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Supreme CourtAllowedPetition 47 of 2019

Geo Chem Middle East v Kenya Bureau of Standards

Supreme Court of Kenya
18 December 2020
Philomena Mbete MwiluP. M. MwiluMohammed Khadhar IbrahimM. K. IbrahimSmokin Charles WanjalaS. C. WanjalaNjoki Susanna NdunguNjoki NdunguIsaac LenaolaI. Lenaola
7,511 words in judgment
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The bottom line

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Supreme Court: Court of Appeal overstepped by deciding arbitration merits instead of sending case back to High Court.

What this practically means

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The High Court refused to hear a challenge to an arbitration award, wrongly thinking it lacked power. The Court of Appeal then decided the case itself, setting aside the award. The Supreme Court said that was wrong. The Court of Appeal should have sent the case back to the High Court for a proper hearing. The Supreme Court also clarified that appeals in arbitration matters are very limited and cannot go beyond the Court of Appeal.

Executive summary

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The Supreme Court allowed an appeal by Geo Chem Middle East against the judgment of the Court of Appeal which had set aside an arbitral award in its favour. The dispute arose from a contract for petroleum inspection services between Geo Chem and Kenya Petroleum Refineries Limited (KPRL). An arbitral tribunal found KPRL had unlawfully terminated the contract and awarded Geo Chem substantial damages. The High Court (Ochieng, J.) refused to set aside the award, holding it lacked jurisdiction to re-evaluate the tribunal's findings. KPRL appealed to the Court of Appeal, which granted leave and then set aside the High Court's ruling, finding the arbitral tribunal lacked jurisdiction and the award was against public policy. The Supreme Court identified two key issues: its own jurisdiction under Article 163(4)(a) and the Court of Appeal's jurisdiction. The Court held that the only constitutional issue was the Court of Appeal's jurisdiction, and it assumed jurisdiction to determine that narrow question. It found that the Court of Appeal acted in excess of its jurisdiction. Since the High Court had declined to exercise jurisdiction, the proper course for the Court of Appeal was to remit the matter back to the High Court for a substantive hearing on the setting aside application, not to determine the merits of the arbitration itself. The Supreme Court also declared that, in line with its earlier decisions in Nyutu and Synergy, no further appeal lies to the Supreme Court from a Court of Appeal judgment on a Section 35 arbitration matter. The Court set aside the Court of Appeal judgment and restored the High Court ruling, with each party bearing its own costs.

Questions the Court framed

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The issues the Court set itself to decide, in its own words.

  1. 1.whether this Court is vested with the requisite jurisdiction to hear and determine the instant Petition
  2. 2.whether the Court of Appeal had the jurisdiction to determine the appeal before it
  3. 3.what reliefs are available to the parties

Key legal issues

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01

Whether the Supreme Court has jurisdiction under Article 163(4)(a) to hear an appeal from the Court of Appeal in a matter arising from Section 35 of the Arbitration Act.

Holding

The Supreme Court assumed jurisdiction to determine the narrow issue of whether the Court of Appeal had jurisdiction to hear the appeal, but declined to delve into the substantive merits of the Court of Appeal's judgment on the arbitral award.

Reasoning

The Court found that the only constitutional issue raised was the jurisdiction of the Court of Appeal to hear and determine the appeal. The substantive merits of the Court of Appeal's judgment regarding the arbitral award did not involve the interpretation or application of the Constitution. Therefore, the Supreme Court's jurisdiction was limited to the jurisdictional question.

p. 13
02

Whether the Court of Appeal had jurisdiction to hear an appeal from the High Court's decision refusing to set aside an arbitral award under Section 35 of the Arbitration Act.

Holding

The Court of Appeal acted in excess of its jurisdiction by determining the merits of the arbitral award when the High Court had not substantively decided the application to set aside the award.

Reasoning

The High Court had declined to exercise jurisdiction, believing it lacked the power to set aside the award. The only question before the Court of Appeal was whether the High Court properly declined jurisdiction. Instead of remitting the matter back to the High Court for a substantive hearing, the Court of Appeal stepped into the High Court's shoes and decided the merits of the arbitration dispute, which was premature and in excess of its jurisdiction.

p. 15
03

Whether the leave to appeal granted by the Court of Appeal was properly granted.

Holding

The leave to appeal was granted without interrogating the substance of the intended appeal to determine if it fell within the narrow window for appeals under Section 35 as later clarified in Nyutu and Synergy.

Reasoning

The Court of Appeal granted leave based on a view that appeals from Section 35 decisions were open-ended, which was later corrected by the Supreme Court in Nyutu and Synergy. The Supreme Court held that after those decisions, a general grant of leave without interrogating the substance of the intended appeal would not suffice.

p. 16

Legal principles established

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  • When a lower court wrongly declines jurisdiction, the appellate court must remit the case, not decide the merits.
  • No further appeal lies to the Supreme Court from a Court of Appeal decision under Section 35 of the Arbitration Act.
  • The Supreme Court's jurisdiction under Article 163(4)(a) is limited to constitutional issues; it cannot review arbitration award merits.
  • Leave to appeal from a Section 35 decision must be granted only after examining whether the intended appeal falls within the narrow window.
  • The Court of Appeal cannot assume the High Court's role in arbitration setting-aside applications.

