https://new.kenyalaw.org/akn/ke/judgment/kehc/2026/10693

**REPUBLIC OF KENYA** **IN THE HIGH COURT OF KENYA AT NAIROBI** **MILIMANI LAW COURTS** **CONSTITUTIONAL AND HUMAN RIGHTS DIVISION** **PETITION NO. E 092 OF 2026** **IN THE MATTER OF THE CONSTITUTION OF KENYA, 2010** AND **IN THE MATTER OF THE FAIR ADMINISTRATIVE ACTION ACT CAP. 7 LAWS OF KENYA** AND **IN THE MATTER OF THE CONSTITUTION OF KENYA (PROTECTION OF RIGHTS AND FUNDAMENTAL FREEDOMS) PRACTICE AND PROCEDURE RULES, 2013** AND **IN THE MATTER OF SECTIONS 73, 74 AND 75 OF THE INSURANCE ACT CAP. 487 LAWS OF KENYA** AND **IN THE MATTER OF REGULATION 22 OF THE INSURANCE REGULATIONS** AND **IN THE MATTER OF THE INSURANCE REGULATORY AUTHORITY CIRCULAR NO.** IC&RE 03/2025 REFERENCE NO. CFN/IRA/00/001/03 DATED 20TH MARCH 2025 BETWEEN **KENYA BANKERS’ ASSOCIATION……………………………PETITIONER** VERSUS **COMMISSIONER OF INSURANCE…………………………RESPONDENT** **RULING** **INTRODUCTION** 1. The Notice of Motion dated 17 February 2026 is presented under Articles 23(3) and 165 of the Constitution of Kenya, Sections 1A,1B, 3A and 63 (e) of the Civil Procedure Act, Order 51 rules 1and 4 of the Civil Procedure Rules and rules 19,23 and 24 of the Constitution of Kenya (Protection of Rights and Fundamental Freedoms) Practice and Procedure Rules. The Application seeks conservatory orders suspending **Circular No. IC & RE 03/2025** pending both the hearing of the Motion and the final determination of the Petition. The Petitioner asserts that the Circular’s directives, particularly the prohibition of service based fees and the requirement that premiums be remitted in full, will be applied during the imminent audit cycle, thereby exposing bancassurance intermediaries to sanctions, qualified audit reports, and disruption of contractual arrangements. 2. The Application is supported by the annexed Affidavit sworn on 11 February 2026 by Raimond Molenje. He depones that the Circular, issued on 20 March 2025, has already been communicated to insurers and intermediaries, and that audits scheduled for February–March 2026 will apply its directives. He states that intermediaries risk sanctions under Section 73(5) of the Insurance Act, loss of revenue from auxiliary‑service contracts, and reputational harm arising from qualified audit opinions. 3. In addition, he has sworn a further affidavit on 31 March 2026 arguing that the Respondent acted without jurisdiction in issuing the Circular of 25 March 2025, and that service based fees, lawfully grounded in Sections 151(1)(c) and (e) of the Insurance Act and Regulations 36 and 38, cannot be prohibited under Section 73. He further avers that the Circular was issued ultra vires, without affording affected parties a hearing, and in disregard of the contractual and statutory distinction between commissions and service based fees. The Petitioner therefore contends that a prima facie case is established, and that the balance of prejudice favours interim protection. He further avers that the Petition is properly before the Court and is not barred by the exhaustion doctrine. The dispute, as framed, concerns the legality and constitutional propriety of the Respondent’s administrative action, a matter that engages Articles 40 and 47 and therefore falls within the Court’s supervisory jurisdiction 4. The Respondent’s Replying Affidavit, sworn by Godfrey Kiptum, asserts that Circular No. IC & RE 03/2025 dated 20 March 2025 was issued within the statutory mandate conferred by Sections 3, 3A and 73 of the Insurance Act. He states that the Circular merely reiterates long‑standing regulatory directives against excess commissions, override payments, and administrative fees disguised as remuneration, citing earlier circulars of 2005 and 2019. The Respondent avers that audited accounts revealed continued non‑compliance, particularly by bancassurance intermediaries receiving service‑based fees “in excess of the limits prescribed under the Insurance Act”. 5. He further contends that the Petitioner admitted receiving such payments and that a meeting held on 22 October 2025 attended by AKPIA and AIBK, confirmed intermediaries’ proposals for alternative remuneration structures, thereby demonstrating awareness of non-compliance. The Respondent argues that the Circular protects policyholders’ interests, prevents dissipation of premium funds, and ensures actuarial integrity in commission structures. He maintains that the Petition is brought in bad faith, seeks unjust enrichment, and offends doctrines of exhaustion, constitutional avoidance, and precision as explained in **Anarita Karimi Njeru** v **Republic [1979]**. 