Case No.

HCCOMMARB/E002/2022

Parties

BRIDGE THE GAP LIMITED Vs. CADILA GROUP LIMITED

Rationale & Relevance

The Judge allowed the Application as the Respondent did not claim any ground to set aside the arbitral award.

CASE RELEVANCE

Section 37 of the Arbitration Act sets out the grounds for refusal of recognition or enforcement of an arbitral award

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Case No.

COACA/8/2009

Parties

ANNE MUMBI HINGA Vs. VICTORIA NJOKI GATHARA

Rationale & Relevance

RATIONALE

The court’s finding was based upon the principle of finality of awards and their subsequent enforcement. Relying on American jurisprudence, the court was of the view that the finality of arbitral awards and their subsequent enforcement ought to be respected. Otherwise, arbitration would lose its core appeal of expediency and timeliness. The court’s reasoning was also based upon the role of courts in arbitration, which was unnecessary unless they were invited to intervene by the arbitration act in question. Thus, judicial review of arbitral decisions had to be very minimal.  

CASE RELEVANCE

  • Under section 35 (3) of the Act, parties are not allowed to make applications to set aside an arbitral award after 3 months. These timelines should be strictly enforced to ensure that arbitration achieves its core value of expediency and timeliness. Courts should therefore embrace a pro-arbitration policy and refrain from judicial review of arbitral matters especially where the timelines for raising complaints have elapsed.
  • Section 39 of the Act sets out specific requirements for the court‚Äôs intervention in a matter already submitted to arbitration. The prior consent of all parties should be obtained before submitting it to the court. Further, the court may only address issues of law and not of fact. While such an intervention is originally reserved for the High Court, the parties may also submit the matter to the Court of Appeal if they agree to do so before the award was given. Alternatively, their questions of law must be of general importance in the eyes of the court to the extent that it substantially affects the rights of the parties. Failure to meet these requirements will result in the court‚Äôs refusal to adjudicate the matter.

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Case No.

COACA/9/2012

Parties

NATIONAL CEREALS & PRODUCE BOARD Vs. ERAD SUPPLIERS & GENERAL CONTRACTS LIMITED

Rationale & Relevance

RATIONALE

The reasoning of the court was founded on the principle of finality of arbitral awards and their subsequent enforcement. In the court’s opinion, arbitration required courts to exercise limited functions over arbitral matters. This denoted that the High Court could not be assumed to exercise appellate jurisdiction over arbitral awards as this would open arbitral decisions to constant judicial review. Instead, parties were only allowed to apply to the High Court to set aside the award. An application for setting aside an award was narrower as it was confined to the grounds enumerated under section 35 of the Act. Further, the court declined to admit new evidence because it would lead to endless litigation. New evidence could only be admitted if it met the three principles required for admitting new evidence or if such evidence was deemed to be needful by the court. 

CASE RELEVANCE

  • Section 35 of the Act provides that parties may approach the High Court for the setting aside of an award. However, the High Court does not exercise appellate jurisdiction when hearing such matters. Instead, it exercises original jurisdiction which allows it to admit a setting aside application that is confined to the grounds listed under section 35 of the Act.
  • Rule 29 of the Court of Appeal for East Africa Rules grants the Court of Appeal the power to admit additional or new evidence. This includes evidence from the High Court on an arbitral matter. Nonetheless, this discretion is not unfettered because such evidence may only be admitted if it is needful or if it meets the disjunctive tripartite test for admission of new evidence (The applicant must show that the evidence could not have been obtained with reasonable diligence at the trial court; It must be shown that the evidence has a substantial influence on the result of the case; Such evidence must be apparently credible, even though it is not entirely incontrovertible).¬†

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Case No.

COACAPPL/E307/2020

Parties

NAIROBI CITY WATER AND SEWERAGE COMPANY LIMITED Vs. CAPTURE SOLUTIONS LIMITED

Rationale & Relevance

RATIONALE

The reasoning of the court was founded on the principles of arbitration which are the finality of the award and the speedy enforcement thereof. While the court had the discretion to grant time extensions on appeals, such discretion was fettered by a couple of considerations. The court was similarly bound by a pro-arbitration policy that required it to abide by the timelines in the Arbitration Act.

