Case Laws 2021

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Case No.

HCOMMARB/E001/2021

Parties

HIGH POINT AGENCIES LIMITED Vs. PS, MINISTRY OF TRANSPORT, INSFRASTRUCTURE, PUBLIC WORKS AND URBAN DEVELOPMENT

Rationale & Relevance

Both parties were in agreement that the arbitral award should be recognized and enforced and in the circumstances, the arbitral award was recognized as binding and enforced as a judgment of the Court.

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Case No.

HCCOMMARB/E003/2021

HCCOMMMISC/E017/2021

Parties

MATCH ELECTRICALS COMPANY LIMITED Vs. LUBULLELAH & ASSOCIATES, ADVOCATES AND LIBYAN ARAB AFRICAN INVESTMENTS COMPANY CONSOLIDATED WITH LIBYAN ARAB AFRICA INVESTMENT COMPANY Vs. MATCH ELECTRICALS

Rationale & Relevance

Section 35 of the Arbitration Act governs applications for setting aside arbitral awards in that, such applications MUST be made within three months after the aggrieved party has received the published arbitral award.

Receipt of an arbitral award by parties to an arbitral dispute occurs upon the parties receiving notification that the award has been published and is ready and NOT when either party actually goes to collect the award.

An Arbitral Tribunal is given discretion to award costs pursuant to Section 32(b) (1) of the Arbitration Act 1995. Rule 10(2) of the Arbitration Rules 1997 DOES NOT govern awarding of costs during arbitral proceedings. It only governs costs for applications that are filed in court which are in relation to the arbitral proceedings.

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Case No.

HCCOMMARB/E006/2021

Parties

TREAT OF THE DAY (EA) LIMITED Vs. UTILITY TRADING LIMITED CONSOLIDATED

Rationale & Relevance

The Judge applied the school of thought that an Arbitrator in an arbitration ought to apply the law but if he errs in his understanding or application of the law the parties have to live with it. He stated:

“If such an error amounted to a transgression of his powers it would mean that all errors of law are reviewable, which is absurd.”

Regarding the public policy issue, the Judge arrived at his decision based on a narrow/strict interpretation of the exception in that the court must see that the recognition and enforcement of an award violates public policy if such recognition and enforcement may endanger the interest of the state’s citizens by executing its public authority. According to the Judge, any public policy exception that cannot show clearly how the recognition and enforcement could damage the interest of a state’s public will not be considered as a bar to recognize or enforce the award.

Further, he was of the view that a party alleging breach of public interest must prove beyond doubt how the recognition and enforcement of the award would damage public good or how it would be clearly injurious to the public good or, that possibly, that the enforcement would be wholly offensive to the ordinary reasonable and fully informed member of the public on whose behalf the powers of the State are exercised.

CASE RELEVANCE

Section 10 of the Arbitration Act provides that except as provided in the Act, no court shall intervene in matters governed by the Act. Section 10 restricts the jurisdiction of the court to only such matters as are provided for by the Act.

The Arbitrator is only subject to the limitations under the Act. The Act confers the Arbitrator with exclusive jurisdiction over questions of fact and law which flows from the provisions of the Act which exclude appeals and limits reviews. The court may only be approached as provided by the Act. Unless the arbitration provides otherwise, an award is only subject to the provisions of the Act, final and not subject to appeal or review and that each party to the reference must abide by and comply with the award in accordance with its terms. The Legislature intended the arbitral tribunal to have exclusive authority to decide whatever questions submitted to it, including any question of law.

Under Section 35(1) of the Act, recourse to the High Court against an arbitral award may be made only by an application for setting aside the award under subsection (2). This implies that an applicant seeking to set aside an arbitral award must demonstrate the grounds under the said sub-section.

A party alleging breach of public interest must prove beyond doubt how the recognition and enforcement of the award would damage public good or how it would be clearly injurious to the public good or, that possibly, that the enforcement would be wholly offensive to the ordinary reasonable and fully informed member of the public on whose behalf the powers of the State are exercised.

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Case No.

