Suryakant Bhagwanji Raja Shah v Aperit Investments S.A. & Another
The bottom line
#Kenya's Court of Appeal ruled that a dissolved foreign company cannot sue in Kenya, and amendments cannot revive a time-barred claim.
What this practically means
#Executive summary
#Questions the Court framed
#The issues the Court set itself to decide, in its own words.
- 1.Whether the learned Judge correctly construed Articles 85 and 86 of the Panamanian Law No. 32 of 1927 and the Panamanian Code of Commerce
- 2.Whether the first respondent, dissolved in 1988, had capacity to sue and to ratify the filing of the suit in 1991
- 3.Whether leave to amend the plaint to plead ratification by trustees/liquidators ought to have been granted
Key legal issues
#Interpretation of Articles 85 and 86 of the Panamanian Corporation Law
The first respondent existed for only three years after voluntary winding up for limited purposes; its trustees had no power in 1998 to ratify the 1991 filing of the suit
Article 85 gives a dissolved corporation three years of post-dissolution existence for specified purposes; Article 86 empowers directors as trustees during that window. The court held the three-year limit in Article 85 governs the exercise of trustees' powers under Article 86, so ratification ten years after dissolution was a nullity.
Capacity of a dissolved foreign company to sue in Kenya
A company dissolved under its law of incorporation is not recognised as an existing entity in Kenya and cannot sue; a non-existent person cannot sue
Applying the English rule in Russian and English Bank v Baring Brothers, the court held that destruction of an artificial person in its country of origin destroys it everywhere. Dissolution is a question of fact for the judge on evidence of foreign law. The first respondent, dissolved in 1988, had no locus standi to institute or ratify the 1991 suit.
Whether leave to amend should have been granted
The learned Judge, being uncertain of the legal position on the expert affidavits, was bound to dismiss the application; the amendments sought to revive a time-barred action
The trial judge himself found conflicting interpretations of Panamanian law and no certainty as to the legal position. In that state of uncertainty he was bound to dismiss the application. The amendments fell outside the exceptions in Order 6A Rule 3(3), (4) and (5) and were a veiled attempt to resurrect a time-barred cause of action.
Laches and waiver by inordinate delay in liquidation
Even if the company still existed for liquidation purposes, its inordinate delay amounted to waiver of the right to sue and laches, disentitling it to leave to amend
The court held alternatively that the first respondent, by taking unreasonably long to complete its winding up, had slept on its rights to the detriment of the appellant. Allowing ratification then would gravely prejudice the appellant, so the amendment could not be justified even on the respondent's own interpretation of Panamanian law.
Legal principles established
#- A foreign company dissolved under the law of its country of incorporation cannot sue or be sued in Kenya; Kenyan courts do not recognise it as an existing entity
- Under Panamanian law a dissolved corporation continues to exist for only three years after dissolution for limited purposes, and cannot thereafter ratify suits filed without authority
- A plaintiff will not be allowed to amend pleadings to introduce or revive a cause of action barred by limitation at the time of the amendment
- Amendments before hearing should be freely allowed if they can be made without injustice, injustice being compensable by costs
Court orders
#- 1.Appeal allowed
- 2.Ruling and order of the superior court dated 24th February 1999 set aside
- 3.Application for leave to amend the plaint dismissed with costs
- 4.Appellant to have the costs of the appeal
- 5.Claim by the first respondent against the appellant struck out with costs under section 3(2) of the Appellate Jurisdiction Act
The bench
#One judgment of the whole court — no separate or dissenting opinions.
Wrote the judgment
Wrote the judgment
Wrote the judgment
- On appeal from
- High Court
- HCCC No. 3906 of 1991
- Jurisdiction invoked
- Appellate jurisdiction of the Court of Appeal; section 3(2) of the Appellate Jurisdiction Act invoked for striking out
Relief refused
#Leave to amend the plaint to plead ratification by trustees/liquidators
Amendment was a veiled attempt to resurrect a time-barred cause of action; the company had no existence or authority after the three-year post-dissolution period
Costs
Application for leave to amend dismissed with costs; appellant to have the costs of the appeal; first respondent's claim struck out with costs
Quotable passages
#Verbatim from the judgment, each located to the page it appears on in the official PDF — so these can be cited and checked directly.
In the eyes of our law a defunct corporation seeking to maintain an action or suit is no entity at all but a mere name only, with no legal existence and a non-existent person cannot sue.
It is trite that a plaintiff will not be allowed to amend his pleadings so as to introduce or revive a cause of action or to revive an action which is barred by the statute at the time of the attempted amendment.
We allow the appeal and set aside the ruling and order of the superior court dated 24th February, 1999. We substitute therefor an order dismissing with costs the application for leave to amend the plaint.
The first respondent's claim against the appellant, in the superior court, is struck out with costs.
No suit ought to be summarily dismissed unless it appears so hopeless that it plainly and obviously disclose no reasonable cause of action and is so weak as to be beyond redemption and incurable by amendment.
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Suryakant Bhagwanji Raja Shah v Aperit Investments S.A. & Another", Case Analysis (2002). Civil Appeal No. 181 of 2000. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2002/304/eng@2002-05-17
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.