Debt recovery in Kenya gives creditors a structured set of enforcement tools, from the magistrates’ courts through to the High Court. Unpaid invoices are among the most common legal problems facing Kenyan businesses, and choosing the right forum depends on getting the pecuniary jurisdiction figures right.
Debt Recovery in Kenya: Before You Sue
Litigation should be a last resort. A structured demand sequence shows the debtor you are serious and creates a paper trail that strengthens your position in court. A typical sequence has three stages: a formal demand letter giving fourteen days to pay, a reminder giving seven further days, and a Letter Before Action from an advocate stating that proceedings will follow. Many debts are recovered at this stage without any filing. These periods are commercial practice rather than statutory requirements.
Limitation and Evidence
Time runs against the creditor. Under section 4(1)(a) of the Limitation of Actions Act, an action founded on contract may not be brought after six years from the date the cause of action accrued, while tort claims are subject to a shorter period under section 4(2). Before any demand is sent, assemble the signed contract or order, invoices, delivery notes or proof of service, statements of account and all correspondence acknowledging the debt. A written acknowledgment of the debt by the debtor can also matter for limitation, so keep it safe and have us check how the Act applies to your facts.
Choosing the Right Forum
The Magistrates’ Courts: Five Tiers, Not One Figure
Under section 7(1) of the Magistrates’ Courts Act, 2015, a magistrate’s court has civil jurisdiction where the value of the subject matter does not exceed: twenty million shillings before a chief magistrate; fifteen million before a senior principal magistrate; ten million before a principal magistrate; seven million before a senior resident magistrate; and five million before a resident magistrate. The chief magistrate tier, not the senior principal magistrate tier, carries the highest limit. The Chief Justice may revise these limits by Gazette notice (section 7(2)), so check the current position for a claim near any threshold. The High Court is the forum for claims above the chief magistrate’s ceiling. If there is real doubt about a claim’s eventual value, file at the higher tier to avoid a transfer or refiling delay.
The Court Process
A claim is filed as a plaint setting out the contractual relationship, the debt, the demands made and the defendant’s failure to pay. If no defence is filed in time, the creditor can apply for default judgment. Where the defendant has no real defence, summary judgment may be available without a full hearing, provided the defendant cannot show a triable issue. Our guide to summary judgment in debt recovery explains the test.
Interest and Costs
Plead interest on the outstanding amount, at the contractual rate or, absent one, the court’s discretionary rate, running from the date the debt fell due. Costs generally follow the event, though the court retains discretion over the amount. Weigh the realistic prospect of recovering both the judgment sum and costs from the particular debtor before deciding to sue, since an unenforceable costs order against an insolvent debtor adds little.
Debt Recovery in Kenya: Enforcing the Judgment
A judgment is only as valuable as your ability to enforce it. Enforcement options include garnishee orders over money in the debtor’s bank account or owed to the debtor by a third party; attachment and sale of movable or immovable property; and, for corporate debtors, a winding-up petition under the Insolvency Act, 2015, which threatens the company’s continued existence rather than a single asset. Where assets are suspected to be hidden, the court can order the debtor to be examined on oath about their means. See our guide to enforcing a judgment and, for companies, the statutory demand.
Practical Considerations
Before pursuing recovery, ask whether the debt is clearly documented, whether the debtor can actually pay, and whether the amount justifies the cost of the correct forum. A success-fee arrangement, where fees are contingent on the amount recovered, can reduce upfront cost exposure.
How We Can Help
Clay & Associates Advocates handles debt recovery in the magistrates’ courts and the High Court, through to enforcement and winding-up proceedings. We help choose the correct forum, structure the demand sequence and enforce judgments against debtors who do not pay voluntarily. Speak to our litigation and dispute resolution practice or contact us for a consultation.
Sources: Magistrates’ Courts Act, 2015, section 7; Limitation of Actions Act, section 4; Insolvency Act, 2015.
Frequently asked questions
Do I need an advocate to recover a debt?
Not always. A party may conduct a civil suit in person, but for most commercial claims an advocate is strongly advisable.
Which court hears a claim above one million shillings?
A magistrate’s court, depending on the grade of magistrate (five to twenty million shillings under section 7 of the Magistrates’ Courts Act), or the High Court above that.
How long do I have to sue on an unpaid invoice?
Six years from when the cause of action accrued for contract claims (section 4(1)(a) of the Limitation of Actions Act).
Need advice on your own matter?
Tell us what you are dealing with. You will know what it involves and what it costs before you commit.
This article is general information on Kenyan law as at its publication date, not legal advice. Reading it does not create an advocate and client relationship.
