Unpaid invoices are one of the most common legal problems facing Kenyan businesses. Kenya’s court system provides effective mechanisms for debt recovery, and the introduction of the Small Claims Court has made it faster and more affordable to recover smaller debts.
Before You Sue: The Demand Sequence
Litigation should be a last resort. A structured demand sequence demonstrates to the debtor that you are serious and creates a paper trail that strengthens your position in court. A typical sequence has three stages: a formal demand letter (14 days to pay), a reminder after the first deadline expires (7 further days), and a Letter Before Action from an advocate stating that court proceedings will follow. A surprising number of debts are recovered at this stage without proceedings.
Choosing the Right Forum
The correct forum depends on the claim value. The Small Claims Court (Act No. 2 of 2016) has jurisdiction over claims up to KES 1,000,000 and is designed for speed and simplicity. Legal representation is not required, procedures are informal, and matters are typically resolved within months.
The Magistrates’ Court handles larger civil claims. Pecuniary jurisdiction varies by magistrate grade under the Magistrates Courts Act No. 26 of 2015 (Senior Principal Magistrate: up to KES 20,000,000; lower grades correspondingly less). The High Court has unlimited civil jurisdiction.
The Court Process
A debt recovery claim is filed as a plaint setting out the contractual relationship, the debt, demands made, and the failure to pay. If no defence is filed, you can apply for default judgment. For clear-cut cases, summary judgment may be available where the defendant has no real defence.
Enforcing the Judgment
A court judgment is only as valuable as your ability to enforce it. Enforcement mechanisms include garnishee orders (attaching money in the debtor’s bank account or owed by a third party), attachment and sale of the debtor’s property, and for corporate debtors, a winding-up petition — often the most effective tool as it threatens the company’s existence. If a debtor is hiding assets, the court can order an oral examination under oath.
Practical Considerations
Before pursuing recovery, assess honestly: Is the debt clearly documented? Is the debtor able to pay? Is the amount worth the cost? A success-fee arrangement for debt recovery, where legal fees are contingent on the amount recovered, reduces upfront costs and aligns the firm’s incentives with the creditor’s.
Our Litigation & Dispute Resolution practice handles debt recovery across all court tiers. Contact us for a consultation.