RELEVANCE

Section 39 (4) provides that an application on questions of law arising out of a domestic arbitration shall be determined according to the rules of the court. Section 79G of the Rules of the Court further provides that a court may allow a time extension after it has issued a decree. If such a decree relates to arbitration, the court should abide by a pro-arbitration policy that favors expediency and timeliness. Further, the discretion to give permit a time extension is not unlimited as the court is bound to consider a couple of factors before granting the extension.

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Case No.

HCCOMMMISC/62/2016

Parties

CONTINENTAL HOMES LIMITED Vs. SUNCOAST INVESTMENTS LIMITED

Rationale & Relevance

RATIONALE

The guiding factor in the court’s decision was the test for setting aside an award on the grounds of public policy. The court noted that where an applicant claims that an award has violated public policy, the award must meet either of the elements in the disjunctive test for determining a violation of public policy. The court was also guided by the principle of finality of arbitral awards and a pro-arbitration policy in choosing to carefully examine the terms of the award without hurriedly setting it aside. After the court satisfied itself that the arbitrator was acting within the scope of their powers, it upheld the award. This demonstrates the court’s willingness to refrain from judicial review of arbitral decisions, allowing arbitration to be an end in itself. 

CASE RELEVANCE

  • Section 35 (2)(a)(iv) provides that an award may be set aside where an arbitrator deals with matters that are beyond the scope of issues that the parties referred to arbitration. However, for a party to succeed in pleading this ground, they must illustrate that the arbitrator went on a frolic of their own when issuing the award.
  • Section 35 (2)(b)(ii) allows for a party to approach the High Court to set aside an award where it violates public policy. Nonetheless, they must prove that the award discloses at least one of the elements of violation of public policy which includes inconsistency with the Constitution of Kenya or other written or unwritten laws, harm to the national interest of Kenya or contrariety to justice and morality

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Case No.

COACAPPL/E113/2020

Parties

DAR IMAN LIMITED Vs. CLASICO BUILDERS (K) LIMITED

Rationale & Relevance

RATIONALE

In determining this matter, the court stated that whether the arbitrator was right or wrong in his approach on the issue is not within the province of the court hearing an application to set aside an award under section 35 of the Arbitration Act since it cannot intervene merely because it would have reached a different conclusion from the Arbitrator who ruled that the claim was properly before the tribunal. Further, since the Respondent’s application for enforcement was not opposed on substantive grounds, the Court did not see any reason why the Respondent’s application should not be allowed.

CASE RELEVANCE

For a party to succeed in showing that matters objected are outside the scope of the reference to arbitration, the application must show beyond doubt that the Arbitrator has gone on a frolic of his own to deal with matters not related to the subject matter of the dispute. The Court cannot intervene in a matter simply because it would have reached a different conclusion.

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Case No.

HC. COMM/597/2002

Parties

DAVID CHABEDA & ANOTHER Vs. FRANCIS INGANJI

Rationale & Relevance

RATIONALE

From the ruling, it is apparent that the court followed section 10 of the Arbitration Act which prevents courts from intervening in matters governed by the act unless otherwise provided. Under section 36 of the Act, there is no provision for the court to use their inherent powers to enforce an arbitral award where the mandatory requirements for such enforcement have not been complied with. Thus, the court could not use the inherent powers of the Court under section 3A to cure the failure of the applicant to comply with mandatory statutory requirements.

CASE RELEVANCE

Section 3A of the Civil Procedure Act allows the court to use their inherent powers to achieve the ends of justice or prevent the abuse of the court. However, these inherent powers do not allow the court to overlook mandatory statutory requirements, such as the ones enumerated under section 36 (2). Thus, a party who seeks to enforce their award but derogates from section 36 (2) by failing to produce a duly authenticated original arbitral award or a duly certified copy of it will not have their arbitral award enforced, irrespective of the inherent powers of the court.

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Case No.

HCCOMMMISC/E1301/2020

Parties

DINESH CONSTRUCTION LTD AND KENYA RETIREMENT BENEFIT SCHEME Vs. AIRCON ELECTRA SERVICES

Rationale & Relevance

RATIONALE

The Judge adopted a strict and narrow interpretation of the Arbitration Act considering the principle of finality of Arbitral Awards. He was of the view that timelines prescribed by the Act ought to be strictly adhered to and any ground for setting aside an award ought to be strictly proved.

