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Court of AppealOtherCivil Application 57 of 2006· [2006] KECA 382 (KLR)

Kenya Shell Ltd v Kobil Petroleum Limited

Court of Appeal
7 April 2006
RORSC OmoloEOEO O'KubasuJOJWO Onyango-Otieno
7,087 words in judgment
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The bottom line

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Kenya's Court of Appeal ruled it can hear applications for leave to appeal against High Court decisions setting aside arbitration awards, keeping Shell's challenge alive.

What this practically means

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Executive summary

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Kenya Shell sought leave to appeal against a High Court ruling (Mutungi J, 14 February 2006) dismissing its application to set aside an arbitral award under section 35(2)(iv) of the Arbitration Act No 4 of 1995. Before the Court of Appeal, Kobil raised a preliminary objection that the Court had no jurisdiction to entertain the intended appeal, since under the Arbitration Act appeals lie only through section 39(3), whose conditions (party consent and leave) were unmet. All three judges agreed on the foundational principle that a right of appeal exists only if expressly donated by statute and cannot be implied. Onyango-Otieno JA, writing first, held that section 39(3) is the Act's sole appellate gateway, that rule 11 of the Arbitration Rules 1997 fills only procedural gaps in the rules and cannot import sections 66 and 75 of the Civil Procedure Act, and would have struck out the application. Omolo JA and O'Kubasu JA disagreed: section 39 is not a general appeals provision; unlike sections 12 and 17, section 35 contains no express bar on appeal; and Parliament, aware of section 75 of the Civil Procedure Act, never ousted it. The majority therefore held the Court has jurisdiction to grant leave and directed that the leave application be heard, awarding the costs of the preliminary objection to Kenya Shell. The decision resolves only the jurisdictional threshold; the merits of leave remain open, and the split reasoning leaves the interaction between section 39(3) and section 75 partially unresolved.

Key legal issues

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01

Source of appellate jurisdiction

Holding

The right of appeal must be expressly given by statute; it cannot be implied or inferred, and must be strictly complied with

Reasoning

Starting from section 3(1) of the Appellate Jurisdiction Act, the Court held that jurisdiction to hear appeals from the High Court depends on the relevant law donating that right. This principle, settled since Harnam Singh Bhogal (1953) and reaffirmed in Rafiki Enterprises and Munene, requires strict compliance with statutory conditions for appeal.

p. 3
02

Scope of section 39(3) of the Arbitration Act

Holding

Section 39(3) is the sole gateway in the Arbitration Act for appeals to the Court of Appeal, confined to the two special scenarios in section 39(1) and (2) and conditional on party agreement plus leave

Reasoning

The words 'notwithstanding sections 10 and 35' make section 39(3) an exception to the non-intervention principle and the exclusive route for challenging a section 35 setting-aside decision by appeal. It does not apply of general application; outside it, the Act donates no direct appellate jurisdiction (Onyango-Otieno JA). The majority agreed section 39 is not a general appeals provision.

p. 7
03

Whether section 35 decisions are appealable via leave under section 75 of the Civil Procedure Act

Holding

MAJORITY: Yes - section 35 contains no express bar on appeals, and Parliament did not modify section 75 of the Civil Procedure Act, so the Court may grant leave to appeal

Reasoning

Omolo JA contrasted section 35 with sections 12 and 17, which expressly bar appeals. The High Court acting under section 35 exercises original, not appellate, jurisdiction, so section 75(2) does not apply. Parliament, aware of section 75 when enacting the 1995 Act, never stated 'Notwithstanding the provisions of section 75 of the Civil Procedure Act'. O'Kubasu JA concurred.

04

Importation of Civil Procedure Rules/Act via rule 11 of the Arbitration Rules 1997

Holding

Rule 11 fills procedural gaps in the rules only; imported provisions remain rules (subsidiary legislation) and cannot import substantive appeal rights from the Civil Procedure Act (Onyango-Otieno JA)

Reasoning

There is no lacuna in the Arbitration Act merely because a party's wishes are unmet. Rule 11 operates only where the rules themselves have a lacuna, and imported rules become part of the arbitration rules as subsidiary legislation. Subsidiary legislation cannot be inconsistent with an Act (section 31, Interpretation and General Provisions Act) nor inject sections 66/75 into the Arbitration Act.

