A Voi court has dismissed a claim by Sasenyi Multipurpose Cooperative Society Ltd for a share of carbon-credit earnings from Rukinga Ranch in Taita Taveta County.
Sasenyi had sued Rukinga Ranching Company Ltd over the title to 5,000 acres it bought from the company for Sh4 million in 1998.
The cooperative said it had bought the land on the understanding that it would receive a leasehold title but was instead issued with a freehold title.
Rukinga acknowledged that the title had been issued in error and said it would assist in having the freehold title cancelled and a proper leasehold title issued.
According to the suit papers, Sasenyi also sought compensation from proceeds of carbon-credit trading involving Rukinga.
The cooperative sought Sh375,000 per month from October 2019, arguing that the carbon trade was being conducted on land forming part of the property it had bought from Rukinga.
Sasenyi chairman Richard Fabian Tolle, who testified in the case, said the cooperative had missed out on carbon proceeds because Rukinga had not facilitated the issuance of a leasehold title for the 5,000 acres.
Tolle said that when they followed up on the matter, they were informed that they needed a title deed before they could be paid for their portion of the land’s carbon.
However, Judge Edward K Wabwoto of the Environment and Land Court in Voi dismissed Sasenyi’s claim for compensation from carbon-credit earnings.
He held that the principle of ‘entitlement follows the land’ applies.
The principle states the right to establish a carbon project and to the credits and income it generates is an incident of lawful ownership of, or lawful rights over, the land or resource generating the reduction, avoidance or sequestration.
A claimant to carbon income must therefore trace their claim to a recognised proprietary interest in the project land, or to a contractual or statutory entitlement.
He said a court should be astute to ensure carbon credits are not generated or traded from land over which the proponent holds no lawful rights.
Wabwoto also held that carbon transactions are contractual in nature and are governed by the ordinary principles of the law of contract, including sanctity of contract and privity, subject only to the statutory safeguards now enacted.
“Courts will enforce carbon agreements according to their terms and will not rewrite the parties’ bargains to import carbon benefits that were never negotiated,” he said.
Wabwoto said there was no agreement over any carbon-credit project when the sale agreement was done in 1998.
He said the carbon project in issue is founded on an agreement executed in 2009 between Rukinga and Wildlife Works, to which Sasenyi is a stranger.
“A contract cannot confer rights or impose obligations on any person other than the parties to it, and it cannot be enforced by or against a third party even if made for his benefit,” Wabwoto said in his ruling.
“The plaintiff, not being privy to the carbon agreement, can found no entitlement upon it. PW1 [Tolle] himself candidly conceded on cross-examination that the plaintiff does not have any agreement on carbon credit.”
Secondly, he said, entitlement follows the land, and on the evidence, Sasenyi failed to establish that any carbon income had been derived from the suit property itself, which is the 5,000 acres it bought from Rukinga.
Wabwoto said the defence’s second witness, Cara Louise May Braund, a conservation manager with Wildlife Works, gave direct and largely unshaken evidence that the project is situated on Rukinga’s retained parcel and not on Sasenyi’s bought parcel.
“The plaintiff tendered no evidence, documentary or otherwise, demonstrating that the suit property forms part of the certified project area or that any quantifiable income is attributable to it.
“The point is fortified by the very nature of an avoided deforestation project: credits accrue from preserving standing vegetation, and it was nobody’s case that credits have been issued in respect of the suit property,” Wabwoto said.
He also said the figure of Sh375,000 per month from October 2019 was not anchored in any document, computation, valuation or expert evidence whatsoever.
“A claim of that character cannot be sustained on the ipse dixit [he himself said it] of a witness. It must also be observed that at the time of the agreement for sale in 1998, the concept of carbon credits was, as both sides acknowledged, unknown to the parties and formed no part of their bargain,” Wabwoto said.
The judge, however, ruled in favour of Sasenyi on the title dispute, saying it is entitled to a good and proper leasehold title for the 5,000 acres it bought.
He said the freehold title issued to Sasenyi was issued in error and ordered that it be surrendered to the land registrar for cancellation and rectification of the register to reflect the correct leasehold.
Wabwoto also ordered Rukinga, within 90 days from the date of judgment, July 23, to take all steps and execute all documents necessary to procure registration of the subdivision of the relevant parcel and issuance of a proper leasehold title to Sasenyi.
Wabwoto also acknowledged the relative novelty of the case, noting there had been no other ruling in a superior court on the nature of carbon credits that was before his court.
