https://new.kenyalaw.org/akn/ke/judgment/keet/2026/12

 REPUBLIC OF KENYA IN THE TRIBUNAL OF KENYA AT NAIROBI COUNTY COURT NAME: ENERGY AND PETROLEUM TRIBUNAL CASE NUMBER: EPA/E010/2025 FAROOQ CHARANIA,SPRING VALLEY FUEL & SERVICE CENTRE LTD,ARGWINGS TOTAL LTD VS TOTALENERGIES MARKETING KENYA PLC JUDGMENT # BACKGROUND 1. The Appellants lodged this Appeal by way of a Memorandum of Appeal dated 12th May2025 being aggrieved by the failure of the Energy and Petroleum Regulatory Authority (“the Authority” or “EPRA”) to determine its complaint lodged on 7th March 2025 within the statutory 60-day timeline under Section 23(1) of the Energy Act, 2019, thereby inviting the Tribunal to assume jurisdiction under Section 23(5) of the Energy Act, 2019. 2. Upon being served with the Memorandum of Appeal, TotalEnergies Marketing Kenya PLC(“the Respondent” or “TotalEnergies”) filed a Notice of Preliminary Objection and Grounds of Opposition, both dated 29th May 2025, arguing that the Tribunal is bereft of jurisdiction on account of the dispute arising from the terms of a Marketing Lease Agreement (“MLA”) which is a purely private commercial contract, with no allegation of breach of regulatory obligations, licensing conditions, or statutory duties. 3. The Tribunal disallowed the said Preliminary Objection in its Ruling dated and deliveredon 8th June, 2025, paving way for hearing and determination of the Appeal. # APPELLANTS’ CASE 1. The Appellant, Mr Farooq Charnia, a director and shareholder of Spring Valley Fuel andService Centre Limited and Argwings Total Ltd, lodged a formal Complaint on 7th March 2025 before the Authority against the Respondent, TotalEnergies, citing breaches of statutory duty, unfair commercial practices, and violations of the Energy Act, 2019 arising from a Franchise Agreements entered into between the two parties. 2. As per the Complaint filed before the Authority, the Appellant contend that from 2010 todate, the Appellant and the Respondent entered into a series of Dealership Marketing License Agreements (hereinafter referred to as MLA) pursuant to which the Appellant was granted a license to sell the TotalEnergies’s products and conduct business at the Respondent’s service station. 3. Pursuant to these agreements the Appellant was issued with a license to operated threeservice stations: Utalii (Parklands Road, surrendered in April 2021), Spring Valley (Lower Kabete Road), and Argwings Kodhek (Hurlingham, taken up in 2018 in place of Utalii). 4. It is the Appellant’s case that TotalEnergies Marketing Kenya PLC ("TE"), the Licensor,occupies an overwhelmingly dominant position in the dealership relationship, controlling every aspect of supply, equipment, pricing and station infrastructure, leaving the Dealer no room for negotiation. He contends that the MLA imposed unconscionable and exploitative terms, including arbitrary charges, unfair rent structures, imposition of recurring probation clauses despite decades of renewal, and that Dealers are forced to sign MLAs in their personal name while invoices are issued in their company's name. 5. The Appellant’s principal grievance is the persistent under-delivery of fuel by theRespondent from the depot to the stations, evidenced by flowmeter tests, Automatic Tank Gauging (“ATG”) records, wetstock/inventory reconciliation reports, witnessed offloading by the Respondent’s own staff, and the Respondent’s internal "Jambo" fuel delivery system all allegedly showing shortages exceeding the industry-acceptable variance of 0.5% (petrol) and 0.3% (diesel). 6. The Appellant concludes by invoking sections 10 and 11 of the Energy Act 2019 andcontends that the Respondent’s conduct constitutes unconscionable trade practice and abuse of dominant position. The Appellant asserts that the Respondent’s MLA contained unfair and oppressive terms which are contrary to the Constitution of Kenya, 2010, particularly the provisions safeguarding consumers from exploitation and unfair commercial practices. 7. In response to the Respondent’s Statement of Response, the Appellant filed a ReplyingAffidavit sworn on 20th August 2025. On the question of jurisdiction, the Appellant maintained that the issue was spent, the Tribunal having already ruled on 8th June 2025 and that the Respondent, having filed a Statement of Response, cannot now resile and invoke an arbitration clause. 8. On the issue of limitation of actions, the Appellant argues that his claims constitute acontinuous dispute rather than time-barred isolated event, pointing to the Respondent's own admissions including a 2024 "Jambo" fuel-loss management report and a 2017–2024 Network Loss Management report as evidence of an ongoing, acknowledged pattern of losses. 9. On rebates, rents and charges, the Appellant disputes denial of a pending rebate of KES11,085,805, asserts rental charges are 300–500% above market rate in abuse of dominant market position. 10. The Appellant further relies on EPRA's letter of 17th April 2025 identifying anticompetitive practices by Oil Marketing Companies, including margin squeezing, overrecovery of investment costs, uncompensated transit losses and restrictive trading agreements, as corroborating his complaint, and contends the Respondent has stalled and failed to furnish investigation reports and credit note computations despite repeated requests. 11. The Appellants prays that the Tribunal be pleased to grant them the following reliefs: 12. Allow this appeal. 13. Assume jurisdiction and hear and determine the Appellants’ complaint dated 3rd March2025. 14. Declare the Respondent’s MLA, as currently drafted, to be unconscionable, unfair, andcontrary to the Energy Act, 2019. 15. Declare that TotalEnergies has violated the Energy Act, 2019. 