p. 7

Legal principles established

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  • A right of appeal to the Court of Appeal can only be conferred by statute and cannot be implied or inferred (common ground of all three judges)
  • Section 39(3) of the Arbitration Act is the only provision of that Act donating appellate jurisdiction to the Court of Appeal, and it applies only to the special cases in section 39(1) and (2), conditional on party agreement and leave
  • MAJORITY: Section 35 of the Arbitration Act does not oust the jurisdiction of the High Court or the Court of Appeal to grant leave to appeal from a High Court decision under that section; section 75 of the Civil Procedure Act remains available
  • Rule 11 of the Arbitration Rules 1997 can fill lacunae in the rules only; imported Civil Procedure Rules remain subsidiary legislation and cannot be the basis for importing sections 66 or 75 of the Civil Procedure Act into the Arbitration Act (Onyango-Otieno JA)

Court orders

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  1. 1.The preliminary objection to the Court's jurisdiction is not sustained; the application for leave to appeal is not struck out
  2. 2.Costs occasioned by the preliminary objection awarded to the applicant (Kenya Shell Ltd)
  3. 3.The Court to proceed to hear the issue of whether leave to appeal ought to be granted

Authorities

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Legislation

  • Arbitration Actsection 6
  • Arbitration Actsection 10
  • Arbitration Actsection 12 (including 12(5))
  • Arbitration Actsection 15 (including 15(1), (2), (3))
  • Arbitration Actsection 17 (including 17(6), (7))
  • Arbitration Actsection 18 (including 18(1), (2), (3))
  • Arbitration Actsection 28
  • Arbitration Actsection 33(1)
  • Arbitration Actsection 35 (including 35(1), 35(2)(iv), (3))
  • Arbitration Actsections 36 and 37
  • Arbitration Actsection 39 (including 39(1), (2), (3), (4))
  • Arbitration Act 1995 (repealed chapter 49)clause 16(b) of the Storage, Blending and Packaging Agreement
  • Civil Procedure Actsection 3A
  • Civil Procedure Actsection 66
  • Civil Procedure Actsection 75 (including 75(1)(h), 75(2))
  • Civil Procedure Actsection 81
  • Civil Procedure Rulesorder 42 rule 1
  • Civil Procedure Rulesorder 44
  • Civil Procedure Rulesorder 45
  • Civil Procedure Rulesorder 50
  • Arbitration Rules 1997rules 4, 7 and 11
  • Interpretation and General Provisions Act (chapter 2)section 31 (including 31(b))
  • Appellate Jurisdiction Act (chapter 9)section 3(1)
  • Landlord & Tenant (Shops, Hotels & Catering Establishments) Act (chapter 301)proviso to section 15(4)

Cases cited (7)

  • Harnam Singh Bhogal trading as Harnam Singh & Company v Jadva Karsan
    (1953) 20 EACA 17

    A right of appeal can only be founded on a statute and its conditions must be strictly complied with

  • Rafiki Enterprises v Kingsway Tyres & Automart Limited
    Civil Application No Nai 375 of 1995 (unreported)

    A right of appeal must be expressly given by law and cannot be implied or inferred

  • Munene v Republic (No 2)
    KLR 105

    No right of appeal apart from statute; none by mere implication or inference

  • Telkom Kenya Limited v Kamconsult Limited and Another
    Civil Application No Nai 55 of 2002

    Approved Rafiki and Munene; found appeal right in section 75(1)(h) Civil Procedure Act with order 42 rule 1 - distinguished as concerning an order 44 review application

  • Nova Chemicals Ltd v Alcon International Ltd
    Milimani Commercial Courts Nairobi Civil Suit No Misc Application 1124 of 2002

    Ringera J: section 39(1)(b)(2) and (3) restricts appeals to the Court of Appeal to agreed, leave-granted cases

  • Geogas SA v Trammo Gas Ltd, known as the Beleares
    [1991] 2 All ER 110

    Comparative authority that appeals from arbitral awards lie only by leave, not automatically

  • National Westminster Bank Plc v Arthur Young McClelland Moores & Co (a firm) (No 2)
    [1991] 3 All ER 21

    Comparative authority on appeal from arbitral awards by leave only

On appeal from
High Court of Kenya at Milimani Commercial Courts, Nairobi
HC Misc Civil Application No 59 of 2004
Jurisdiction invoked
Section 3(1) of the Appellate Jurisdiction Act (chapter 9) - appeals from the High Court in cases in which an appeal lies under any law; leave to appeal under section 75 Civil Procedure Act / section 39 Arbitration Act in issue

Key timeline

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Practical implications

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Frequently asked questions

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Later judgments citing this (25)

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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, "Kenya Shell Ltd v Kobil Petroleum Limited", Case Analysis (2006). Civil Application 57 of 2006. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2006/382/eng@2006-04-07

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