The High Court has barred the National Transport and Safety Authority (NTSA) from impounding unregistered imported vehicles held by used-car dealers, handing a major relief to the traders.
The court, however, upheld the legal requirement that imported vehicles be registered before sale. It ordered the NTSA to give a fresh notice of at least 60 days to the dealers before enforcing the 2024 rules. The court found the NTSA’s earlier seven-day compliance deadline was procedurally unfair.
The ruling followed a petition by the Car Importers Association of Kenya (CIAK) challenging NTSA’s December 2024 directive requiring dealers to register imported vehicles before sale or risk impoundment and prosecution.
The association argued that immediate registration reduced resale value because buyers preferred newer registration series.
But Justice Ngaah Jairus backed the NTSA requirement and said that the authority’s decision was legal under the Traffic Act.
However, he found the authority failed to meet constitutional standards of fair administrative action after abruptly enforcing the notice following years of tolerating a different practice.
‘The Petition succeeds in part only,’ the judge said, declaring that the registration requirement was lawful and ‘is not displaced by any legitimate expectation or estoppel.’
The dispute arose after NTSA announced a multi-agency exercise involving Kenya Revenue Authority (KRA), the Financial Reporting Centre, immigration officials and security agencies targeting unregistered vehicles held by car dealers.
The notice warned of impoundment and criminal charges after December 16, 2024.
Ruling on the CIAK’s case, the court restrained NTSA from impounding vehicles or prosecuting association members solely for missing the December 16, 2024 deadline until it first gives reasonable notice and a fresh 60-day compliance period.
CIAK represents used-car importers with showrooms across Kenya. It said members import second-hand vehicles from Japan and Dubai through Mombasa.
Dealers said they have long paid duty, cleared vehicles from customs areas and kept them in showrooms before registering them after finding buyers.
It also claimed franchise dealers of new vehicles could hold stock pending sale while registering later, amounting to discriminatory treatment.
NTSA defended the notice as enforcement of mandatory Traffic Act provisions, not a policy change. It argued no public authority could be prevented from enforcing statutory duties through legitimate expectation or estoppel. The authority also cited security concerns over unregistered vehicles.
The court agreed statutory obligations could not be overridden by administrative practice. ‘No representation could have had the legal effect of permanently exempting the Petitioner’s members from registration requirements,’ the court said.
The court nevertheless found procedural unfairness. It said NTSA gave dealers seven days to comply, spanning a weekend and public holiday.
The association met NTSA officials on December 10, 2024, and requested three months to comply, but received no response before the deadline.
Justice Jairus said Article 47 and the Fair Administrative Action Act required ‘prior and adequate notice’ and ‘a reasonable opportunity to be heard.’
He found regulators should not abruptly terminate a settled commercial practice without allowing sufficient adjustment time.
The court also rejected CIAK’s discrimination claim and accepted NTSA’s argument that used-car dealers and new-vehicle franchise dealers operate under different customs regimes.
Used imports enter the domestic market after duty is paid, while new vehicles may remain under bonded warehousing until sale.