In Duplum Rule in Kenya: A Critical Analysis of the Unaddressed Aspects of Section 44A of the Banking Act

Abstract

Amendment No. 9 of 2006 of the Kenya Banking Act introduced the in duplum rule into Kenyan legislation. The rule provides that with respect to non-performing loans, only the principal owing when the loan becomes non-performing; contractual interest not exceeding the principal owing when the loan becomes non-performing; and expenses incurred in the recovery of any amounts owed by the debtor may be recovered. This statutory rule has its roots in South African common law. Kenyan jurisprudence has demonstrated a divergence from interpretations of the rule as per other jurisdictions where the rule has a long standing history such as South Africa. This is indicative of a misnomer which upon further interrogation reveals that Section 44A of the Banking Act is merely a semblance of the in duplum rule and not the in duplum rule stricto senso. The aim of this paper is to scrutinise the rule while making reference to South Africa, without carrying out a full comparative analysis, in a bid to address the issue of whether our enactment of the in duplum rule will effectively serve the purpose for which it was enacted; the protection of debtors.