16. Immediate suspension of any arbitrary charges imposed by TotalEnergies. 17. Reimbursement of the arbitrary charges imposed by TotalEnergies and interest thereonat commercial rates. 18. Urgent compensation for proven under-deliveries and interest thereon at commercialrates. 19. Lost profit for the under-delivered products and interest thereon at commercial rates.(i) A reassessment of the rent structure, ensuring fairness and compliance with current valuation reports to be conducted yearly. 20. Reimbursement of the overcharged rent and interest thereon at commercial rates. 21. Expedited settlement of the pending rebate amount for Argwings Total Limited plusinterest at commercial rates. 22. A protection order from any form of retaliation, threats, or intimidation fromTotalEnergies. 23. A permanent stop order prohibiting TotalEnergies from engaging in any further unfairbusiness practices, abuse of dominance, or anticompetitive behavior. (n) Fines and Penalties as will be deemed fit by the Honourable Tribunal. 24. Grant such other or further reliefs as the Honourable Tribunal shall deem fit, just andexpedient in the circumstances. 25. Award the Appellants costs of this Appeal, together with interest thereon at prevailingcommercial rates. # RESPONDENT’S DEFENCE 1. In its Statement of Response dated 6th August 2025, the Respondentopposed the Appealin its entirety and objects to the admissibility of this Appeal and the underlying Complaint before EPRA, citing a binding arbitration clause in the MLA. The Respondent contends that the present dispute, to the extent that it related to the interpretation, validity and performance of the MLA, ought to be referred to arbitration under the Arbitration Act, and the Tribunal should defer jurisdiction or stay proceedings. 2. The Respondent maintained that there existed a licensor-licensee relationship betweenthe parties and averred that the Appellant operated TotalEnergies service stations pursuant to successive MLAs. The Respondent denied the Appellant’s assertion that he operated solely as its discretion and contended that, although the Appellant occasionally declined to execute certain MLAs, he nevertheless continued to operate under and benefit from their terms and could not approbate and reprobate by rejecting the existence of the agreements while simultaneously seeking to rely on them. 3. The Respondent admits to there being probationary clauses in the MLA but denied theallegations that the same were unfair, discriminatory or introduced in bad faith, stating that the clauses were standard commercial provisions intended to monitor performance and ensure compliance with agreed operational standards. The Respondent equally denied that the MLA had been subjected to unfair commercial terms, arbitrary treatment, coercion or intimidation, maintaining that all activities undertaken were in accordance with the contractual arrangements governing the dealership relationship. 4. Regarding the Appellant’s allegations of fuel under-deliveries and losses at the variousservice stations, the Respondent denied any systemic short delivery of fuel and asserted that all fuel deliveries were undertaken using industry-approved and regulatory-compliant measurement methods. It maintained that tools such as the ATGs, flowmeter readings and Fuel Management System reports were internal operational tools and not regulatory measures for determining delivered quantities. The Respondent further averred those complaints lodged by the Appellant were investigated through its established complaintmanagement system and that where investigations established any short delivery, appropriate credit notes were issued. 5. In relation to Spring Valley Fuel and Service Centre Limited and the other stationsoperated by the Appellant, the Respondent contended that investigations undertaken in response to reported losses revealed operational challenges rather than supplier underdelivery. It asserted that several corrective measures and recommendations were proposed to the Appellant, some of which were not implemented, and denied liability for the losses claimed. 6. The Respondent also challenged the claims for compensation, loss of profits, interestand other monetary reliefs, contending that the same were unsubstantiated, contractually unsustainable and, in any event, statute-barred under section 4(1)(a) of the Limitation of Actions Act to the extent that they related to events occurring more than six years before the filing of the complaint. 7. As per the Respondent the only losses and rent issues from March 2019 onwardsremain, as set out herein below: # Item Remaining Quantum PMS Loss - Spring Valley 495,652 litres AGO Loss- Spring Valley 87,669 litres PMS Loss - Argwings 406,229 litres AGO Loss - Argwings 71,374 litres Rental Overcharge KES 54,344,437.36 Rebate KES 11,085,805.00 Further, the tabulation above is provided strictly for jurisdictional delimitation. 1. The Respondent objects to the validity, quantification, and causation of the above figuresleft within the valid limitation period for the reasons set in paragraphs 23 and 24 herein below. 2. The Respondent contends that the alleged losses are unverified and based onextrapolated audits conducted unilaterally by the Dealer. No jointly authenticated wetstock reconciliation was conducted to validate these figures. The Respondent also notes that any variances within the accepted EPRA threshold (0.5% for PMS) are considered normal operating variances and not compensable. 3. The alleged AGO losses are within industry-acceptable norms or derive fromundocumented assumptions. The Respondent maintains that its delivery logs, truck meter calibrations, and depot reconciliation data do not support the quantum claimed. 