To establish this argument, Uber Kenya Limited relied on ‘the doctrine of privity of contract’. Under this legal argument ‘a Contract cannot confer rights or impose obligations on any person other than those who are party to the Contract’, and Uber Kenya Limited was clearly not a party to the contract. On their part, the claimants argued that ‘it is Uber Kenya who has been enforcing the terms of the Contract’ on behalf of the Uber group of companies.

The Nairobi High Court of Kenya addressed this intricate issue along two lines of argument. The court’s first line of argument was that it could not be ruled out that, in spite of Uber Kenya Limited not being a party to the online contracts, ‘Uber Kenya bears separate civil culpability (from Uber B.V) in the manner in which the contract has been implemented in Kenya’. To underline this argument the court considered that a clear connection existed between Uber Kenya Limited and Uber BV. The shares in Uber Kenya Limited were held by two shareholders, Uber International Holdings BV as a 90% shareholder and Uber International BV as a 10% shareholder. That in itself would not establish a connection between Uber Kenya Limited and Uber BV, but: ‘From information in a search obtained from the Registrar of Companies these two entities share an address (Vi[j]zelstraat 68 1017 HL Amsterdam) with Uber BV’. As a result, Uber Kenya Limited might well bear ‘separate civil culpability (from Uber BV) in the manner in which the contract has been implemented in Kenya’. At the same time, under the court’s second line of argument, Uber BV was still not a defendant party to the proceedings in Kenya. As the court considered, ‘Even if it is accepted that Uber Kenya Ltd [is] the face of Uber BV in Kenya, the Plaintiffs will be faced with a daunting task to prove their claim’. In this respect the court added that, in order to be potentially successful in their claim, the plaintiffs would have to find some way of ‘enjoining Uber B.V which is the primal party to the contracts that form the foundation of the action’ in the Kenyan lawsuit.

As a consequence, the Nairobi High Court of Kenya declined to dismiss the claim against Uber Kenya Limited on the arguments advanced by Uber Kenya Limited at that early stage of the proceedings.

The order of the Nairobi High Court of Kenya can be found at: www.kenyalaw.org.

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