HCCOMMARB/E015/2021

Parties

ELIZABETH NJERI MUNGAI Vs. DIAMOND PROPERTY MERCHANTS LIMITED

Rationale & Relevance

The grounds for setting aside an arbitral award are prescribed by Section 35 of the Arbitration Act only. A party seeking to set aside an award must adhere to the strict timelines set out in Section 35 of the Act.

CASE RELEVANCE

Section 35 of the Arbitration Act sets out the grounds for setting aside an arbitral award. It also sets out the timelines for filing an application to set aside an arbitral award.

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Case No.

HCCOMMARB/E016/2021

Parties

PHOEBE NJOKI MUNGAI Vs. DIAMOND PROPERTY MERCHANTS LIMITED

Rationale & Relevance

The grounds for setting aside an arbitral award are prescribed by Section 35 of the Arbitration Act only. A party seeking to set aside an award must adhere to the strict timelines set out in Section 35 of the Act.

Section 35 of the Arbitration Act sets out the grounds for setting aside an arbitral award. It also sets out the timelines for filing an application to set aside an arbitral award

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Case No.

HCOMMARB /E017/2021

Parties

JEMIMA NJERI Vs. DIAMOND PROPERTY MERCHANTS LIMITED

Rationale & Relevance

The time limitation as per Section 35 of the Arbitration Act had elapsed without the Respondent making an application to set aside hence, the arbitral award was recognized as binding and enforced as a judgment of the Court

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Case No.

HCCOMMMISC/E007/2021

Parties

MANARA LIMITED AND MANARA LIMITED Vs. BRITANIA FOODS LIMITED

Rationale & Relevance

The court arrived at its decision based on the principle of the finality of arbitral awards. The Judge was of the view that courts should not render decisions based on the merits of an arbitral award. The judge also adopted a narrow/strict interpretation of the public policy exception for setting aside an arbitral award.

CASE RELEVANCE

Section 35 of the Arbitration Act sets out the grounds upon which a party can apply to the court to set aside an arbitral award. For any ground to be satisfied a party will be put to strict proof to show the ground exists.

Courts tend to adopt a narrow interpretation of the public policy exception as was seen in the Christ of All Nations and Mall Developers Ltd cases.

Courts respect the finality of arbitral awards and do not render decisions based on the merits of an arbitral award

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Case No.

HCCOMMMISC /E120/2021

Parties

NORTHWOOD DEVELOPMENT COMPANY LIMITED Vs. SHUAIB WALI MOHAMMED

Rationale & Relevance

In dismissing the Applicant’s application, the Court stated that the Applicant’s objection was not raised as required as per Section 17 of the Arbitration Act. The Section confers on the Arbitral Tribunal the power to rule on all jurisdictional issues pertaining to its own competence to adjudicate on a matter. The court stated that there is no jurisdiction given to the Arbitral Tribunal as a matter of right or inherence or by statute, rather, the jurisdiction of the arbitral tribunal is derived through the Arbitration Clause or Arbitration Agreement between the parties. The Court observed that the arbitral tribunal is bound by the agreement between the parties therefore Jurisdiction of the Arbitral Tribunal was admitted.

The court relied on a passage of the Halsbury law that states that parties to an arbitration agreement may if they wish, contract that no arbitration proceedings shall be brought after the expiration of some shorter period than that applicable under the statute. The Court further outlined that there is a clear distinction between jurisdiction and limitation of actions. Limitation only limits a party’s right to institute a claim which is statue barred, whereas absence of jurisdiction connotes that the court or tribunal has no power to entertain the case.

Finally, the Court stated that the preliminary objection concerned a point of fact and not of law as the Applicant brought out the issue of whether the Respondent had committed fraud. The Court observed that this is a weighty issue of fact which can only be resolved by way of evidence and must be strictly proved. The Court stated that such an issue cannot be determined as a ground of preliminary objection

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Case No.

