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Court of AppealDismissedCivil Appeal No. 28 of 2004· [2015] KECA 834 (KLR)

Nairobi Golf Hotels Ltd v Linotic Floor Company Ltd [2015] KECA 834 (KLR)

Court of Appeal
25 March 2015
PWP. N. WakiWKW. KaranjaWilliam OukoW. Ouko
5,362 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~21 min to read original · ~4 min brief

The bottom line

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Kenya's Court of Appeal confirmed that losing parties can't overturn arbitration awards just by disagreeing with the arbitrator's conclusions.

What this practically means

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Executive summary

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This appeal arose from a High Court ruling by Onyango-Otieno J dated 6 December 2001 dismissing an application to set aside an arbitral award of 4 December 1996, in which sole arbitrator Norman Mururu found that Linotic Floor Company lawfully terminated its building contract with Nairobi Golf Hotels for the Windsor Golf & Country Club and awarded damages. The appellant advanced thirty-one grounds but abandoned grounds one to seven, leaving the central question: whether the arbitrator's alleged errors of fact and law amounted to misconduct justifying setting aside the award under the repealed Arbitration Act (Cap 49) and the Arbitration Act 1995. The Court held that the arbitral process under both statutes is founded on the doctrine of finality; that a mistake of fact or law, disagreement with an arbitrator's interpretation, or the possibility that another arbitrator would have reached a different conclusion does not amount to misconduct; and that intervention is limited to errors of law apparent on the face of the award. The Court endorsed the narrow interpretation of misconduct adopted by the High Court, finding the arbitrator competent, impartial, and fair, and affirmed the ruling below. It also held that any defect in the chamber summons for failing to state grounds on its face was curable, particularly as the grounds appeared in the supporting affidavit, and that the application was decided on the merits. Noting that the award was nearly eighteen years old, the Court deprecated the delay as a travesty of the doctrines of expedition, efficacy and finality underpinning arbitration. The appeal was dismissed with costs to the respondent.

Key legal issues

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01

Meaning and scope of 'misconduct' of an arbitrator under the Arbitration Act

Holding

Misconduct requires conduct such as dishonesty, bias, unfairness, or failure to conduct the reference as prescribed; erroneous findings of fact or law, or conclusions another tribunal might have reached differently, do not constitute misconduct.

Reasoning

The Court drew on Mustill and Boyd's Commercial Arbitration and Sections 35(2) and 37 of the Arbitration Act 1995 to define the limited grounds for setting aside an award. It held that the arbitral process is founded on finality, that differing interpretations of law or facts cannot amount to misconduct, and that the fact another arbitrator might have reached a different conclusion is irrelevant. The arbitrator's competence, qualifications and fair conduct of proceedings meant no misconduct was proved.

p. 9
02

Whether the learned Judge erred in adopting a narrow interpretation of misconduct

Holding

No. The narrow interpretation was correct even under the repealed Act, and the Judge properly addressed whether the arbitrator understood the issues and reviewed the evidence.

Reasoning

The Court examined the impugned ruling and found the Judge had considered the evidence, the award, and the definition of misconduct from English and regional authorities. He re-evaluated the commencement date, variation, and delay issues himself, and concluded any mistakes were minor and did not cause a substantial miscarriage of justice warranting setting aside the award.

p. 9
03

Whether procedural defects in the chamber summons vitiated the application

Holding

Any defect in failing to state grounds on the face of the summons was curable, particularly as the grounds were in the supporting affidavit; in any event the application was decided on the merits, not dismissed for form.

Reasoning

The Court noted the Judge found the summons defective for non-compliance with Order 50 Rule 7 but nonetheless proceeded to determine the application on its merits rather than striking it out. The Court observed the defect would be curable under Sections 1A and 1B of the Civil Procedure Act, Sections 3A and 3B of the Appellate Jurisdiction Act, and Article 159(2)(d) of the Constitution, since the grounds were incorporated in the affidavit.

p. 4

Legal principles established

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  • A mistake of fact or law by an arbitrator, or a failure to arrive at a particular decision, does not amount to misconduct and is not a ground for setting aside an award under the Arbitration Act; judicial intervention is limited to errors of law apparent on the face of the award.
  • The arbitral process under both the repealed Arbitration Act (Cap 49) and the Arbitration Act 1995 is founded on the doctrine of finality, and a party cannot seek to set aside an award outside the grounds specified in the Act.

Court orders

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  1. 1.Appeal dismissed
  2. 2.Costs of the appeal awarded to the respondent

Authorities

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Legislation

  • Arbitration Act (Cap 49) (Repealed)Sections 24, 37(a)
  • Arbitration Act 1995Sections 35(2), 35, 37, 42(2)
  • Civil Procedure ActSections 3A, 1A, 1B
  • Appellate Jurisdiction ActSections 3A, 3B
  • Constitution of KenyaArticle 159(2)(d)
  • Civil Procedure RulesOrder XLV; Order 50 Rule 7; Arbitration Rules Rule II
  • Land Dispute Tribunals Actrepealed

Cases cited (7)

  • Castellino vs Rodrigues
    [1972] EA 223
  • Nyangau vs Nyakwara
    (1982-1988) 1 KAR 805
  • Robert Njue Wangai vs Francis Muthike
    Civil Appeal No. 274 of 2000
  • Josephat Murage Miano & Another vs Samuel Mwangi Miano & Another
    Civil Appeal No. 26 of 1996
  • Anne Mumbi Hinga vs Victoria Njoki Gathara
    Civil Appeal No. 8 of 2006
  • Moran vs. Lloyd
    [1983] AllER 20
  • DB Shapriya and Co Ltd v Bish International BV (2)
    (2003) 2 EA 404
On appeal from
High Court of Kenya at Nairobi
H.C. Misc. Civil Case No. 889 of 1997
Jurisdiction invoked
Appeal to the Court of Appeal from the High Court in a matter arising from an application to set aside an arbitral award under the Arbitration Act (Cap 49) (repealed) and the Arbitration Act 1995

Key timeline

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Practical implications

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Frequently asked questions

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Later judgments citing this (6)

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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, "Nairobi Golf Hotels Ltd v Linotic Floor Company Ltd [2015] KECA 834 (KLR)", Case Analysis (2015). Civil Appeal No. 28 of 2004. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2015/834/eng@2015-03-25

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