4. Consequently, the Respondent urges the Tribunal to dismiss the Appeal with costs. # ISSUES FOR DETERMINATION 26. Having carefully considered and evaluated the respective parties’ pleadings, arguments, submissions and the applicable law, this Tribunal is of the considered view that the following issues arise for determination: (a) Whether this Tribunal can assume jurisdiction under section 23(1) of the Energy Act (b) Whether the Tribunal has jurisdiction to hear and determine this Appeal in light of the arbitration clause in the Marketing Lease Agreement. 1. Whether part of the Appellant’s claim is time-barred under section 4(1)(a) of theLimitation of Actions Act (Cap 22). 2. Whether the Respondent’s Marketing Lease Agreement or its commercial practicesviolate the Constitution, the Energy Act, 2019 or any other written law. 3. Whether the claims in respect of fuel under-delivery, rental overcharges and rebateshave been proven to the required standard. (f) Whether the reliefs sought are merited **ANALYSIS AND DETERMINATION** # (A) Whether this Tribunal can assume jurisdiction under section 23(1) of the Energy Act 1. Before addressing the merits of this appeal, we consider it necessary to establish thebasis for this Tribunal assuming its jurisdiction in this matter. Section 23(1) of the Energy Act, 2019 provides that- *“The Authority shall, within sixty days from the date of filing of a complaint, investigate and determine the complaint.” Section 23(5) states that “If the Authority fails to determine the complaint within the period prescribed under subsection (1), the complainant may appeal to the Tribunal against the failure, and the Tribunal may assume jurisdiction over the complaint and determine it.”* 1. The Appellant lodged his complaint with EPRA on 7th March 2025. The statutory 60-dayperiod prescribed under section 23(1) of the Act expired on 6th May 2025 without a determination being rendered by EPRA. This Tribunal accordingly finds that the conditions for invoking Section 23(5) of the Act have been satisfied and hereby assumes original jurisdiction over the Appellant’s complaint dated 3rd March 2025. # (B) Whether the Tribunal has jurisdiction to hear and determine this Appeal in light of the arbitration clause in the Marketing Lease Agreement 1. Once jurisdiction is challenged, it follows that the question must be determined in limineas it holds the potential of determining the whole matter, without venturing into the merits or lack thereof. The jurisdiction question raised by the Respondent is to the effect that the dispute herein is subject to a binding arbitration clause under Article VIII (iv) of the MLA, and as such the matter ought to either be referred to arbitration or a stay of proceedings be issued under section 6 of the Arbitration Act (Cap 49). 2. The Appellant opposes the objection on two grounds. First, it was submitted that thequestion of jurisdiction was conclusively determined by this Tribunal in its Ruling delivered on 8th June 2025, wherein the Tribunal affirmed its jurisdiction to hear this matter under section 35(1), (3) and (4) of the Energy Act and Section 117(6) of the Petroleum Act. Secondly, the Respondent argues that by filing its Response to the claim the Respondent has submitted itself to this Tribunal’s jurisdiction and cannot therefore be allowed to approbate and reprobate. 3. We have carefully considered parties’ rival submissions on this issue. The starting pointis to determine whether the present objection is spent by virtue of this Tribunal’s ruling of 8th June 2025. The Respondent’s Notice of Preliminary Objection dated 29th May 2025, the subject of the said ruling, challenged this Tribunal’s jurisdiction on the basis that the dispute was purely contractual in nature and therefore fell outside the Tribunal’s mandate. The present objection, however, is founded upon the existence of an arbitration clause within the MLAs and therefore invokes the provisions of the Arbitration Act. 4. In our view, the two objections are distinct in both substance and legal basis.Consequently, the objection now before us cannot be said to have been determined in this Tribunal’s earlier ruling although the reasoning advanced by this Tribunal in the said ruling will have a bearing on the Tribunal’s holding as expressed later on in this judgment. 5. As courts and tribunals have variously stated before, jurisdiction is a creature of statuteand the Constitution itself. While it is left to the litigant to choose which jurisdiction to invoke, once that decision is made, the same must meet the set threshold. The Jurisdiction of this Tribunal is entrenched under Section 36 of the Energy Act which specifies the types of disputes and the manner in which the same are to be determined. It provides that: *The Tribunal shall have jurisdiction to hear and determine all matters referred to it, relating to the energy and petroleum sector arising under this Act or any other Act.* 6. *The jurisdiction of the Tribunal shall not include the trial of any criminal offence.* 7. *The Tribunal shall have original civil jurisdiction on any dispute between a licensee and athird party or between licensees.* 8. *The Tribunal shall have appellate jurisdiction over the decisions of the Authority and anylicensing authority and in exercise of its functions may refer any matter back to the Authority or any licensing authority for re-consideration.* 9. *The Tribunal shall have power to grant equitable reliefs including but not limited toinjunctions, penalties, damages, specific performance. The Tribunal shall hear and determine matters referred to it expeditiously.