Bolt, beats government in a clash in court over commission caps, license rules

A bolt taxi.[File, Standard]

Online taxi-hailing company Bolt has won a legal battle against the Government over regulations governing the ride-hailing industry, after a Nairobi High Court struck down rules that imposed an 18 per cent commission cap.

High Court Judge Roselyn Aburili faulted the Government for changing licensing requirements and commission limits without subjecting the changes to public participation.

In her judgment, Justice Aburili declared the National Transport and Safety Authority (NTSA) Transport Network Companies, Owners, Drivers and Passengers Regulations, 2022, contained in Legal Notice No. 120 of 2022, procedurally defective, unconstitutional, null and void.

The court also barred the NTSA from enforcing the 18 per cent commission cap on behalf of drivers, ruling that the commission charged should instead be determined through negotiations between the contracting parties.

Justice Aburili said parties to the contracts should be free to negotiate and agree on what they consider to be an appropriate commission rate.

She noted that it was unfair for the government to put stringent measures against the digital platforms while being silent on the traditional taxi business operators.

“In this instant case, no reasons or evidence were adduced to justify why digital platforms alone, while exempting traditional taxi operators and public service vehicles. This will bear disproportionate compliance and surveillance obligations,” she noted.

“The effect of these provisions is to create a dual regulatory regime that penalises innovation and arbitrarily distinguishes between similarly situated transport providers. Such discrimination undermines the constitutional values of fairness and inclusivity under Article 10 of the Constitution and violates the equal protection clause guaranteed under Article 27 of the Constitution,” said Justice Aburili.

In its petition against the Transport Cabinet Secretary, NTSA, the National Assembly and the Attorney General, the Estonia-based company wanted the court to find that the Regulations were unlawful, unconstitutional, and invalid.

The firm argued that it is not a transport company, but a digital platform and therefore cannot be controlled by NTSA as stipulated in the Regulations.

Bolt lamented that it was required to apply for a license and that NTSA was granted the power to cap the amount ride-hailing companies got from each trip, setting the commission at 18 per cent, a directive that could lead to losses for the drivers who are independent contractors.

Bolt further argued that the regulations also require all industry companies to share data on drivers and passengers and further insure them.

While describing the regulations as draconian, Bolt argued that it does not own any vehicles and that the move will kill the country's digital platform taxi business.

“The NTSA Regulations have a direct and substantial impact on the businesses of Transport Network Companies (TNCs) and Transport Network Drivers (TNDs). The introduction of these regulations has affected key aspects of their operations, including pricing mechanisms, compliance requirements and operational flexibility, which are critical to their business models,” argued Bolt’s lawyer, Faith Macharia.

Bolt further told the court that if NTSA wanted to police the industry, the regulations should have been applicable to both traditional and digital platform-based companies as they both compete for passengers and operate in the cities.

Macharia argued that those who run traditional taxis operate under the same conditions as before while those on digital platforms are over-regulated.

The firm asserted that all market players, including traditional and digital-based services, should be regulated fairly and equitably.

“ Both traditional taxis and TNCs operate in similar urban environments, yet TNCs are subject to more onerous rules even though they only provide a platform service and do not provide the transportation service and without evidence that they present greater risks. This disparity is unjustifiable and violates the principles of fairness and proportionality,” it argued.

Bolt further told the court that Parliament had disregarded stakeholder feedback and ignored industry concerns.

According to him, the August House rendered the parliamentary review process a mere formality, reducing Parliament's role to a "rubber stamp" rather than an active participant in legislative scrutiny.

On the other hand, Parliament argued that NTSA regulations were approved on February 2023, after a rigorous public engagement process.

It claimed that although Bolt argued that Parliament had not conducted public participation, this role was to be carried out by the NTSA.

“The Regulations were procedurally enacted. The Petitioner has failed to demonstrate any procedural impropriety that would warrant a declaration of unconstitutionality,” National Assembly’s lawyer Suzanne Khadambi replied.

“ Should the Court find any merit in the Petition, we urge this Court to exercise judicial restraint as a declaration of unconstitutionality would create a regulatory vacuum, exposing the public to unregulated and potentially unsafe transport services,” she added.

On the other hand, the NTSA argued that failing to regulate the digital taxi industry has led to unrest, with drivers accusing the firms of manipulation and passengers complaining of recklessness.

The need to amend the rules was informed by our mandate to ensure the safety of all those who use public roads in Kenya through the promotion of professional driver training to provide a foundation of the proper skills, knowledge and attitude that will allow drivers to operate for decades into the future,” argued NTSA.