Dhanjal Investments Limited v Kenindia Assurance Company Limited
The bottom line
#Insurer had sole arbitration right; insured cannot start it alone.
What this practically means
#Kenya Orient Insurance tried to start arbitration under a policy that gave the insurer, Travelers, the sole right to do so. The Supreme Court ruled that the policy clearly meant only the insurer could refer disputes to arbitration. The insured's unilateral appointment of an arbitrator was invalid, and the entire arbitration was a nullity. The appeal was dismissed.
Executive summary
#Questions the Court framed
#The issues the Court set itself to decide, in its own words.
- 1.The place of the Public Liability Insurance policy document and its dispute resolution mechanism.
- 2.The place of the Arbitration proceedings.
- 3.The place of the grounds of affirmation.
- 4.Reliefs, if any.
Key legal issues
#Whether the appellant had a right to initiate arbitration under the insurance policy.
The appellant had no right to initiate arbitration under the policy; the right was exclusively granted to the respondent under clause 10.
The court examined clauses 10 and 11 of the policy. Clause 10 only granted the respondent the right to refer disputes to arbitration. Clause 11 provided a 12-month limitation period after a disclaimer by the respondent, but did not grant the appellant a right to initiate arbitration. The court found that the policy was not ambiguous and that the appellant's only recourse for disputes was litigation before a competent court, as indicated by clause 12. The appellant's unilateral appointment of an arbitrator was therefore in error.
Whether the appointment of the arbitrator by the appellant was lawful.
The appointment of the arbitrator was unlawful and the resulting arbitration proceedings were a nullity.
The court found that neither clause 10 nor 11 of the policy allowed the appellant to invoke arbitration or appoint a sole arbitrator. The appellant's reliance on section 11(2) of the Arbitration Act was misplaced because the appellant had not first invited the respondent to participate. The court also noted that the arbitrator failed to properly rule on his own jurisdiction under section 17 of the Act, given the respondent's non-participation. Consequently, the entire arbitration process was irregular and void.
Whether the Court of Appeal erred by failing to consider the appellant's notice of grounds for affirming the High Court decision.
The Court of Appeal erred by not specifically addressing the grounds of affirmation, but this did not change the outcome of the appeal as the grounds were without merit.
The Supreme Court acknowledged that the Court of Appeal failed to render a decision on the notice of grounds for affirmation filed under rule 94(1) of the Court of Appeal Rules. However, the Supreme Court proceeded to consider the grounds itself and found them to be without merit because the arbitration proceedings were a nullity. The conduct of the respondent, while criticized, did not affect the legality of the arbitration process.
Legal principles established
#- Only the party granted the sole right in an insurance policy can initiate arbitration.
- Unilateral appointment of an arbitrator without first inviting the other party is unlawful.
- A court of appeal must rule on every ground in a notice of grounds for affirming a decision.
- An appeal as a matter of general public importance must go beyond the parties' specific dispute.
- Ignoring arbitration proceedings does not make an unlawful arbitration valid.
Court orders
#- 1.The appeal herein is hereby dismissed.
- 2.Each party shall bear its own costs in this court only.
- 3.Costs in the courts below shall remain as ordered by those courts.
The bench
#One judgment of the whole court — no separate or dissenting opinions.
Wrote the judgment
- On appeal from
- Court of Appeal at Malindi
- Civil Appeal No. 117 of 2010
- Jurisdiction invoked
- Article 163(4)(b) of the Constitution
Relief refused
#Setting aside the orders of the Court of Appeal and reinstating the High Court ruling and the arbitral award.
The arbitration process was found to be a nullity as the appellant had no right to initiate arbitration under the policy.
An order directing the High Court to enforce the arbitral award.
The enforcement of the award emanates from a different cause of action not before the court, and the arbitration process has been faulted.
Costs
each party bearing its costs in this court only. Costs in the courts below shall remain as ordered by those courts.
Quotable passages
#Verbatim from the judgment, each located to the page it appears on in the official PDF — so these can be cited and checked directly.
the appeal herein is hereby dismissed with each party bearing its costs in this court only. Costs in the courts below shall remain as ordered by those courts.
A concise reading of the two clauses would lead to the inevitable conclusions that clause 10 only availed the respondent the sole right to initiate the arbitration proceedings and this position was buttressed by both the High Court and the Court of Appeal.
it is inevitable that the arbitration proceedings so instituted were irregular under the policy as well as the Arbitration Act 1995.