HCCOMMMISC/E084/2021

Parties

LAND LAYBY KENYA LIMITED Vs. WILFRED OGOT

Rationale & Relevance

The Judge adopted a very narrow interpretation of the public policy ground that could be relied upon to set aside an arbitral award. He stated as follows:-

“Thus, in my view, the scope of the public policy ground of refusal applies only to the fundamental core questions of morality and justice which enliven this particular statutory exception to enforcement. The public policy ground does not reserve to the enforcement court a broad discretion and should not be seen as a catch-all defense of last resort. It should not be used to give effect to parochial and idiosyncratic tendencies. This approach also ensures that due respect is given to contract-based awards as an aspect of the product of freely negotiated arbitration agreements entered into willingly between parties.”

Regarding, the Arbitrator’s decision itself, the Judge was of the school of thought that it is insufficient to render an arbitral award reviewable just because an Arbitrator committed a factual error which led them to a wrong decision. According to the Judge, only where the mistake is so gross or manifest as to evidence misconduct, mala fides or partiality on the part of the arbitrator will the award be reviewable in terms of Section 35 of the Arbitration Act.

CASE RELEVANCE

• Section 10 of the Arbitration Act provides that except as provided in the Act, no court shall intervene in matters governed by the Act. It restricts the jurisdiction of the court to only such matters as are provided for by the Act. The Section articulates the need to restrict the court’s role in arbitration so as to give effect to the principle of party autonomy.

• Section 10 of the Act permits two possibilities where the court can intervene in arbitration. First is where the Act expressly provides for or permits the intervention of the court. Second, in public interest where substantial injustice is likely to be occasioned even though a matter is not provided for in the Act. However, the Act cannot reasonably be construed as ousting the inherent power of the court to do justice especially.

• Section 10 of the Act was enacted to ensure predictability and certainty of arbitration proceedings by specifically providing instances where a court may intervene. It follows that parties who resort to arbitration, must know with certainty instances when the jurisdiction of the courts may be invoked. Under the Act, such instances include, applications for setting aside the award, determination of the question of the appointment of an arbitrator and recognition and enforcement of arbitral awards amongst other specified grounds.

• Section 35(2) of the Arbitration Act sets out the grounds upon which the High Court will set aside an arbitral award.

• By agreeing to arbitration, parties to a dispute necessarily agree that the fairness of the hearing will be determined by the provisions of the Act and nothing else. Typically, they agree to waive the right of appeal, which in context means that they waive the right to have the merits of their dispute re-litigated or reconsidered. Parties entering into an arbitration agreement must be aware that the arbitration award will be final, except in limited

circumstances. If parties want the option of appealing the award, such right of appeal must be set out in the arbitration agreement itself.

• The basic tenet of the provision on public policy is to protect the fundamental moral beliefs and social order of the country where recognition and enforcement of the award is sought from being harmed by such recognition and enforcement. A violation of public policy may render an agreement “in-arbitrable.”

• If the court feels that an issue falls in the scope of public policy, the court may intervene only, to protect the benefit of the public

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Case No.

MISC.APPLI.CAUSE NO. E304 OF 2021

Parties

ENZYNE CREATIONS LIMITED Vs. CHINA QUINGJIAN INTERNATIONAL (K) LTD

Rationale & Relevance

It was ordered that the Chairman of Chartered Institute of Arbitrators Kenya be directed to appoint an Arbitrator within 7 days to hear and determine the dispute between the parties in respect of the Contract for provision of services and construction materials with regard to the construction of Ngong Road and the Chairman of Chartered Institute of Arbitrators to appoint an Arbitrator within 10days from the date of the order to hear and determine the dispute between the parties. There was no order as to costs.

RATIONALE

The order was given upon reading the Supporting Affidavit of Eng. Evans Omari sworn on 26th April, 2021 and upon hearing counsels for both parties

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Case No.

MISC.APPL.CAUSE NO. E327 OF 2021

Parties

SAID ALI MWANGI Vs. ZAMEER KASSAM ALI MOHAMMED AND RODEX EAST AFRICA LTD (INTERESTED PARTY)

Rationale & Relevance

The Court allowed the application and gave its order upon reading the Chamber Summons Application and the Supporting Affidavit of Said Ali Mwangi and hearing both counsels for the Respondent and the Applicant.

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Case No.

HCCOMMMISC/E160/2021

Parties

UTILITY GROUP KENYA LIMITED Vs. TREAT OF THE DAY (EA) LIMITED

Rationale & Relevance

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