China Threatens Kenya With Lawsuit Over Secret SGR Contracts as Court Orders Full Disclosure

A fresh legal and diplomatic storm has erupted around Kenya’s controversial Standard Gauge Railway project after China warned that Nairobi could face lawsuits, financial penalties and strained bilateral relations if secret SGR contracts are made public.

The warning follows a landmark ruling by the Court of Appeal ordering the Kenyan government to release confidential agreements tied to the multi-billion-shilling railway project that was financed largely through loans from China Exim Bank.  

The court upheld an earlier High Court decision compelling the State to disclose documents linked to the construction, financing and operation of the SGR, rejecting government attempts to keep the contracts hidden from the public.  

Behind the scenes, senior government lawyers had repeatedly cautioned judges that making the contracts public could trigger serious repercussions from Beijing because Kenya had signed strict confidentiality clauses with Chinese lenders and contractors.  

The railway project, launched during former President Uhuru Kenyatta’s administration, remains one of the most expensive infrastructure undertakings in Kenya’s history, costing taxpayers more than Sh580 billion according to court filings. The loans were backed by sovereign guarantees, meaning ordinary Kenyans continue servicing the debt through taxes and levies.

Government filings presented in court painted a picture of panic within State agencies over the possible fallout from disclosure. Lawyers from the Attorney General’s office argued that exposing the contracts could damage diplomatic relations with China, undermine Kenya’s commercial credibility and expose the country to legal action from Chinese entities.  

The State further claimed some of the agreements involved sensitive foreign government information touching on national security and strategic economic interests. Officials insisted the secrecy provisions were binding and warned that violating them could come at a heavy cost for Kenya.  

The legal battle was initiated by governance activists Khelef Khalifa and Wanjiru Gikonyo together with Katiba Institute, who demanded full disclosure of all contracts linked to the railway project.  

The activists sought access to feasibility studies, procurement agreements, financing arrangements, environmental impact reports, collateral agreements and operational contracts involving Chinese firms that continue to run parts of the railway system.  

Particular attention has centered on the role of Africa Star Railway Operation Company, the Chinese-linked operator reportedly receiving more than Sh1 billion every month in operational costs under agreements that have never been fully scrutinized publicly.  

The SGR has long been dogged by allegations of inflated costs, opaque procurement and hidden debt obligations. In 2020, the High Court declared that procurement procedures used in awarding the railway contract violated Kenyan law because the project bypassed competitive tendering requirements. That ruling intensified public pressure for full disclosure of the agreements.

During the 2022 presidential campaigns, President William Ruto promised to make the SGR contracts public, arguing that Kenyans deserved to know the exact terms of debts they were repaying.   Although parts of the loan agreements were later released, activists maintained that critical operational and collateral agreements remained hidden.  

In its ruling, the Court of Appeal firmly sided with transparency advocates, declaring that public interest outweighed the government’s claims of speculative diplomatic harm. Judges said the State had failed to provide evidence showing how disclosure would genuinely threaten national security or economic stability.  

The judges also delivered a stinging rebuke to government secrecy, ruling that confidentiality clauses cannot override constitutional rights to access information. “Access is the rule; secrecy the exception,” the court said while emphasizing that public information belongs to citizens and not the State.  

The ruling is now expected to send shockwaves through future government-to-government infrastructure deals, particularly those involving Chinese financing. Analysts warn that the case could open the floodgates for demands to disclose agreements tied to roads, ports, airports and energy projects signed under similar secrecy arrangements.  

China remains Kenya’s largest bilateral lender and trading partner, with billions tied up in infrastructure financing under the Belt and Road Initiative. Any escalation between Nairobi and Beijing over the SGR disclosures could place Kenya in an uncomfortable diplomatic position at a time when the country is already struggling with debt pressures and rising repayment obligations to foreign lenders.

The showdown now places the Treasury, the Ministry of Transport and the Attorney General under intense pressure to comply with the court order while managing the diplomatic consequences that may follow once the closely guarded SGR agreements are finally exposed to the public.