Court orders

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  1. 1.The Appeal herein is allowed as prayed and the Judgment of the Court of Appeal dated 22nd November 2019 is hereby set aside.
  2. 2.Each Party shall bear its costs thereof.

The bench

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One judgment of the whole court — no separate or dissenting opinions.

Philomena Mbete Mwilu
P. M. MwiluDCJ
Currently serving
majority
Mohammed Khadhar Ibrahim
majority
Smokin Charles Wanjala
S. C. WanjalaSCJ
Currently serving
majority
Njoki Susanna Ndungu
Njoki NdunguSCJ
Currently serving
majority
Isaac Lenaola
I. LenaolaSCJ
Currently serving
majority
On appeal from
Court of Appeal at Nairobi
Civil Appeal No. 259 of 2018
Jurisdiction invoked
Article 163(4)(a) of the Constitution

Quotable passages

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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 allowed as prayed and the Judgment of the Court of Appeal dated 22nd November 2019 is hereby set aside.
p. 16 Final Orders
As is the practice in all other disputes, where an Appellate Court holds that a lower Court has wrongly declined to determine a matter in the "mistaken" belief that it lacks jurisdiction to do so, the Court has to remit that matter to the lower Court directing it to exercise its jurisdiction.
p. 15 Appellate Procedure - Remission
we now declare that in conformity with the principle of the need for expedition in arbitration matters, where the Court of Appeal assumes jurisdiction in conformity with the principle established in these two decisions, and delivers a consequential Judgment, no further appeal should ordinarily lie therefrom to this Court.
p. 13 Supreme Court Jurisdiction - Arbitration Appeals
the Judgment of the Court of Appeal, to the extent to which it purported to interrogate the merits of an arbitral award, in the absence of the High Court's pronouncement on the same, was rendered in excess of jurisdiction.
p. 15 Court of Appeal Jurisdiction - Excess of Jurisdiction
Only those appeals arising from cases involving the interpretation or application of the Constitution can be entertained by the Supreme Court. It is not the mere allegation in pleadings by a party that clothes an appeal with attributes of constitutional interpretation or application
p. 9 Supreme Court Jurisdiction - Article 163(4)(a)

Key timeline

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Before 2020
Arbitral tribunal awards damages to Geo Chem against KPRL.
Before 2020
High Court (Ochieng, J.) refuses to set aside the award, citing lack of jurisdiction.
22 November 2019
Court of Appeal sets aside High Court ruling and decides the arbitration merits.
2020
Supreme Court allows Geo Chem's appeal, sets aside Court of Appeal judgment, and restores High Court ruling.

Practical implications

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For lawyers

Appellate jurisdiction in arbitration matters

When appealing a Section 35 decision, ensure the Court of Appeal only reviews jurisdictional errors, not merits. If the High Court wrongly declined jurisdiction, the proper remedy is to remit, not to decide the case. Also, leave to appeal must be scrutinized to confirm it falls within the narrow window set by Nyutu and Synergy.

For businesses

Arbitration award finality reinforced

The Supreme Court reinforced that arbitration awards are final. Challenges under Section 35 are limited to jurisdictional or procedural grounds. The Court of Appeal cannot substitute its own view on the merits. Businesses can rely on arbitration awards unless there is a clear jurisdictional error, reducing uncertainty and costs.

For individuals

Your rights in arbitration disputes

If you win an arbitration award, the other side cannot easily overturn it by appealing to the Court of Appeal on merits. Courts will only check if the arbitrator had jurisdiction or if there was a procedural flaw. This protects the finality of arbitration and means you can enforce your award without lengthy court battles.

Frequently asked questions

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What is the Geo Chem Middle East v KPRL case about in Kenya?+

It is about the limits of court appeals in arbitration. The Supreme Court ruled that the Court of Appeal cannot decide the merits of an arbitration dispute if the High Court never properly heard the case. Instead, the case must be sent back to the High Court.

Can I appeal an arbitration award to the Supreme Court in Kenya?+

Generally no. After this case and earlier decisions, appeals from arbitration matters under Section 35 stop at the Court of Appeal. The Supreme Court will only hear an appeal if there is a constitutional issue, not to review the award's merits.

What happens if the High Court wrongly refuses to hear my arbitration case in Kenya?+

The Court of Appeal should send the case back to the High Court for a proper hearing, not decide the case itself. The Supreme Court confirmed this in Geo Chem v KPRL, ensuring you get a fair hearing at the right court.

Does the Supreme Court have jurisdiction over arbitration disputes in Kenya?+

Only if there is a constitutional issue, such as whether the Court of Appeal had jurisdiction. The Supreme Court cannot review the merits of the arbitration award itself. This was clarified in Geo Chem Middle East v Kenya Petroleum Refineries Limited.

Later judgments citing this (21)

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Judgments in the corpus that rely on this one. Where the Court said how it treated the authority, that is shown.

Cite this brief

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Cite this brief

Caselaw, "Geo Chem Middle East v Kenya Bureau of Standards", Case Analysis (2020). Petition 47 of 2019. Source: https://new.kenyalaw.orghttps://new.kenyalaw.org/akn/ke/judgment/kesc/2020/1/eng@2020-12-18

Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.