TROPICAL FOOD PRODUCTS INTERNATIONAL LIMITED v EASTERN AND SOUTHERN AFRICAN TRADE AND DEVELOPMENT BANK [2007] KECA 91 (KLR)
The bottom line
#Kenya's Court of Appeal confirmed that consent orders can be set aside for mistake, especially when they conflict with an arbitration clause the lawyers overlooked.
What this practically means
#Executive summary
#Key legal issues
#Whether a consent order can be set aside for mistake
Yes. A consent order recorded in court is binding but may be varied or set aside on grounds including fraud, collusion, mistake, absence or ignorance of sufficient material facts, or any other sufficient reason; these categories are not closed. Equity aids a party pleading mistake whether common, mutual or unilateral.
The Court adopted the summary of grounds for setting aside consent orders from Flora Wasike v Wamboko (following Hirani v Kassam) and endorsed the equitable principle in Solle v Butcher that a contract is liable to be set aside where parties laboured under a fundamental common misapprehension and the applicant is not at fault. Counsel's oversight of the ICC arbitration clause's appointing mechanism when recording the consent constituted such a mistake, justifying review.
Whether the arbitration clause took precedence over the consent order and whether the right to arbitration was waived
The consent order could not override the contractual dispute-resolution mechanism because the court was not seized of the suit while an arbitration clause existed; there was no submission to the court's jurisdiction since no appearance or section 6 application was made, so no waiver of the right to arbitration.
The Court found that the Bank filed only a notice of appointment and took no further step in the court process; no application under section 6 of the Arbitration Act, 1995 was necessary for parties to record a consent pursuant to their arbitration clause. Since the Facility Agreement designated the ICC Secretariat as appointing authority, the consent order purporting to confer that power on the court was made under a mistake and its review was a timely intervention.
Whether the Court of Appeal could interfere with the superior court's discretionary decision
No. The parameters for appellate interference with discretion are considerably circumscribed; the learned Judge was entitled to believe the respondent's advocate's sworn account of mistake and no compelling reason to interfere existed.
Applying Mbogo v Shah, the Court held it would not disturb the exercise of discretion unless the judge misdirected himself, acted on wrong matters, failed to consider relevant matters, or was clearly wrong resulting in misjustice. The judge's finding of fact, accepting the advocate's affidavit evidence of inadvertent oversight of the arbitration clause, was open to him and the Court found no error of principle in his reliance on mistake and 'any other sufficient reason'.
Whether the entire consent order could be set aside when only part was challenged
The Court accepted the respondent's submission that setting aside the whole order was consequential: once the matter was referred to arbitration, a stay of proceedings follows automatically without a further order.
The review application targeted only the limb directing the court to appoint an arbitrator in default of agreement. The Court agreed with Mr. Oraro that the order made was consequential upon the prayer; referral to arbitration carries an automatic consequential stay of court proceedings, so no complaint arose from the breadth of the order.
Legal principles established
#- A consent order recorded in court with the consent of counsel is binding and can only be varied or discharged on grounds such as fraud, collusion, mistake, ignorance of material facts, or any other sufficient reason; the categories are not closed.
- Parties cannot confer jurisdiction on a court where none exists; where a valid arbitration clause designates a foreign appointing authority, the court errs by accepting a consent order appointing it as the appointing authority in default of agreement.
- An appellate court will not interfere with a lower court's exercise of discretion unless the decision is clearly wrong, because of misdirection, reliance on wrong matters, failure to consider relevant matters, or resulting misjustice.
- Equity will relieve a party from a contract entered into under a common misapprehension of facts or rights, provided the misapprehension was fundamental and the party seeking relief was not himself at fault.
Court orders
#- 1.The appeal is dismissed with costs to the respondent
- 2.The order of Mwera J. setting aside the consent order recorded on 1st November, 2001 and giving the parties liberty to proceed as their agreement binds them is left undisturbed
- On appeal from
- High Court of Kenya at Nairobi
- H.C.C.C. No. 1534 of 2001
- Jurisdiction invoked
- Appellate jurisdiction of the Court of Appeal over a ruling of the High Court (an appeal from an order allowing review under section 80 of the Civil Procedure Act and Order XLIV rules 1 and 2 of the Civil Procedure Rules); no specific appellate provision is cited in the judgment.
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "TROPICAL FOOD PRODUCTS INTERNATIONAL LIMITED v EASTERN AND SOUTHERN AFRICAN TRADE AND DEVELOPMENT BANK [2007] KECA 91 (KLR)", Case Analysis (2007). Civil Appeal 253 of 2002. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2007/91/eng@2007-10-12
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.