* 10. It is common ground that the relationship between the Appellant and the Respondentwas governed by a series of MLAs pursuant to which the Appellant operated various service stations under the Respondent’s brand. It is equally undisputed that this dispute arises within the context of that commercial relationship. 11. However, a careful examination of the Complaint reveals that the Appellant’ grievancesextend beyond the interpretation or enforcement of the contractual terms contained in the MLAs. The Appellant through its Complaint dated 7th March 2025 allege persistent underdeliveries of fuel perpetrated by the Respondent and beyond industry acceptable loss threshold, spanning over more than a decade. 12. Beyond the fuel shortages, the Appellant raised broader allegations of unconscionableand anti-competitive conduct by the Respondent, as an oil marketing company, including allegations of imposition of unfair dealership terms, excessive rental charges, unauthorized deductions, withholding of rebates and the imposition of arbitrary charges. The Appellant contends that such conduct contravenes the provisions of the Energy Act. 13. The relief sought by the Appellant further reflect the nature of these grievances. Inaddition to monetary compensation sought, the Appellant urges this Tribunal to declare that the Respondent contravened the Energy Act and to impose fines and penalties accordingly. 14. While this dispute undoubtedly arises from a contractual relationship, we are notpersuaded that it is merely a private contractual dispute compelling this Tribunal to refer the matter to arbitration as the Respondent has urged us to do. The issues placed before the Tribunal requires an examination of the Respondent’s conduct as a licensee under section 2 of the Energy Act and whether that conduct complies with the obligations imposed by the Energy Act. 15. Those questions fall squarely within the statutory mandate conferred upon this Tribunalunder section 36(2) of the Energy Act and section 117(5) and (6) of the Petroleum Act. 16. Moreover, the dispute raises technical questions relating to fuel supply measurement,industry fuel loss threshold governing licensed operators in the petroleum sector, these are matters that lie at the core of the Tribunal’s specialized jurisdiction. 17. In the circumstances we find that the Appellant’s claim raises substantial issues underthe Energy Act which although cannot be divorced from the parties’ contractual relationship, the same transcend a mere contractual dispute. The mere existence of the MLA does not, in itself oust the Tribunal’s jurisdiction where the dispute concerns alleged violations of the Energy Act by a licensee. 18. Even assuming we were to entertain the Respondent’s contention that the disputeherein is purely governed by an arbitration agreement, it is settled law that a court or tribunal can only stay proceedings and refer parties to arbitration where there exists a valid and enforceable arbitration agreement. Section 6 of the Arbitration Act provides that: - *(1) A court before which proceedings are brought in a matter which is the subject of an arbitration agreement shall, if a party so applies not later than the time when that party enters appearance or otherwise acknowledges the claim against which the stay of proceedings is sought, stay the proceedings and refer the parties to arbitration unless it finds—* *(a) That the arbitration agreement is null and void, inoperative or incapable of being performed; or* *(b)That there is not in fact any dispute between the parties with regard to the matters agreed to be referred to arbitration.* 43. Section 4 of the Arbitration Act further provides that; - *An arbitration agreement may be in the form of an arbitration clause in a contract or in the form of a separate agreement.* *(2) An arbitration agreement shall be in writing.* *(3)An arbitration agreement is in writing if it is contained in* *(a)a document signed by the parties;* 1. In the present case, the argument put forth by the Respondent is that whereas noexecuted MLAs exists, the parties nevertheless conducted themselves in accordance with the same terms and conditions applicable under previous MLAs, and that this Tribunal should therefore infer the existence of an arbitration agreement. We are unable to accept that contention. An arbitration agreement cannot be inferred merely from the parties' course of dealing in the absence of a valid written agreement to arbitrate. Section 4(2) of the Arbitration Act is couched in mandatory terms that an arbitration agreement must be in writing. 2. To this end therefore, we see no difficulty in assuming jurisdiction over the presentmatter. We affirm that we have the requisite jurisdiction to hear and determine this matter and the Respondent’s Preliminary Objection is not merited, consequently the same is dismissed. # (C) Whether part of the Appellant’s claim is time barred under section 4(1)(a) of the Limitation of Actions Act (Cap 22) 1. The Respondent pleaded that part the Appellant’s claims is time-barred under section4(1)(a) of the Limitation of Actions Act (Cap 22), to the extent that they related to a cause of action occurring more than six years before the institution of these proceedings. 2. In rebuttal, the Appellant contend that this defence is untenable as his complaintconstituted a continuous dispute and involved systematic issues of unfair business practices rather than an isolated event. The Appellant further argues that the conduct of the Respondent’s own officials restarted the clock. The Appellant points to the Respondent's witness Aquinas Mwathani, who admitted that a rebate claim was formally rejected in December 2018, but that the Managing Director's letter of 15th February 2022 proposed a "good-faith reconciliation exercise" for that same claim. The Appellant argues this later proposal made after the alleged limitation period had run demonstrates the Respondent itself treated the claim as live and negotiable, undermining any plea of limitation. 