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Court of AppealDismissedCivil Application No. 7 of 2017· [2017] KECA 80 (KLR)

Telkom Kenya Limited v Aftraco Limited & 2 others [2017] KECA 80 (KLR)

Court of Appeal
1 December 2017
3,240 words in judgment
View original judgmentRead on Kenya Law Watch case
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The bottom line

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Kenya's Court of Appeal refused to pause two arbitrations, confirming it cannot stay arbitral proceedings it has not been asked to review.

What this practically means

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Executive summary

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Telkom Kenya Limited moved the Court of Appeal under Rule 5(2)(b) for a stay of two parallel arbitral proceedings concerning LR No. 7656, pending an intended appeal against the ruling of Olga Sewe, J. dated 28th September 2016, which dismissed its application to consolidate the two arbitrations before a single arbitrator. Telkom argued the arbitrations were intertwined, that the learned Judge wrongly declined to exercise the High Court's supervisory jurisdiction, and that proceeding with both arbitrations risked conflicting awards it could not comply with, exposing it to contempt. The respondents opposed, arguing the arbitrations were consensual and long-running, the consolidation application was an afterthought brought after some four years of delay, one arbitration had already been resorted to by Telkom itself with consent, and that the Court lacked jurisdiction to stay arbitral proceedings under Rule 5(2)(b). Applying the notorious twin tests - an arguable appeal and nugatory-ness - the Court had very serious doubts about arguability, noting that arbitral processes are consensual and consolidation lies in the judge's discretion. It further doubted its own jurisdiction to direct a stay of arbitral proceedings not challenged before it, and found the feared loss speculative, especially as one claim carried an alternative prayer for damages. Emphasising party autonomy and the speed and economy of arbitration, the Court declined the stay and dismissed the application with costs.

Key legal issues

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01

Jurisdiction to stay arbitral proceedings under Rule 5(2)(b)

Holding

The Court expressed serious doubt that it can direct a stay of arbitral proceedings that are not challenged directly before it, since the rule targets proceedings of the court appealed from.

Reasoning

The Court reasoned that Rule 5(2)(b) is engaged once an appeal is instituted by notice of appeal against a decision of a court, and any stay of further proceedings must therefore relate to proceedings of that court. Relying on its earlier decision in Benard Gichubi Njira, where it doubted jurisdiction to direct stays at subordinate courts, the Court held itself extremely doubtful that it could stay arbitral proceedings not directly before it.

p. 5
02

Arguability of the intended appeal

Holding

The Court had very serious doubts whether the intended appeal raised any arguable issue, given the consensual and discretionary character of consolidation and the respondents' point on inordinate delay.

Reasoning

Consolidation of separately agreed arbitrations lies in the discretion of the judge, and arbitral processes are consensual; a process entered by consent can only be altered with the consent of the same parties. The respondents also raised the crucial point that the consolidation application came after some four years of delay, which further undermined arguability.

p. 5
03

Whether the appeal would be rendered nugatory

Holding

The feared conflicting awards and possible inability to comply were speculative and would not render the intended appeal futile, academic or illusory.

Reasoning

The Court found the applicant's apprehension of two conflicting awards and contempt exposure speculative, noting one respondent claimed an alternative remedy in damages. Either arbitrator's award, or neither, would present no difficulty to the applicant. The applicant itself had consented to arbitration and delayed consolidation, so no clog should be placed on the arbitrations.

p. 5

Legal principles established

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  • A stay of proceedings under Rule 5(2)(b) can only relate to proceedings of the court appealed from, not to arbitral proceedings not challenged directly before the Court of Appeal.
  • Arbitral processes are consensual and a process entered into by consent can only be altered in character with the consent of the same parties.
  • An applicant under Rule 5(2)(b) must establish both an arguable appeal and that the appeal would be rendered nugatory if stay is denied.

Court orders

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  1. 1.The application for stay of the arbitral proceedings pending the intended appeal is dismissed with costs

Authorities

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Legislation

  • Court of Appeal RulesRule 5(2)(b)
  • Appellate Jurisdiction Actsection 3A & B
  • Appellate Jurisdiction Actsection 3(3)
  • Civil Procedure RulesOrder 46
  • Arbitration Act(generally referenced)
  • Model Law on International Commercial Arbitrations (UNCITRAL, 1985)generally

Cases cited (6)

  • NYUTU AGROVET LIMITED vs. AIRTEL NETWORKS LTD
    [2015] eKLR
  • EXCLUSIVE ESTATES LTD vs. THE REGISTRAR OF TITLES OTHERS
    Civil Appeal No. 135 of 2013
  • JUDICIAL COMMISSION OF INQUIRY INTO THE GOLDENBERG AFFAIR & 3 OTHERS vs. KILACH
    [2003] KRL 249
  • STANLEY KANGETHE KINYANJUI vs. TONY KETTER & 5 OTHERS
    [2013] eKLR
  • BENARD GICHUBI NJIRA vs. KANINI NJIRA KATHENDU & ANOR
    Nyeri Civil Appln. 24 of 2015 (UR16/2015)
  • KENYA OIL CO. LTD & ANOR vs. KENYA PIPELINE & ANOR
    Civil Appeal No. 102 of 2012
On appeal from
High Court of Kenya at Nairobi
H.C.C.C. No. 443 of 2011
Jurisdiction invoked
Rule 5(2)(b) of the Court of Appeal Rules; sections 3A & 3B and 3(3) of the Appellate Jurisdiction Act (invoked by the applicant)

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, "Telkom Kenya Limited v Aftraco Limited & 2 others [2017] KECA 80 (KLR)", Case Analysis (2017). Civil Application No. 7 of 2017. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2017/80/eng@2017-12-01

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