Judicial Review of Regulatory and Licensing Decisions: When Can You Sue the Regulator?

Judicial Review Regulatory Licensing Decisions Kenya cases raise a question that general judicial review guidance rarely answers directly: is it actually harder to challenge a regulator’s decision than an ordinary piece of administrative action, given that the regulator is usually the body that investigated, prosecuted and decided the matter all at once? The reported case law suggests the structural overlap of those three roles is precisely what drives the specific procedural fairness demands courts have imposed on regulators, and it is worth understanding exactly what those demands are before a licence is suspended or revoked, not after.

The Fair Administrative Action Act Overlay

Section 4 of the Fair Administrative Action Act 2015 sets the baseline: administrative action must be expeditious, efficient, lawful, reasonable and procedurally fair. Where that action is likely to adversely affect a person’s rights, section 4(3) requires prior and adequate notice of the proposed action and its reasons, an opportunity to make representations, notice of any right to review or appeal, a statement of reasons, notice of the right to legal representation, and, under section 4(3)(g) specifically, disclosure of the information, materials and evidence the decision-maker intends to rely on.

That last requirement, disclosure of the actual evidence relied upon, is the single most litigated and most successful ground in the regulatory enforcement cases we could verify. In Ahmed v Capital Markets Authority [2019] KEHC 4811, the CMA had imposed a five million shilling penalty and a three-year disqualification from holding key officer positions arising from alleged financial misstatement during the applicant’s tenure as a bank managing director. The High Court quashed the decision for non-disclosure of evidence contrary to section 4(3)(g), for apparent bias where board minutes showed conclusions had been reached before the hearing, and for irrationality in attributing board-level duties to one individual. The companion case, Alubala v Capital Markets Authority; National Bank of Kenya Limited [2019] KEHC 4895, involving a ten-year disqualification and a penalty exceeding one hundred million shillings arising from the same underlying events, reached the same result on the same section 4(3)(g) ground, with the court also finding the overlap between the CMA’s investigator, prosecutor and adjudicator roles created an appearance of bias.

What This Means in Practice

A licensee facing an enforcement notice, suspension or revocation should request the specific evidentiary file the regulator intends to rely on immediately, in writing, and treat any refusal or partial disclosure as a live ground for challenge. Signs that the decision was effectively predetermined before any hearing, such as internal minutes or communications reflecting conclusions reached in advance, are similarly a strong basis for a bias challenge, as both CMA cases show.

Regulators Do Not Always Lose

It would overstate the case law to suggest procedural fairness challenges against regulators routinely succeed. In Imaran Limited & 5 Others v Central Bank of Kenya & 4 Others [2016] KEHC 7512, shareholders of a bank placed under receivership challenged the CBK’s appointment of a receiver and the ensuing transfer of assets and liabilities, alleging no notice, no reasons, and a conflict of interest. The application was dismissed. The court found that the enabling statute, the Kenya Deposit Insurance Act, expressly displaced the ordinary consultation and notice requirements in this specific receivership context, and that unsubstantiated suspicion of bad faith was not enough to succeed. The lesson is that the strength of a fairness challenge depends heavily on whether the specific enabling statute governing that regulator and that type of action preserves or displaces the ordinary FAAA protections, which needs to be checked statute by statute rather than assumed.

The Standard Being Applied

We would rather be precise than overclaim here: the case law we could verify does not establish a single, named landmark shift from a narrow reasonableness standard to a broader proportionality-style review. What it does establish, consistently across the CMA cases, is that courts are applying the fuller list of grounds set out in section 7 of the Fair Administrative Action Act, including bias, non-disclosure and irrationality together, rather than confining themselves to whether the regulator’s decision was one no reasonable regulator could have reached. In practice, that is a materially more searching review than the classic light-touch approach, even without a single case declaring the doctrine formally changed.