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Court of AppealDismissedCivil Appeal No. 229 of 2006· [2015] KECA 630 (KLR)

Kenfit Limited v Consolata Fathers [2015] KECA 630 (KLR)

Court of Appeal
19 June 2015
HOH. OkwenguPhilomena Mbete MwiluP. MwiluJOJ. Otieno-Odek
2,116 words in judgment
View original judgmentRead on Kenya Law Watch case
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·~8 min to read original · ~4 min brief

The bottom line

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Kenya's Court of Appeal confirmed that an arbitration award is not final—and cannot be enforced—until the arbitrator has also determined the costs of the arbitration.

What this practically means

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Executive summary

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This appeal concerned whether the High Court could recognize and enter judgment on an arbitral award titled 'Final Award' where the arbitrator had expressly reserved the question of costs for agreement between the parties or taxation. The sole arbitrator, Mr. John S. Mbaya, issued an award on 30th November 2000 awarding the claimant Ksh.389,740 as liquidated damages wrongly deducted, and directed that costs be paid on a party-and-party basis, to be submitted for taxation if the parties could not agree. When the appellant applied by Chamber Summons in December 2003 for recognition of the award and entry of judgment, the respondent raised a preliminary objection that the application was premature because costs remained undetermined. J.B. Ojwang, J. upheld the objection and struck out the application, holding that a judgment could only be sought after the arbitrator had determined all questions referred to him, including costs. The Court of Appeal dismissed the appeal and affirmed that ruling. It held that an award does not become final merely because it is labelled 'Final Award'; finality requires determination of all issues referred, including the quantum of costs. The award was therefore a partial award. The High Court cannot recognize a partial award and later enforce the costs component, since a party cannot litigate in installments and piecemeal litigation must be discouraged. The arbitrator was not functus officio, having reserved costs for consideration. The Court clarified that the High Court had not refused recognition; the application was merely premature, and the appellant's right to apply later for recognition and enforcement remains unfettered. The appeal was dismissed with costs to the respondent.

Key legal issues

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01

Finality of an arbitral award where costs are reserved

Holding

An award reserving costs for agreement or taxation is a partial award and is not capable of recognition and enforcement.

Reasoning

The court held there can only be one award, which must be the final or composite award determining all issues referred. Although the award was titled 'Final Award', the arbitrator expressly reserved costs for agreement or taxation, leaving the quantum in abeyance. Finality is substantive, not conferred by the heading. Only once the quantum of costs is determined does a final award come into existence.

p. 4
02

Piecemeal recognition and enforcement of arbitral awards

Holding

A party cannot litigate in installments; the High Court cannot recognize a partial award and later enforce costs separately.

Reasoning

The court reasoned that allowing enforcement of a partial award would produce a 'blank cheque' judgment and vex a party twice over the same subject matter. Taxation of costs would form part of the arbitration proceedings, and enforcement would require a further application, encouraging piecemeal litigation which courts must discourage.

p. 4
03

Functus officio where costs are reserved

Holding

The arbitrator did not become functus officio because the award reserved costs for consideration, agreement or taxation.

Reasoning

By providing that parties may agree on costs or proceed to taxation, the arbitrator delegated the ascertainment of costs to other persons, and those proceedings remain part of the arbitration. The High Court can only recognize and enforce a final award that reserves no matter for further consideration by the arbitration or any other person.

p. 4
04

Nature of the High Court ruling

Holding

The High Court did not refuse recognition of the award; it held the application was premature, leaving the appellant free to apply later.

Reasoning

The court clarified that the learned judge upheld the preliminary objection on prematurity rather than declining recognition on the merits. The appellant's right to make a fresh application once the final award exists, including determination of costs, remains unfettered.

p. 4

Legal principles established

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  • An arbitral award is final only where all issues referred to the arbitrator, including costs, have been determined; a partial award cannot be recognized and enforced by the High Court.
  • The label on an award does not determine its finality; finality depends on whether all referred issues have been determined.
  • Piecemeal enforcement of arbitral awards is impermissible; the High Court cannot recognize a partial award and later enforce the remaining portion.
  • An arbitrator who reserves costs for agreement or taxation is not functus officio.

Court orders

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  1. 1.The ruling of the High Court dated 17th June 2005 is upheld
  2. 2.The appeal is dismissed with costs to the respondent

Authorities

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Legislation

  • Arbitration ActSection 36 (including 36(2)(a) and (b))
  • Arbitration ActSection 37 (including 37(1))
  • Arbitration ActSection 32 (including 32(1), 32(6), 32(6)(a))
On appeal from
High Court of Kenya at Nairobi
H.C Misc. Civil Application No. 1592 of 2003
Jurisdiction invoked
First appeal from the High Court under the Court of Appeal's appellate jurisdiction (Arbitration Act, 1995 context; no specific provision quoted in the judgment)

Key timeline

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Practical implications

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Frequently asked questions

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Cite this brief

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Cite this brief

Caselaw, "Kenfit Limited v Consolata Fathers [2015] KECA 630 (KLR)", Case Analysis (2015). Civil Appeal No. 229 of 2006. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2015/630/eng@2015-06-19

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