Court Halts NTSA Crackdown, Gives Car Dealers 60-Day Lifeline

The High Court has delivered a landmark ruling that reshapes the relationship between regulators and Kenya’s lucrative used motor vehicle industry, giving thousands of car dealers a fresh 60-day window before the National Transport and Safety Authority (NTSA) can begin impounding unregistered imported vehicles.

In a carefully balanced judgement, Justice Ngaah Jairus ruled that NTSA acted unfairly by abruptly enforcing a long-tolerated practice without adequate notice or consultation.

However, he was equally clear that the authority’s statutory power to require registration remains intact, meaning the ruling delays enforcement rather than abolishing it.

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The decision is expected to have far-reaching implications for Kenya’s multi-billion-shilling used vehicle industry, where dealers have for years imported vehicles, paid customs duties, and stored them in showrooms before registering them once buyers were found.

Registration Battle

The dispute arose after NTSA published a public notice directing dealers to register all unregistered vehicles by December 16, 2024, warning that those who failed to comply risked having their stock impounded and facing criminal prosecution.

That prompted the Car Importers Association of Kenya (CIAK), led by its National Chairman Peter Otieno, to move to court, arguing that the regulator had suddenly criminalised a practice it had knowingly allowed for years.

CIAK maintained that used-car dealers had always cleared vehicles through the Kenya Revenue Authority (KRA), the Kenya Bureau of Standards (KEBS), and NTSA before moving them into their yards unregistered.

Registration, the association argued, only occurred once a customer purchased a vehicle.

According to the association, immediate registration hurts business because vehicles that remain unsold for several months appear older simply because they carry an earlier registration series, reducing their market appeal despite being identical to newer imports.

CIAK argued that the long-standing practice had created a legitimate expectation that government agencies would not abruptly change course without consulting dealers.

Key Ruling

Justice Ngaah rejected that argument.

He held that Sections 6(1) and 6(1A) of the Traffic Act make registration mandatory, adding that no administrative practice, however longstanding, can override a statutory obligation imposed by Parliament.

“The underlying requirement… that motor vehicles held by the Petitioner’s members be registered, is lawful,” the judge ruled.

The court said doctrines such as legitimate expectation and estoppel cannot exempt citizens from complying with mandatory legal requirements.

But that was only half the story.

Justice Ngaah drew an important distinction between a substantive legitimate expectation, which cannot defeat the law, and a procedural legitimate expectation, which protects people from abrupt and unfair administrative action.

The judge noted that NTSA had tolerated the practice for years before suddenly issuing a notice giving dealers barely seven days to comply.

The deadline also fell between a weekend and a public holiday, effectively leaving dealers with even less time.

A used car yard. Photo/courtesy

The court further observed that NTSA failed to respond to a memorandum submitted by CIAK following a December 10, 2024 meeting, in which the association sought either a three-month extension or alternative compliance measures before enforcement began.

Justice Ngaah found that the regulator’s conduct fell short of Article 47 of the Constitution and the Fair Administrative Action Act.

“Procedural fairness ordinarily requires more than a bare public notice affording a matter of days”, the judge observed while faulting the authority’s enforcement timeline.

He consequently restrained NTSA from impounding vehicles or prosecuting CIAK members solely for missing the December deadline until the authority grants affected dealers a fresh compliance period of at least 60 days from the date of the judgement.

After that period expires, NTSA remains free to enforce the registration law through lawful means.

Industry Impact

The court also dismissed CIAK’s claim that used-car dealers were being discriminated against compared to franchise dealers selling brand-new vehicles.

Justice Ngaah accepted NTSA’s explanation that the two groups operate under different customs regimes established under the East African Community Customs Management Act.

While new vehicles often remain under bonded warehouses with duty deferred until sale, used imports enter Kenya under the home-consumption regime after taxes have already been paid.

Fairness Wins

That legal distinction, the court ruled, means the two categories are not comparable for purposes of constitutional equality.

The decision marks only a partial victory for both sides.

NTSA retains its statutory authority to insist on vehicle registration, while dealers have secured valuable breathing space to comply without facing immediate seizures or criminal charges.

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Ultimately, the High Court declined to invalidate the registration requirement, rejected claims of discrimination, and refused to permanently exempt dealers from the law.

Instead, the judgement delivers a broader constitutional message.

Regulators may change long-standing administrative practices, but they must do so fairly, transparently, and after giving those affected reasonable notice.

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