3. It is common ground that the dispute arises from the parties' commercial relationship.Consequently, claims for compensation arising from those arrangements are, in principle, contractual claims and are subject to the six-year limitation period prescribed under Section 4(1)(a) of the Limitation of Actions Act. 4. We are, however, equally mindful that the present proceedings were instituted beforethis Tribunal pursuant to the jurisdiction conferred by the Energy Act. Accordingly, the Tribunal's jurisdiction to inquire into alleged breaches of statutory and regulatory obligations is not extinguished merely because some of the underlying contractual claims may be time-barred. 5. The question of limitation therefore affects the availability of contractual remediesrather than the Tribunal's jurisdiction to examine the parties' conduct. We therefore find that, although the Tribunal is entitled to investigate the entirety of the parties' dealings where such inquiry is necessary to determine the issues before it, the Appellant cannot recover compensation for contractual causes of action that accrued outside the six-year limitation period, unless the Appellant bring itself under the exception permitted under section 26 of the Limitation of Action Act. 6. The Appellant has argued that the Respondent fraudulently concealed material facts bysuppressing and manipulating custody transfer data. However, no evidence of the alleged fraud was adduced to warrant the application of the exceptions to the statutory limitation so as to revive claims that had already become time-barred. To the extent that the fraud allegations remain bare allegations the same cannot displace the operation of Section 4(1)(a) of the Limitation of Actions Act. 7. The Complaint was filed before the Authority on 7th March 2025. Accordingly, anycontractual claim for monetary compensation founded on acts or omissions occurring before 7th March 2019 falls outside the statutory limitation period and is not recoverable. 8. Consequently, we make the following finding: - 9. Any claim based on acts or omissions that occurred before 7th March 2019 (six yearsprior to filing) is barred by statute and is not recoverable. 10. The Appellant’s claims for under-deliveries, rental overcharges, and rebates attributableto periods before 7th March 2019 are therefore struck out. 11. The following claims (relating to post-March 2019) remain for determination on theirmerits: # Item Remaining Quantum PMS Loss - Spring Valley 495,652 litres AGO Loss- Spring Valley 87,669 litres PMS Loss - Argwings 406,229 litres AGO Loss - Argwings 71,374 litres Rental Overcharge KES 54,344,437.36 Rebate KES 11,085,805.00 # (D) Whether the Respondent’s Marketing Lease Agreement or its commercial practices violate the Constitution, the Energy Act, 2019 or any other written law 1. Addressing the unconscionable conduct of the Respondent, the Appellants submittedthat the MLA featured one-sided clauses such as the absolute suspension discretion, broad exclusions of liability for faulty equipment and imposition of recurring probation clauses despite decades of renewal. 2. The Respondent’s conduct of forcing Dealers to execute agreements in their personalcapacities while invoicing corporate entities creating an improper hybrid liability that ignores the principle of separate legal personality under the Companies Act, 2015. That the terms of the said MLAs coupled with the Respondent’s conduct are all together unconscionable and exploitative. To buttress this argument the Respondent relied on Morjaria v Patel [2025] KEHC 2930 (KLR), where the court held that agreements imposing oppressive or illegal terms are unenforceable. 3. The Respondent submitted that the Appellants voluntarily entered into and continuedoperating under successive MLAs for approximately two decades; that they themselves terminated the Utalii station agreement; that they were subsequently offered another dealership at Karen in December 2023; and that these circumstances demonstrate that they possessed meaningful commercial choice and continued to enjoy the benefits of the Respondent's franchise system. The Respondent further argued that the contractual terms were consistently applied across its dealer network and therefore could not properly be characterized as oppressive. 4. In light of the principles enunciated by the Court of Appeal in Dhiman v Shah [2025] KECA 1264 (KLR) we agree that it is not the function of this Tribunal to rescue parties from commercial bargains merely because they subsequently prove to be disadvantageous. Conversely, the doctrine of unconscionability permits judicial intervention where contractual terms are imposed through unequal bargaining power and are so one-sided as to offend equity, good conscience and public policy. 5. Although the Appellant did not produce before this Tribunal the particular MLA, theterms of the MLA seem not to be in dispute. The evidence before us demonstrate that the Marketing License Agreement is a standard contract prepared by the Respondent and presented to prospective dealers on a “take it or leave it” basis with the provisions heavily skewed in favour of the Respondent at the expense of the Dealers. 