Thika Coffee Mills Ltd v Rwama Farmers Co-operative Society Ltd
The bottom line
#Kenya's Court of Appeal dismissed Thika Coffee Mills' bid to overturn a Kshs. 15 million arbitration award, confirming courts can only overturn awards in narrow circumstances.
What this practically means
#Executive summary
#Key legal issues
#Right of appeal to the Court of Appeal from a section 35 decision
In light of conflicting Court of Appeal decisions and three petitions pending before the Supreme Court, the majority upheld the appellant's right of appeal and determined the appeal on its merits, with the respondent having submitted to jurisdiction without moving to strike out the appeal.
The Court noted conflicting lines of authority (Nyutu Agrovet versus DHL Excel and Kenya Bureau of Standards v Geo-Chem) on whether sections 35 and 39 bar an appeal. Persuaded by the Geo-Chem reasoning that section 35 does not expressly bar an appeal, the Court extended the benefit of doubt to the appellant, noting also that the respondent never moved under the relevant rules to strike out the appeal but opposed it on the merits.
Scope of the arbitrator's terms of reference
The refund award was within the reference: although crop advances were not specifically pleaded, evidence on them was led, and the issue fell under the broad agreed issue of indebtedness for coffee deliveries.
The arbitrator was bound by the agreed statement of issues and the pleadings, but both parties addressed the crop advances, the appellant producing bank statements, cheques, crop advance agreements and payment vouchers. The question whether payments were actually made thus arose by implication and fell under the broad issue of whether the appellant was indebted to the respondent for coffee deliveries. The Judge's finding to that effect was upheld.
Unjust enrichment and public policy
Since the respondent disputed receipt and the appellant failed to prove actual payment of the Kshs. 7,500,000.00, the refund was properly due and could not constitute unjust enrichment contrary to public policy.
The arbitrator held that once receipt was disputed, the burden lay on the appellant to prove actual payment, which it failed to discharge. The learned Judge was likewise not persuaded that Cheque No. 100100 was ever released to or received by the respondent. An award of amounts rightfully due cannot offend public policy.
Fair hearing under Article 50 of the Constitution
The appellant was not denied a fair hearing: the parties by agreement departed from strict procedural rules and the appellant had the opportunity to respond, including post-award.
Arbitral proceedings are not subject to the strict rigours of procedural rules unless the parties so authorise. Here the parties agreed to file and exchange documents even mid-hearing. Both parties appeared before the arbitrator post-award on the request for clarification, so the appellant had opportunity to rebut. No evidence supported the Article 50 allegation.
Legal principles established
#- Section 35 of the Arbitration Act provides a closed catalogue of the only circumstances in which the High Court may set aside an arbitral award, leaving no room for intervention on other grounds.
- An arbitral award may be set aside only on grounds such as incapacity, illegality of proceedings, breach of natural justice, excess of jurisdiction, fraud, bribery, corruption, undue influence or breach of public policy.
- Where the parties agreed to depart from strict rules of procedure in arbitration and were heard post-award, an allegation of denial of fair hearing under Article 50 will fail absent supporting evidence.
Court orders
#- 1.The appeal is dismissed
- 2.Costs of the appeal awarded to the respondent
- On appeal from
- High Court of Kenya
- Not stated (ruling of Mabeya, J dated 28th September 2012)
- Jurisdiction invoked
- Article 164(3) of the Constitution; appeal arising from a decision of the High Court under section 35 of the Arbitration Act (right of appeal contested under sections 35 and 39 of the Act)
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Thika Coffee Mills Ltd v Rwama Farmers Co-operative Society Ltd", Case Analysis (2018). Court of Appeal Civil Appeal (as delivered at Nairobi, 12th October 2018). Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2018/1/eng@2018-10-12
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.