27th October 2025
Our very own, George Oraro S.C and Kateline Mang’ich, together with Radhika Arora successfully represented Standard Chartered Financial Services Limited (“the Bank”) in Supreme Court Petition No. E012 of 2024: Standard Chartered Financial Services Limited vs Manchester Outfitters (Suiting Division) Limited now called King Woolen Mills Limited & 2 others. This win secured the rights of the Bank and all other financial institutions and lenders in Kenya to rely on securities already advanced to secure subsequent borrowings and brings to an end a dispute that has been before the Kenyan Judiciary for nearly 35 years.
On 14th November 2025, the Supreme Court issued a judgment that finally closed this decades-long matter. This dispute arose from the placement of Manchester Outfitters (Suiting Division) Limited (Manchester) under receivership in 1990, by the Bank, after it had defaulted in its repayment obligations following the advancement of a facility worth KES. 9 million in 1986 to localize a eurocurrency facility that had been issued to Manchester in a tri-partite facility involving the Bank and its European counterpart, Standard Chartered Merchant Bank London (SCMB). These advancements had been made following discussions with Galot Industries Limited (Galot) and Manchester. The funds advanced to Manchester by the Bank under the localized facility were secured by securities (including debentures, charges and guarantees) that had been issued when the euro-currency facility had been advanced by SCMB. Manchester’s subsequent receivership was initiated under the provisions of those debentures.
The matter before the Supreme Court was an appeal of the Court of Appeal’s decision of 16th December 2022 in Nairobi Civil Appeal No. 88 of 2000 – Manchester Outfitters Suiting Division Limited & Another v. Standard Chartered Financial Services Limited & Others. The Court of Appeal had determined that the localized facility required registration of fresh securities. Since this was not done, the Court deemed the ensuing receivership, based only on the original securities, void, thereby absolving Manchester from the obligation to repay the localized facility. The Bank was therefore directed to pay damages for harm that had been occasioned to Manchester on account of the receivership.
Highlights of what we achieved:
- Whether a financier holding securities in a charge or debenture is required to register fresh securities whenever a subsequent advance is made, even if the securities for the previous advances have not been discharged: The Supreme Court brought to an end the inconsistencies in the application of the law with regard to this issue. The Supreme Court found that the concept of continuing security is a doctrine that is applied in the Kenyan banking sector and is aimed at protecting lenders and preventing the burden of having parties re-execute securities during each new advancement. The Supreme Court further found that the validity of a continuing security was dependent on the interpretation of the provisions of the security document itself. This finding is anchored on the principle that parties are bound by their contracts and Courts cannot rewrite the parties’ contracts. The Court therefore agreed that the localised facility was secured by the debentures and the charges that had been issued under the eurocurrency facility, which had not been discharged, hence Manchester was legally and validly placed under receivership.
- Whether a borrowing which has not been secured (whether as contemplated by the parties or otherwise) discharges a borrower from its obligation to repay a loan: The Supreme Court was of the view that securities are accessories to a debt, and the debt exists whether or not the security is valid. As such, it was held that the validity of the securities did not discharge a borrower (Manchester) from the obligation to repay the debt.
The Supreme Court ordered that the Court of Appeal’s judgment of 16th December 2022 be set aside and reinstated the finding of the High Court of 30th July 1999, issued in HCCC No. 5002 of 1990 – Manchester Outfitters (Suiting Division) Limited & Another v. Standard Chartered Financial Services Limited & Others. As such, the subsisting securities meant to secure the issuance of the localization agreement are valid and Manchester is indebted to the Bank, hence Manchester was validly placed under receivership.
Read the full Judgment here
About Oraro & Company Advocates
Oraro & Company Advocates is a full-service market-leading African law firm established in 1977 with a strong focus on dispute resolution and corporate & commercial law. With a dedicated team of partners and associates, the firm has been consistently ranked by leading legal directories such as Chambers Global, IFLR1000 and Legal 500 as a top-tier firm in Kenya.
Oraro & Company Advocates prides itself in its deeply rooted client relationships by providing quality legal services through its partner-led approach, drawing from local knowledge and global perspectives.
The firm is a full Affiliate Member of AB & David Africa, a Pan-African business law network committed to ensuring that businesses and projects succeed in Africa, by helping clients minimize the risks associated with doing business in the continent. This enables the firm to offer cross-jurisdictional legal advice in a seamless manner, while maintaining the highest professional standards.