1. In the Supplementary Affidavit sworn on 16 March 2026, the Respondent reiterates that the Petition is founded on “falsehoods, misrepresentations, and factual inaccuracies” He disputes the Petitioner’s claims of imminent enforcement during February–March 2026 audits, citing statutory timelines under Sections 61 and 155 of the Insurance Act. He argues that the Petition was filed nearly a year after the Circular’s issuance, undermining claims of urgency and that conservatory orders would improperly restrain lawful regulatory oversight. The Respondent characterises the Petitioner’s conduct as an attempt to “circumvent the law”, asserting that litigants who approach the Court with “unclean hands” are undeserving of discretionary relief. He urges dismissal of both the Notice of Motion and the Petition, emphasising that judicial intervention should not be used to shield intermediaries from compliance obligations or to impose “oppressive financial consequences on insurance customers/policyholders”. 2. The application was canvassed via written submissions **SUMMARY OF THE PETITIONER’S SUBMISSIONS** 1. The Petitioner relies on the Supreme Court decision in **Gatirau Peter Munya v Dickson Mwenda Kithinji & 2 Others (2014) eKLR,** on the conditions under which a Court should grant conservatory orders. The Petitioner also cites **Makumi & 4 Others v Speaker County Assembly of Kitui (2024) KEHC 2812** and **Gatiria v Kamunyu & 4 Others (2025) KEHC 9619**, which reaffirm the principles of arguable case, prejudice, preservation of substratum and avoid rendering the main Petition nugatory and public interest. 2. The Petitioner contends that unless a conservatory order is granted, the Petition will be rendered nugatory because implementation of the Circular will disrupt value‑added service contracts, affect bancassurance operations, and prejudice insurers, intermediaries, and customers. The Petitioner invokes the principle articulated in **Muslim for Human Rights (MUHURI) v Attorney General (2011) eKLR** that courts must avoid conclusivity at the interim stage while preserving the ability of parties to prosecute their cases without prejudice. **SUMMARY OF THE RESPONDENT’S SUBMISSIONS** 1. While acknowledging that at this stage the Court does not require that Petitioner to prove their case, the Petitioner herein has not met the threshold for conservatory relief under the principles articulated in **Gatirau Peter Munya v Dickson Mwenda Kithinji & 2 Others (2014) eKLR** and reaffirmed in **Dock Workers Union & Okiya Omtatah Okoiti v Portside Freight Terminals Ltd & 10 Others (2024)eKLR.** 2. On the alleged violation of constitutional rights, the Respondent argues that Article 40 rights are not absolute and cannot protect unlawfully acquired benefits, relying on **Dina Management Ltd v County Government of Mombasa & 5 Others (2023) KESC 30**. The Respondent invokes **Mutyaene v KCB Bank Ltd & Another (2023) KEHC 2205** to argue that the Petition offends the doctrine of constitutional avoidance, as it elevates a regulatory dispute into a constitutional claim without demonstrating actual rights violations. It also asserts that the Petition violates the doctrine of exhaustion, citing **Geoffrey Muthinja Kabiru v Samuel Munga Henry (2015) eKLR** and **Old Mutual General Insurance Kenya Ltd v IRA & Tropic Air Ltd (2025) KEHC 4570**, where courts held that parties must first pursue statutory remedies before invoking constitutional jurisdiction. 3. On public interest, the Respondent submits that granting conservatory orders would undermine consumer protection and destabilise the insurance sector. It relies on **Martin Nyaga Wambora v Speaker, County Assembly of Embu (2014) eKLR** and **Dock Workers Union (supra)** to emphasise that conservatory orders affecting public agencies must be granted with caution. The Respondent argues that service‑based fees disguised as commissions reduce funds available for claims, prejudice policyholders, and threaten actuarial sustainability. It likens the Petitioner’s conduct to the “Shakespearean Shylock,” citing **Emmanuel Wambua Muthusi v Jaffery Academy (2020) KEELRC 574** **and re Estate of Josphat Mburu Wanyoike (2025) KEHC 1928, and Ndungu v KCB Ltd (2025) KEELC 1162**, to illustrate judicial disapproval of parties seeking disproportionate financial gain at the expense of vulnerable stakeholders. The Respondent concludes that the application is built on misrepresentations, fails all conservatory‑order tests, and should be dismissed with costs **ANALYSIS AND DETERMINATION** 1. Having considered the pleadings and submissions, herein, I frame the following as the issues for determination- 1. Whether the Petition is justiciable or is barred by the doctrine of constitutional avoidance 2. If the answer to (a) is in the affirmative, whether the application has met the threshold for grant of conservatory orders 3. Arising from (a) and (b) what are the consequential orders ***Whether the Petition is justiciable or is barred by the doctrine of exhaustion and constitutional avoidance*** 1. This is a jurisdictional question, and it must be confronted at the outset. As the Court of Appeal held in **Owners of the Motor Vessel “Lillian S” v Caltex Oil (Kenya) Ltd [1989] KECA 48 (KLR**), jurisdiction is the foundation upon which judicial authority rests. Without it, a court cannot proceed, even one step further. The principle is uncompromising; once a question of jurisdiction is raised, the court must resolve it immediately, on the record as it stands. Whether the evidence is scant or limited is immaterial; it is the evidence before the court, and it must be addressed. 