The owners of Nairobi’s 14 Riverside complex, Cape Holdings Limited, want the High Court to determine whether a section of the Banking Act is unconstitutional for allowing interest on court-awarded debts to grow beyond the principal amount and expose borrowers to potentially disproportionate financial claims.
The company and its directors are challenging Section 44A (4) of the Banking Act, which excludes judgment debtors and court decrees from the protection of the in duplum principle. This rule generally limits recoverable interest on a debt to the outstanding principal.
‘The petition does not seek to reopen the merits of the arbitration, set aside the award, reverse the Court of Appeal judgement or invite this court to exercise appellate or supervisory jurisdiction over any superior court,’ the company said.
The petition arises from a long-running commercial dispute between Cape Holdings and a creditor, Synergy Industrial Credit Limited, over an aborted transaction involving a block within the 14 Riverside Drive development in Nairobi.
‘An Act of Parliament that offends the Constitution is unconstitutional,’ the company lawyer said, urging the court to hear the petition on its merits.
Cape Holdings says it is not seeking to reopen the underlying arbitration dispute or overturn previous court decisions. Instead, it wants the High Court to determine whether the continued accumulation and enforcement of interest on the decretal amount violates constitutional protections, including the rights to equality, dignity and property.
The dispute has gained significance because the amount now being claimed has grown substantially beyond the original arbitration award.
According to court documents, an arbitrator awarded Synergy Sh1.666 billion. However, fresh warrants of sale and a notification of sale issued on March 16, 2026 put the amount allegedly due at Sh10.679 billion.
Cape Holdings, through its lawyer, told the court that about Sh9.013 billion of the claimed amount comprises compound interest, accounting for roughly 84 per cent of the total.
The company argues that the interest has therefore overtaken the original award by a significant margin.
A valuation by Knight Frank in October 2025 placed the open-market value of 14 Riverside at Sh7.328 billion, with a forced-sale value of Sh5.496 billion.
The company argues that the claimed debt now exceeds even the property’s open-market value, raising questions over the proportionality of the proposed enforcement.
Cape Holdings said the petition does not challenge Synergy’s status as a decree-holder. Rather, the company wants the court to examine whether the manner in which the decree has been calculated and enforced is constitutionally permissible.
The company said the attempts to enforce the Sh10.679 billion claim against the entirety of 14 Riverside, and potentially against property belonging to the company’s directors and third parties, amount to a disproportionate interference with property rights.
Cape Holdings, through its lawyer, argued that the statutory exclusion raises a constitutional question under Article 27 of the Constitution, which guarantees equality and freedom from discrimination. He urged the court to determine whether the provision can stand where it treats judgment debts differently from other debts protected by the in duplum principle.
Synergy Industrial Credit has opposed the petition and wants it struck out.
Synergy argued that the dispute has been before the courts for about 16 years and that all available appeals have been exhausted.
The company said that the courts, including the High Court, Court of Appeal and Supreme Court, have already determined the dispute and that Cape Holdings should not be allowed to reopen it through a constitutional petition.
It also argued that Cape Holdings no longer has proprietary rights over the property in question and urged the court to bring the prolonged litigation to an end by striking out the petition with costs.
The court will rule on October 22, 2026, on whether to strike out the petition or proceed to hear the substantive petition.