Gitonga Warugongo v Total Kenya Limited
The bottom line
#What this practically means
#Executive summary
#Questions the Court framed
#The issues the Court set itself to decide, in its own words.
- 1.Whether the High Court Judge was right to set aside the entire arbitral award as being beyond the terms of the reference
- 2.Whether the part of the award granting a 20% rent increment every two years was severable from the determination of the monthly rent
Key legal issues
#Whether an arbitrator who imposes terms not in the parties' agreement exceeds his authority
By imposing a 20% increment every two years not found in the lease, the arbitrator made a new contract for the parties and exceeded his authority.
The lease provided for rent review after seven years with an agreed mode of calculation. There was no mention of a 20% increment or a two-year period. By purporting to impose those terms the arbitrator went beyond the reference, exceeding his authority as arbitrator.
Severability of the ultra vires part of the award
The 20% two-yearly increment was separate and severable from the rent determination, so only that part should have been set aside, not the entire award.
The arbitrator correctly determined the monthly rent of KShs.167,000/= using the method in the parties' agreement. The increment determination was not referred to him and was severable. Under the proviso to section 35(1)(a)(iv), only the part containing decisions on matters not referred may be set aside.
Legal principles established
#- Under section 35(1) of the Arbitration Act 1995, recourse to the High Court against an arbitral award is only by application to set aside; there is no provision for modification or remission for modification.
- Where an arbitrator exceeds the terms of the reference, only the severable part of the award containing decisions on matters not referred may be set aside.
Court orders
#- 1.Appeal allowed
- 2.Order of the High Court setting aside the arbitral award set aside
- 3.Arbitrator's award of monthly rent of KShs.167,000/= restored
- 4.Part of the award allowing a rental increase of 20% after every two years set aside
- 5.Appellant awarded half the costs of the appeal and half the costs of the High Court proceedings; each party to bear its own costs before the arbitrator
The bench
#One judgment of the whole court — no separate or dissenting opinions.
- On appeal from
- High Court of Kenya at Nairobi
- H.C.MISC.C.S. No. 718 of 1998
- Jurisdiction invoked
- Section 35(1) of the Arbitration Act, Act No. 4 of 1995
Relief refused
#Full costs of the appeal and High Court proceedings for the appellant
Appellant succeeded only in part; costs limited to half
Costs
Appellant awarded half the costs of the appeal and half the costs of the High Court proceedings; each party to bear its own costs before the arbitrator.
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.
We accordingly allow this appeal, set aside the learned Judge's order setting aside the arbitral award and substitute it with an order restoring the arbitrator's award of a monthly rent of KShs.167,000/= but set aside that part of the award allowing a rental increase of 20% after every two years.
In purporting to impose those terms, the arbitrator was making a new contract for the parties. He was accordingly going beyond the terms of the reference to him, that is, he was exceeding his authority as an arbitrator.
The increase of 20% after every two years is clearly separate and severable from the arbitral award regarding the monthly rent payable.
So there is no longer any provision in the Act for asking a court to modify an award or for the court to remit the same to the arbitrator for modification.
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Gitonga Warugongo v Total Kenya Limited", Case Analysis (1998). Civil Appeal No. 113 of 1998. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/1998/276/eng@1998-12-11
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.