2. It is submitted that this Court should decline jurisdiction because the Petition’s core is not constitutional—it is regulatory. The dispute concerns the statutory basis, formulation, and implementation of the impugned Circular. The Petitioner argues that Article 47 was not complied with, that the Circular rests on an erroneous interpretation of Section 73, and that Article 40 rights are threatened. But these claims arise directly from the Respondent’s exercise of statutory authority under the Insurance Act. They do not transform a regulatory disagreement into a constitutional controversy. Elevating such a dispute would disregard the doctrine of constitutional avoidance, and would risk turning this Court into the first forum for every regulatory grievance dressed in constitutional language. 3. In determining whether the Petition is barred by the doctrine of constitutional avoidance, the Court must look to the pleadings and the correspondence exchanged. The applicant’s letter of 17 July 2025 makes the nature of the dispute plain. The Circular was addressed to insurers and intermediaries, communicating measures to ensure compliance with Section 73, Regulation 22, and the Eleventh Schedule. The applicant acknowledged that the Circular largely mirrors the law, but expressed concern that its implementation would negatively affect bancassurance operations. They requested the Respondent to consider emerging industry practices and revise the Circular. These are regulatory concerns. 4. Even with the most generous reading, it is impossible to avoid the conclusion that this Petition arises from a failure of minds to meet on the statutory underpinning of the Circular. That is precisely the kind of dispute the Insurance Appeals Tribunal, established under Section 169 of the Act, is designed to resolve. The Tribunal is the specialised body entrusted with reviewing regulatory decisions under the Insurance Act. To bypass it is to disregard the statutory scheme and the constitutional principle that specialised mechanisms must be respected. 5. The Supreme Court in **Communications Commission of Kenya & 5 others v Royal Media Services Ltd & 5 others [2014] KESC 53 (KLR)** articulated the doctrine of constitutional avoidance with clarity and force. The Court held that where a matter can be resolved on a narrower statutory basis, courts should refrain from deciding constitutional questions. The Court emphasised that constitutional adjudication must be reserved for situations where no alternative legal pathway exists. This Petition, grounded in statutory interpretation and regulatory compliance, is precisely the kind of dispute the avoidance doctrine requires courts to defer. 6. The High Court in **Okoiti & another v Registrar of the Supreme Court & 4 others [2026] KEHC 7698 (KLR)** reaffirmed that constitutional avoidance is a doctrine of judicial economy and constitutional discipline. It ensures that constitutional adjudication remains a matter of last resort, preserving the Constitution’s normative authority and preventing its casual invocation in ordinary disputes. The doctrine does not oust jurisdiction; it guides courts to decline constitutional determination where statutory mechanisms are available and adequate. 7. On the strength of these principles, and on the record before the Court, I find that the Petitioner has approached this Court prematurely. The dispute falls squarely within the jurisdiction of the Insurance Appeals Tribunal. The statutory pathway is both available and appropriate. Respect for institutional roles, statutory design, and constitutional discipline requires that this Court decline jurisdiction. 8. The consequence of that finding is that I will down my pen instantly. All that is left is to strike out the Petition in its entirety 9. The respondent will have the costs of the Petition. **SIGNED, DATED AND DELIVERED VIRTUALLY AT NAIROBI THIS 16TH DAY OF JULY, 2026.** **P.M. NYAUNDI** **JUDGE** **In the Presence of** Fardosa Court Assistant Khaseke for Petitioner/Applicant Ms. Muraigu for Respondent