Court Curbs Due Diligence Overreach in Kenyan Public Tenders
The Court of Appeal has delivered a significant ruling that will impact public procurement processes in Kenya, particularly concerning complex transactions like carbon credit tenders. In a judgment issued on July 10, 2026, the appellate court has mandated a fresh review of a disputed Kenya Electricity Generating Company (KenGen) carbon credits tender, establishing a critical boundary for procurement entities: new evaluation criteria cannot be introduced during the due diligence stage.
The ruling arose from an appeal filed by Sintmond Group Limited, which challenged the evaluation of its bid for Tender No. KGN-SALE-005-2025, a tender for the sale of Certified Emission Reductions (CERs), also known as carbon credits. Sintmond Group contended that while its bid initially met all mandatory requirements, KenGen subsequently introduced additional evaluation standards during the due diligence phase. This, the company argued, effectively altered the competition’s rules after bids had already been submitted.
The Court of Appeal concurred with Sintmond Group’s position. The judges affirmed that while procuring entities are entitled to conduct due diligence, this process must be strictly limited to verifying information already provided by bidders. The court explicitly stated that due diligence cannot be leveraged to impose fresh conditions, introduce new benchmarks, or demand compliance through a different category of evidence. “Such due diligence must remain anchored to the disclosed tender criteria,” the court held, underscoring that allowing such practices would erode the fundamental principles of fairness, transparency, and equal treatment inherent in Kenya’s public procurement framework.
Consequently, the appellate court overturned a prior decision by the Public Procurement Administrative Review Board (PPARB) and directed that the dispute be heard anew by a differently constituted review panel. Rather than determining the successful bidder itself, the court has instructed the PPARB to reconsider the case in light of the legal principles articulated in its judgment, with specific reference to the limitations of due diligence as outlined in Section 83 of the Public Procurement and Asset Disposal Act.
This landmark decision is poised to influence future public procurement practices, especially within burgeoning sectors such as carbon markets, climate finance, and other environmental asset transactions. The court also ordered each party to bear its own legal costs, acknowledging the protracted nature of the dispute and its broader public interest implications.