CASE RELEVANCE

  • Section 35(3) of the Act provides that an Application for setting aside an arbitral award may NOT be made after 3 months have elapsed from the date on which the party making that Application had received the award.
  • Public policy, as a ground for setting aside an arbitral award, must be narrow in scope and an assertion that an award is contrary to the public policy in Kenya cannot be vague and generalized. A party seeking to challenge an award on this ground must identify the public policy which the award allegedly breaches and then must show which part of the award conflicts with that public policy.

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Case No.

CA/98/2016

Parties

EZRA ODONDI OPAR Vs. INSURANCE COMPANY OF EAST AFRICA LTD

Rationale & Relevance

RATIONALE

The decision of the court was based upon section 35 (4) which asks the court to take such other action that will eliminate the grounds for setting aside the arbitral award. This means that where a court can distinguish between the terms of the award that are subject to being set aside from those that are not, it will then uphold that part of the award that does not disclose the grounds for a setting aside application. Section 35 (2)(a)(iv) also formed the basis of the court’s judgement because the court maintained that it would not uphold an arbitral award if the arbitrator went beyond their scope of reference when making the arbitral award.

RELEVANCE

  • Section 35 (4) stipulates that courts should take such other action that will eliminate the grounds for setting aside the arbitral award. This means that courts will not set aside an entire award where some terms of the award were rightfully rendered within the arbitrator‚Äôs jurisdiction. Courts are therefore allowed to partially set aside an award if part of the award discloses grounds for a setting aside application.
  • Section 35 (2)(a)(iv) provides that an application can be set aside if an arbitrator considers matters that are beyond their scope of reference. Arbitrators should therefore be fully aware of the matters that are referred to them in the arbitration agreement to prevent rendering an award that may be subject to a setting aside application.

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Case No.

SCAPPL/33/2020

Parties

KENYA BUREAU OF STANDARDS Vs. GEO CHEM MIDDLE EAST

Rationale & Relevance

RATIONALE

The reasoning of the court was based on the limited power of the court to review or entertain an appeal of its own decision. Where an application did not disclose any of the grounds in the test for judicial review of a Supreme Court decision, it could no longer be entertained. This is in line with the principle of res judicata which bars the re-opening of a matter that has already been decided by a competent court or body.

RELEVANCE

If an arbitral matter has already been concluded at the highest court of the land, it may not be subject to further review where it does not disclose any merits for judicial review of a Supreme Court decision.

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Case No.

HC.COMM. MISC/E073/2018

Parties

GERICK KENYA LIMITED Vs. HUNDA MORTOCYCLE LIMITED

Rationale & Relevance

RATIONALE

The court arrived at its decision by considering the arbitrability of fraud. As per the tripartite disjunctive test of deciding the arbitrability of fraud, the court held that the matter was arbitrable since it did not give rise to complex issues before the tribunal. Further, it was more desirable to uphold arbitration agreements between parties to prevent an erosion of faith in arbitration as a dispute resolution mechanism in the commercial world.

CASE RELEVANCE

  • As per section 35 (2)(a)(iv), an award may be challenged if the arbitrator has exceeded the scope of the matters referred to arbitration. This generally includes criminal proceedings. However, mere fraud as a criminal proceeding will not bar the arbitrator from exercising their jurisdiction where the fraud in question is in line with the tripartite test for illustrating the arbitrability of fraud.
  • Section 32 (c) of the Arbitration Act gives the arbitrator power to decide upon the interest and the terms therein when issuing an award. It matters not whether the interest was awarded from a date that preceded the dispute.

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Case No.

Parties

GLENCORE GRAIN LTD Vs. TSS GRAIN MILLERS LTD

Rationale & Relevance

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Case No.

Parties

GOLDEN HOMES (MANAGEMENT) LIMITED Vs. MOHAMMED FAKRUDDINN ABDULLAI & ANOTHER; GOLDEN HOMES LIMITED

Rationale & Relevance

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Case No.

