You are on page 1of 7

Provided that a body, whether public or private, wields institutional power that is capable of

adversely affecting the rights and interests of individuals, it ought to be subject to the
principles of administrative law.

With the aid of decided cases, discuss this statement in the context of the challenges presented to
administrative law by privatization and the growth of private power.

PRIVATIZATION

Privatization is of no doubt a great mechanism towards the realization of state development.


Privatization simply put means selling government enterprises to private entities.1 It outsources
some of the public duties in terms of delivery of services like water, education, roads, health care
among others to private firms. While discharging the specified duties; public entities are required
to keep the public interests at heart.2 The whole process has to conform to the principles of
democracy as well as administrative law lest it gives rise to controversies. Some have expressed
their liking to this mode of ruling while others are definitely not for this kind of administration.
Why are there divided views? Well, this study is set to evaluate the impacts privatization has had
to the public sector.

GROWTH OF PRIVATIZATION

The first country to implement privatization was Britain in 1980. This idea was born in three
ways: capitalism, Structural Adjustment Programs and Neoliberalism. Capitalism came about
when the government did not live up to its responsibilities in terms of service delivery. This led
to the creation of private commerce for profitability and efficiency. The International Monetary
Fund and the World Bank took up the SAPs to supply loans to developing countries. These loans
would in turn grow their economic market by privatizing public sectors and the supply of public
services. Neoliberalism favors free market capitalism. It demands that the government should
stay clear off the market sector. This way, it acts free from political interference and flourishes as
a result. This mechanism encouraged International Monetary Fund and World Bank to promote
privatization of governmental assets and companies. As a result, the governments economic

1 Blacks Law Dictionary

2 Freeman, The Contracting State, 175.


1
sphere is reduced.3 The sale of assets and services to the private entity has only benefitted the
wealthy shareholders. They are the direct beneficiaries and subjecting the poor to more poverty
which isnt just and reasonably fair.

THE NECESSITIES FOR PRIVATISATION

The main ideas behind privatization are outlined as follows;

1. It keeps off the political sphere from interfering with the private sector. This ensures
efficiency and effectiveness in the provision of services.
2. It is more flexible. It can sustain changing market conditions.
3. More revenue is collected while controlling how the business should be conducted.
4. Formation of more entrepreneurship jobs in the state.
5. The benefits of functional specialization.

CHALLENGES TO ADMINISTRATIVE LAW

The adoption of this system has sparked fears on whether this is the best resort in the realization
of a fully functional and integrated state while protecting the citizens rights at the same time.4 To
avert these demerits, it is best if the public interest is put into consideration before coming up
with some of these contractual relationships with private sectors. Public participation and
rational decision making should be paramount before vesting these duties to the private domain.
This exercise exerts great powers on the private bodies which in turn act on the liberties of the
citizens. Power imbalance has come up as a result of this mechanism which shall be discussed in
the course of this study.

Over the years, private firms have erred in maintaining the rights and interests of individuals in
various instances. A good example is the Republic v Kenya Cricket Association and 2 others
case.5 The cricket board issued a harsh judgement on the applicant for gross misconduct in the
course of his work. On further appeal, the court declined to intervene on matters of private

3 Akech M, Administrative Law in the Contracting State, Strathmore University Press, 2016,
349.

4 Freeman, The Contracting State, 175.

2
bodies.6 This policy infringed Odumbes bright career and sent it down the drain. This decision
went against the principle of proportionality. It did not use the least restrictive means of sanctions
to protect the offenders rights.

The Constitution of Kenya 2010 in article 27 advocates for fair treatment and equality. Private
entities have acted in contravention with this provision. In Duncan Muriuki Kaguuru &
Another v Baobab Beach Resort & Spa Ltd7, the petitioner filed a suit against the respondent on
the basis of race discrimination.

Private Powers have come up with decisions without offering justifications. An example of this
is seen on the case of Abisalom Ajusa Magomere v Kenya Nut Company Ltd.8 The petitioner
was charged with certain acts that took place under his supervision. He wasnt even given an
opportunity to explain himself. The court termed this as unlawful subject to Section 43 of the
Employment Act 2007. The company had a duty to give valid reasons as to his dismissal.

Most of the private bodies are not subject to checks and balances by the parliament according to
the Westminster type of government. This proves to be a challenge to the public in terms of
accountability for their actions. This was evidenced in Nairobi Law Monthly Ltd v Kenya
Electricity Generating Company & 2 others.9 The courts held that the petitioner was not entitled
to information leaving the private company unaccountable.

Denial of right to participation has sufficed in various instances. One of them is found in Mambo
case10 where the petitioner was denied the right to critic the by-law which was set on leaving
them out on participating during the elections. Even after the protests, the law passed.