6. The Respondent is undoubtedly one of the country's largest oil marketing companies,under the MLA, the dealers are dependent upon the Respondent’s fuel supply, infrastructure, branding, equipment and technical support. While we accept that these are the hallmark of a franchising relationship, that fact cannot be invoked as a shield against scrutiny of the contractual terms. Indeed, the vary nature of franchise agreement present a heightened risk of unconscionable conduct. It is precisely because of these structural features that courts intervene where contractual terms go beyond protecting legitimate commercial interests and instead become oppressive, arbitrary or manifestly one-sided. 7. We are satisfied that several provisions of the Marketing Licence Agreement displayelements of substantive unconscionability. These include the Respondent's unfettered discretion to suspend dealership operations, even where the alleged default concerns equipment owned and maintained by the Respondent; broad exclusions of liability in respect of such equipment; repeated probationary clauses notwithstanding longstanding commercial relationships, the requirement that individual directors execute agreements personally while the dealership business is conducted through incorporated companies. 8. Considered cumulatively, these clauses substantially allocate commercial risk to thedealers while conferring extensive discretionary powers upon the Respondent with minimal corresponding obligations. Such provisions are not merely commercially advantageous to the Respondent but are oppressive in their practical operation. 9. We also take note that the concerns regarding the commercial practices adopted bymajor oil marketing companies, including the Respondent, against dealers, have in the past attracted regulatory scrutiny. In particular, the Authority's letter dated 17th April 2025 identifies allegations of abuse of dominance and anti-competitive practices requiring investigation. While that correspondence does not in itself constitute a definitive finding of statutory breach, it is persuasive evidence that the impugned contractual practices are not isolated complaints but form part of broader competition concerns within the downstream petroleum sector. 10. Accordingly, we find that the impugned provisions of the Marketing Licence Agreementare unconscionable and unenforceable to the extent that they confer arbitrary and unilateral powers upon the Respondent, exclude liability for its own acts or omissions, or improperly disregard the separate legal personality of incorporated dealer entities. Such provisions are inconsistent with equitable principles recognized by the Court of Appeal in Dhiman v Shah and are incompatible with the constitutional values of fairness, equality, human dignity and consumer protection embodied in Articles 10, 27 and 46 of the Constitution. # (E) Whether the claims in respect of fuel under-delivery, rental overcharges and rebates have been proven to the required standard 64. Under this issue the Appellant rises several claims of fuel under-delivery, rental overcharge and rebates. We will address each head of claim separately. # Fuel Under-delivery Claim 1. Central to the Appellant’s complaint is the alleged undersupply of fuel. According to theAppellant, the volume reflected in the Respondent’s invoices did not correspond with the volume of fuel actually received in its underground storage tanks, resulting in substantial loss over the years. 2. The Appellant’s case rest on three pillars of expert and documentary evidence. First, theFuel Loss Analysis Reports prepared by Syrecon Services in respect of Total Spring Vallet Service Station and Arwings Total Limited. Secondly, the Forensic Audit Report dated 24th January 2024 prepared by Nitram Accountants. Thirdly, various internal correspondence between the Appellant and the Respondent together with various invoices and delivery documentation. 3. The Respondent disputed the claim in its entirety. Its response, stripped to its bareessentials was that, the Appellant had failed to identify a single specific instance where the quantity invoiced differed from the quantity actually delivered. It maintained that every delivery was undertaken through calibrated loading systems and verified upon receipt using the industry-approved dip measurement procedure. The Respondent further contended that the Appellant's experts conducted no independent verification of the loading process, the transportation process or the delivery procedures, but merely analyzed data records supplied by the Appellant hence lacked independent verification. 4. As a starting point it is imperative to restate the law on the burden of proof. Section 107 (1) of the Evidence Act which provides that: - Whoever desires any court to give judgment as to any legal right or liability dependant on the existence of facts which he asserts must prove that those facts exist. 1. Sections 109 and Section 112 of the Evidence Act supplement this principle by providingthat:- *109.The burden of proof as to any particular fact lies on the person who wishes the court to believe in its existence, unless it is provided by any law that the proof of the fact shall lie on any particular person.* *112.In civil proceedings, when any fact is especially within the knowledge of any party to those proceedings, the burden of proving or disproving the fact is upon him.* 1. On the place of expert evidence, it is trite that expert evidence is admissible where thecourt is required to determine matters requiring specialized knowledge, however, expert evidence is not binding on a court or tribunal. The tribunal must independently evaluate the foundation upon which the opinion rests and weigh it together with all other evidence on record. In the case of Shah and Another -vs- Shah and Others [2003] 1 EA 290, the Court held that: - *The opinion of the expert witness is not binding on the court, but is considered together with other relevant facts in reaching a final decision in the case and the court is not bound to accept the evidence of an expert if it finds good reasons for not.