Lawsuit Against Government of Kenya Dismissed on Sovereign Immunity Grounds

The outcome of Community Finance Group’s lawsuit against the Republic of Kenya over a failed purchase of Kenyan gold provides a valuable lesson in the challenges of conducting business with sovereign powers. From law firm Cadwalader:

“The business transaction was either not papered or was papered without a waiver of sovereign immunity. Nor, apparently, did the governing documentation define or delimit what Kenya’s duties were and the extent to which the conduct of the sovereign was commercial or sovereign in nature. The Court decided the motion on subject matter grounds, and believed it was obliged to dismiss the action under the Foreign Sovereign Immunities Act… The difficulty here is that, though the transaction was clearly commercial in nature, the grounds for non-performance included alleged failure to investigate the legitimacy of the transaction, securing the gold stored by Customs, failure to investigate the criminal activity of the alleged wrongdoers, and failure to turn over the gold or restitute the funds seized from the alleged wrongdoers. These acts, said the Court, were not commercial activity but were exercises of the ‘sovereign power’.”

Read the full update, Claims Against Kenya Disimssed on Foreign Sovereign Immunity Grounds, by Cadwalader, Wickersham & Taft LLP»