5 Republic v Kenya Cricket Association and 2 others [2006] eKLR

6 Akech M, Administrative Law in the Contracting State, Strathmore University Press, Nairobi,
2016, 372-373.

7 Duncan Muriuki Kaguuru & Another v Baobab Beach Resort & Spa Ltd [2014] eKLR.

8 Abisalom Ajusa Magomere v Kenya Nut Company Ltd [2014] eKLR.

9 Nairobi Law Monthly Ltd v Kenya Electricity Generating Company & 2 others [2013] eKLR.

3
Privatization leads to abuse of public interest. State-owned enterprises tend to make the
government inaccessible which lead to problems which can only be solved by legislators through
enactment of new rules and regulations.11 It is clear that the only motivation for most private
companies is amassing huge profits and not necessarily aiming for the common good.12

REGULATION OF PRIVATE POWER

Regulation of private power is essential for the best outcomes in privatization. Control of this
private power safeguards the publics interest and rights. This is achieved through political,
administrative and judicial means.

Political and administrative mechanisms take on two approaches. First, public participation and
access to information regarding the contractual details are basic in this criterion. In so doing, the
public will be actively involved by questioning the governments choice on awarding of
contracts. Second, consumer councils register consumer views and recommendations which can
be applied under the contract or later on during renewal. These contracts grant the intended
beneficiaries third-party rights of action. They also function as responsibility mechanisms which
keep the private companies in synch with the administrative law principles. The Ombudsman
also deals with citizen complaints against private entities.

Should courts review private bodies exercising public duties? For a long time, judicial review
has been applied only where there is public power. It was presumed that private power is only
regulated by private law. Thereafter, a determination was arrived at to weigh whether judicial
review could apply on private power. This was the source of power test13 but was later discarded

10 Rose Wangui Mambo and 2 others v Limuru Country Club and 17 others [2014] eKLR.

11 Brown L and Jacobs L, The Private Abuse of the Public Interest: Market Myths and Policy
Muddles.

12 Caution: Red Light Cameras Ahead: The Risks of Privatizing Traffic Law Enforcement and
How to Protect the Public.

13 Akech M, Administrative Law in the Contracting State, Strathmore University Press,


Nairobi, 2016, 362.

4
since the test would not bring about desirable results. A distinctive case of Regina v Panel on
Take-Overs and Mergers, ex parte Datafin PLC14developed a more substantive test. This test
had in mind the impact and nature of the power rather than its source. The court came to a
conclusion that the Panels decisions were fit for a judicial review because it was performing a
public duty and the decisions affected the rights and interests of citizens. The Datafin approach
raised some questions regarding the shift from the source of power test. It was concluded that
courts would have regard to both the source and the consequences of its exercise for best results.

The Kenyan Judicial system has adopted the Datafin approach in a number of cases. One of them
is Total Kenya Limited v The Permanent Secretary, Ministry of Energy & 14 others.15 Judicial
review was granted on the grounds that no one had appointed the Permanent Secretary as an
arbitrator and had no legal power to determine oil prices since that was the jurisdiction of the
Open Tender System. The contractual matters of this case were backed by statute. In line with
this decision, existence of contractual remedies could hinder judicial review. Hindrance arises
where procedures for the remedies are followed and where they are not followed, they arent
entitled to the remedies and can seek alternative remedies. Courts can therefore provide judicial
review where alternative remedies are in no way convenient, beneficial or alternative.

IN CONCLUSION

Privatization is a great instrumental approach to decentralization and improvement of the


citizens lives by providing them different beneficial services on time. It is inescapable that this
system is bound to interfere with peoples rights and interests hence the need for regularization
through a democratic and accountable process. In the Kenyan context, the issue of
standardization is not yet straightened out. In the case of Total Kenya Ltd and Mambo, the courts
are more than willing to adopt the Datafin approach in their rulings. In Odumbes, the courts are
still hesitating whether to come between the dealings of private power. However, these courts
have no idea that the private power has immense powers that could lead to the detriment of an

14 Akech M, Administrative Law in the Contracting State, Strathmore University Press,


Nairobi, 2016, 363.

15 Total Kenya Limited v The Permanent Secretary, Ministry of Energy & 14 others [2006]
eKLR.

5
individuals rights. Once it is ascertained that private power isnt harmless, any court approached
with a complaint against any private entity should act on it provided there is contravention of the
Constitution of Kenya or infringement of any persons rights. Courts should also play a big role
where alternative remedies are unreachable.

BIBLIOGRAPHY

Akech Migai, Administrative Law (Strathmore University Press, 2016)

Blacks Law Dictionary

Brown L and Jacobs L, The Private Abuse of the Public Interest: Market Myths and Policy
Muddles.

Dulce Pamela Baizas, Caution: Red Light Cameras Ahead: The Risks of Privatizing Traffic Law
Enforcement and How to Protect the Public, (2001) < http://patimes.org/privatization-public-
interest/ > accessed on 2 May 2017

Freeman, The Contracting State

Kenya Law Reports

6
7