Rule 94(1) of the Court of Appeal Rules is not academic and in vain and once it is invoked, the court is moved appropriately and like every other manner that a court is moved, a decision has to be taken one way or the other.
the appellant did not, in our view, properly articulate its substantive case relating to the policy document and arbitration process in a manner that transcends their specific circumstances to create a public aspect to the dispute.
Key timeline
#Practical implications
#Draft clear arbitration clauses
When drafting insurance policies, specify which party can initiate arbitration. If the clause grants only one party the right, the other cannot invoke arbitration. Also, ensure that steps under the Arbitration Act—like inviting the other side to appoint an arbitrator—are followed strictly. An award from a procedurally flawed arbitration will be set aside.
Check your policy’s dispute clause
Businesses must read their insurance policies carefully to understand who controls the dispute resolution process. If the policy gives the insurer the sole right to arbitrate, you cannot start arbitration yourself. Your only option may be to sue in court. Ignoring the policy terms can lead to wasted time and legal costs.
Know your insurance arbitration rights
Individuals should not assume they can force arbitration under their insurance policy. The policy language may reserve that right to the insurer. If you try to appoint an arbitrator without the insurer's agreement, the process may be invalid. Always seek legal advice before starting arbitration, especially if the other party is unresponsive.
Frequently asked questions
#Can an insured person force arbitration in Kenya if the policy says only the insurer can?+
No. The Supreme Court in Kenya Orient Insurance v Travelers Insurance held that if the insurance policy gives the insurer the sole right to refer disputes to arbitration, the insured cannot start arbitration. The insured's only recourse is to sue in court.
What happens if I appoint an arbitrator without the other party's consent in Kenya?+
The appointment is likely unlawful. Under the Arbitration Act, you must first invite the other party to participate. If you do not, and the policy does not give you that right, the arbitration is a nullity. The resulting award can be set aside by a court.
Is an arbitration award valid if the arbitrator had no jurisdiction in Kenya?+
No. If the arbitrator lacked jurisdiction because the party appointing them had no right to arbitrate, the entire proceeding is void. The Supreme Court confirmed that such an award is a nullity and cannot be enforced.
What does 'general public importance' mean for appeals to Kenya's Supreme Court?+
To appeal under Article 163(4)(b), the case must raise issues that go beyond the specific parties and affect the public. The Supreme Court said the appellant must articulate its case to show a public aspect. A purely contractual dispute does not qualify.
Later judgments citing this (10)
#Judgments in the corpus that rely on this one. Where the Court said how it treated the authority, that is shown.
- Standard Chartered Financial Services Limited v Manchester Outfitters (Suiting Division) Limited Now Called King Woolen Mills Limited & 2 others[2025] KESC 68 (KLR)14 Nov 2025followed
- Jovet (Kenya) Limited v Bavaria NV[2025] KESC 27 (KLR)16 May 2025applied
- Kamande v Republic[2025] KESC 18 (KLR)11 Apr 2025followed
- North Stream Limited v Registered Trustees of the Comboni Sisters (Enviromental and Land Originating Summons E063 of 2024) [2025] KEELC 3061 (KLR)[2025] KEELC 3061 (KLR)2 Apr 2025
- Ondimu & another v Commissioner of Police & 3 others[2024] KESC 46 (KLR)9 Aug 2024followed
- Stanbic Bank Kenya Ltd v Santowels Ltd[2024] KESC 31 (KLR)28 Jun 2024
- Shah & 7 others v Mombasa Bricks & Tiles Limited & 5 others[2023] KESC 106 (KLR)28 Dec 2023
- Moi University v Zaippeline & another[2022] KESC 29 (KLR)17 Jun 2022followed
- Kenindia Assurance Company Ltd v Wangungu (Civil Appeal 155 of 2017) [2021] KECA 10 (KLR)[2021] KECA 10 (KLR)23 Sept 2021distinguished
- John Florence Maritime Services Limited & Conken Cargo Forwarders Limited v Cabinet Secretary for Transport and Infrastructure, Attorney General, Kenya Maritime Authority & Office De Gestion Du Freit Maritime (Ogefrem)[2019] KESC 20 (KLR)25 Oct 2019
Cite this brief
#Cite this brief
Caselaw, "Dhanjal Investments Limited v Kenindia Assurance Company Limited", Case Analysis (2018). Petition of Appeal 7 of 2016. Source: https://new.kenyalaw.orghttps://new.kenyalaw.org/akn/ke/judgment/kesc/2018/16/eng@2018-11-20
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.