* 1. It is against this standard that we now turn to assess the evidence tendered. We havecarefully considered the Syrecon Service Reports. The Reports reveal the existence of persistent and abnormal stock variances extending over several years. They are not founded upon isolated incidents but upon extensive reviews of wetstock reconciliations, invoices, delivery notes, stock records and operational documentation. From this, the Appellant’s Witness, Mr Murithi, draws the conclusion that there exists a casual relationship between the Respondent’s deliveries and the losses recorded by the Appellant and attributes the losses, in substance to the supply side of the transaction. 2. While we accept that the reports disclose a recurring stock discrepancy at theAppellant’s service stations, we are not persuaded that this conclusion can be accepted at face value. In our view, the reports show, at most, a statistical correlation between the fuel deliveries and the subsequent stock losses. However, the existence of such a correlation does not necessarily establish that the losses were caused by under-delivery by the Respondent. 3. Fuel deliveries are ordinarily the occasions when stock measurements, reconciliationsand adjustments are undertaken. It is therefore equally plausible that discrepancies accumulated from various sources become apparent during the reconciliation process following deliveries. Consequently, the coincidence between delivery dates and recorded stock losses is not, without more, proof that the Respondent physically supplied less fuel than that reflected in its invoices. 4. The Appellant maintained that it played no part in the deport loading process. That maybe so, but it was nevertheless for the Appellant to put before this Tribunal evidence that the stock discrepancies arose from the depot loading process and/or the delivery. Discrepancies and an allegation of fuel theft is not sufficient, the Appellant needed to provide evidence of the fuel taken at the depot itself. 5. Mr. Murithi's own evidence, given under cross-examination, was candid on this point.He confirmed that he did not visit the Respondent's depot; that he did not observe the actual loading procedures employed there; that his comments on loading procedure were based on what he described as "generic procedures" rather than direct observation of the specific depot in issue. 6. These are not minor methodological quibbles. They go to the root of whether theexpert's conclusion that losses "originated from the supply side" can be regarded as a finding grounded in direct examination of the loading and delivery process, or whether it is, in substance, an inference drawn backward from an observed statistical pattern in data whose underlying accuracy was never independently tested. We find it to be substantially the latter. 7. Turning to the 2024 forensic audit by Nitram Accountants-Africa, it is, in its ownwording, a careful and comprehensive exercise in quantification. The auditors reviewed wetstock reports, invoices, delivery notes, and stock reconciliation records spanning many years, and on that basis arrived at a computed claimable loss. 8. We accept that this audit was conducted with diligence on its own terms. However, anexamination of the methodology discloses that the auditors' role was, in essence, threefold: they accepted the wetstock reconciliation records placed before them as accurate; they verified the arithmetic of the calculations performed upon those records; and they calculated the residual variance after deducting the allowable operational loss thresholds recognized by EPRA and the Respondent's own manual. What the audit did not do, on the evidence before us, is independently investigate or test what caused the residual variance once the permitted tolerance had been deducted. 9. The audit proceeds on the unstated assumption that any variance remaining after thededuction of allowable thresholds must necessarily be attributable to under-delivery by the Respondent. That is precisely the proposition in issue in this case, and it is a proposition that itself stood in need of independent proof that the audit, by its own methodology, does not supply. An audit that quantifies a residual figure with precision is not, without more, equivalent to an audit that has identified the cause of that figure with the same precision. Unavoidably, the Appellant’s Audit report suffers the same defect as the Syrecon Service Reports. 1. We have also carefully examined the internal correspondence exchanged between theparties, together with the wetstock reports, flowmeter records, ATG reports and other operational records. These documents undoubtedly demonstrate that the Appellant consistently complained about unexplained stock losses and that the Respondent was aware of those complaints. They further establish that stock variances existed over a prolonged period. 2. Nevertheless, these documents do not establish that the discrepancies originated fromunder-delivery by the Respondent. None identifies a particular delivery in which the quantity loaded at the depot differed from the quantity discharged into the Appellant's storage tanks. Neither do they independently verify that any specific invoice overstated the quantity 3. Having considered the entirety of the evidence, we are satisfied that the Appellant hasdemonstrated the existence of abnormal stock variances extending over a considerable period. However, the evidence before us falls short of establishing, on a balance of probabilities, that those variances were caused by fuel under-delivery attributable to the Respondent. The expert reports successfully quantify the discrepancies but do not independently establish their origin. Likewise, the documentary evidence confirms the existence of stock losses but does not identify the point within the supply chain at which those losses occurred. 