HC.COMM. MISC/39/2014

Parties

KAY CONSTRUCTIONS LIMITED Vs. ATTORNEY GENERAL

Rationale & Relevance

RATIONALE

The court reached its decision based on a narrow and strict interpretation of the grounds for refusal of the recognition and enforcement of the arbitral awards in that any of the grounds relied upon would have to be strictly proved and established.

CASE RELEVANCE

  • The recognition and enforcement of arbitral awards is provided under Sections 36 and 37 of the Arbitration Act, Cap 49 Laws of Kenya. Section 36(3) requires that the party applying for the enforcement of the award to furnish the original arbitral award and the original arbitration agreement or duly certified copies of the same.
  • The provisions of Section 36(3) of the Arbitration Act do not specify who is to certify the award.
  • Section 37 of the Act provides the grounds upon which the Court may refuse to recognize an arbitral award. The court may refuse to recognize the award at the request of the party against whom the award is made if the party proves that: a party to the agreement was under some incapacity; the arbitration agreement is not valid under the applicable law; the proper notice of the appointment of an arbitrator or of the arbitral proceedings was not given to the party or that no party was otherwise unable to present his case; that the award does not fall within the terms of the reference of the arbitration; the composition of the arbitral tribunal was not in accordance with the arbitration agreement; that the arbitral award has not yet become binding or has been set aside; that the making of the award was induced or affected by fraud, bribery, corruption or undue influence.

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Case No.

Parties

KENFIT LIMITED Vs. CONSOLATA FATHERS

Rationale & Relevance

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Case No.

COMM MISC 548/2016

Parties

KENYA AIRFREIGHT HANDLING LTD. (KAHL) Vs. MODEL BUILDERS & CIVIL ENGINEERS (K) LTD.

Rationale & Relevance

RATIONALE

The Judge was of the school of thought that in determining whether an arbitral award has jurisdiction or not, the court ought to interrogate four issues:

  1. Is there a valid arbitration agreement?
  2. Is the arbitral tribunal properly constituted?
  3. Have the parties submitted themselves to arbitration in accordance with the arbitration agreement?
  4. Are the matters submitted to arbitration arbitrable and within the scope of the arbitration agreement?

In this case, the Judge opined that the Applicant faltered on the third ground regarding parties submitting themselves in accordance with the Arbitration Agreement. Regarding his strict interpretation of the time limits, the Judge was of the view that he had no powers to redraw the contract and extend the time limits.

CASE RELEVANCE

  • Section 17 of the Act grants an arbitral tribunal the competence to rule on its own jurisdiction. This is known as the Competence-Competence (Kompetenz-Kompetenz) principle. According to Section 17(2) of the Act, a party raising an objection to the arbitral tribunal‚Äôs jurisdiction is to do so not later than the submission by the party of a statement of defense.
  • Section 17(c) of the Act vests the court with the power to determine whether an arbitral tribunal has jurisdiction. The power may only be exercised once a party has raised an objection before the arbitrator and the objection was subsequently declined.

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Case No.

COACAPPL/57/2006

Parties

KENYA SHELL LIMITED Vs. KOBIL PETROLEUM LIMITED

Rationale & Relevance

RATIONALE

The court reached its decision based on the interpretation of public policy which posits that it is in the public interest that litigation must come to an end and that this is echoed through the principle of finality of arbitral proceedings present in the Arbitration Act. The court was of the view that there was no realistic prospect of success of the intended appeal nor was there a ground of appeal that merited serious judicial consideration.

CASE RELEVANCE

  • Arbitration is one of the several dispute resolution methods that parties may choose to adopt outside the courts in this country. The parties may either opt for it in the course of litigation under Order XLV of the Civil Procedure Rules or provide for it in contractual obligation in which event the Arbitration Act, Act No. 4 of 1995 would apply, and the courts take a backseat.

The Arbitration Act came into operation in 2ndJanuary 1996. Together with the Arbitration Rules 1997, they repealed and replaced Chapter 49 Laws of Kenya and its rules which had governed arbitration matters since 1968. A comparison of the two pieces of legislation underscores an important message introduced by the latter Act: the finality of disputes and a severe limitation of access to courts. Sections 6,10,12,15,17,18,28,35 and 39 of the Act are particularly relevant in that regard. According to the court, the message is a pointer to the public policy the country takes at this stage in its development.

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