4. In light of the above, the claim for under delivery of fuel attributable to the Respondenthas not been proved to the required standard and the same is dismissed. # Rental Overcharge 1. On the claim of rental overcharge, it was the Appellant submission that the Respondentimposed excessive and arbitrary rent by aggregating rent attributable to ancillary facilities with the forecourt rent, thereby inflating the rent payable. 2. To substantiate this claim, the Appellant sought to rely on the Rental Valuation Reportprepared by Liska Properties Limited dated 17th July 2020. The report assessed what it considered to be the fair market rental value of the suit premises at Kshs.194,000 per month and consequently the Appellant computed alleged rental overpayments amounting to KShs. 150,956,773.21. The Appellant contended that in the absence of a contrary valuation report from the Respondent, this Tribunal ought to accept the valuation report as uncontroverted. 3. The Respondent, on the other hand, contested the valuation report noting that thevaluer Pauline Wambui Kariuki expressly admitted during cross-examination that she had never undertaken a valuation of a petroleum marketing facility before preparing the report. It was further pointed out that the valuation was derived from comparisons with properties such as supermarkets, grocery stores and coffee roasters, which were not comparable to a branded petroleum service station. The Respondent also faulted the report for failing to account for the commercial value and goodwill associated with the Respondent's brand, contending that such omission rendered the valuation fundamentally flawed. 4. In the case of Samson Nzaro -vs- Boniface Ngari (2020) eKLR, the court, when facedwith an exactly similar situation and where only one valuation report was filed, held thus; *“…. In his testimony before the court, the Plaintiff produced a Valuation Report (Exhibit 2) of the buildings he constructed on the suit property. The Report by Next Level Valuers and Property Consultants dated November 7, 2016 places the value of the building as at September 28, 2016 when they conducted the valuation at Kshs 220,000/-. In the absence of any other valuation report with a contrary value, this court is persuaded that the building is worth the said Kshs 220,000/- and that the Defendant ought to pay the said amount to the Plaintiff as compensation now that he no longer desires to have the Plaintiff operating the* *Posho Mill on his property.”* 1. The challenge raised by the Respondent that the valuation failed to account for thecommercial value and goodwill associated with the Respondent's brand and that properties such as supermarkets, grocery stores were not comparable to a branded petroleum service station, even if made out, could have been cured by the Respondent adducing a corresponding valuation report properly accounting for such. The Respondent did not do so. 2. Having reviewed the valuation report by Liska Properties Limited, which remainsuncontested due to the absence of an alternative figure, and having considered both the documentary evidence and the oral testimonies presented herein, we determine that the fair market rental value of the service station is Kshs.194,000/- and therefor the post march 2019 rental overcharge claim of KES 54,344,437.36 is allowed. Rebates 1. The Respondent does not deny owing rebates but disputes the quantum. The admittedpending rebate of KES 11,085,805 shall be paid to the Appellants within 30 days of this judgment, without prejudice to any additional amount that may be established through the forensic audit. # (F) Whether the reliefs sought herein are merited 1. Having made a determination on the issues arising in this matter, it follows that therelieds available to the parties must accord with the Tribunal’s finding on each issue. Accordingly, the consequential reliefs to be granted are those set out in the final disposition of this Judgment. 2. With respect to the prayer for a protection order, no evidence was presented to supportthe claim of threats or intimidation. The prayer for a protection order is therefore declined. # DISPOSITION 93. For the reasons set out above, this Tribunal finds that the Appellant’s Appeal partially succeeds and makes the following orders:- 1. The Respondent shall pay to the Appellants the pending rebate amounting to KES11,085,805/= within thirty (30) days of this judgment, failing which interest shall accrue at court rates until payment in full. 2. The Appellant is awarded rent overcharge of KES 54,344,437.36. 3. The prayer for a protection order from retaliation is declined for lack of evidence. 4. No penalties are imposed at this stage, but EPRA is directed to investigate theRespondent’s delivery and reconciliation practices for compliance with the Energy Act, 2019 and KEBS standards. 5. Since each party has succeeded in part, there will be no order as to costs. Dated and delivered at Nairobi this 2nd day of July 2026 ………………………………… Ms. Doris Kinya Mwirigi Vice Chairperson ………………………………. Eng. Buge Hatibu Wasioya Member ………………………………. Mr. Feisal Shariff Ibrahim Member SIGNED BY/FOR: | | | --- | | **★ THE JUDICIARY OF KENYA ★** **HON. DORIS KINYA MWIRIGI** **BUGE HATIBU WASIOYA FEISAL SHARIFF IBRAHIM** ENERGY AND PETROLEUM TRIBUNAL ENERGY AND PETROLEUM TRIBUNAL Date: 2026-07-08 08:48:27 |