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Court of AppealDismissedCivil Appeal No. 291 of 2012· [2018] KECA 885 (KLR)

Broadway Trust Ltd v China Young Tai Engineering Co. Ltd

Court of Appeal
19 January 2018
3,892 words in judgment
View original judgmentRead on Kenya Law Watch case
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The bottom line

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If you don't challenge an arbitration award within 90 days in Kenya, the other side can enforce it as a court order without a hearing.

What this practically means

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Executive summary

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Broadway Trust Ltd engaged China Young Tai Engineering Co. Ltd to construct commercial premises on LR No. 209/3841/1, Hurlingham, Nairobi. A dispute was referred to a sole arbitrator, who issued two awards in 2010: one concerning formwork and another ordering payment of Kshs 8,127,252.99. The respondent filed the awards in the High Court and, without a contested hearing, obtained an order enforcing them as a decree of the court, later serving a notice to show cause for Kshs 13,052,316. The appellant's application for stay of execution, setting aside of the decree and leave to pay by instalments was dismissed by Havelock, J. on 26th January 2012, prompting this appeal. The respondent challenged the Court's jurisdiction, the competence of the appeal, and the merits. The Court of Appeal held it had jurisdiction because the appellant was not challenging the arbitral award itself - which had become final under section 32A after no section 35 application was filed within 90 days - but only the enforcement process under the Civil Procedure Code, distinguishing Anne Mumbi Hinga and Nyutu Agrovet. The competence objections failed because the notice of appeal and certified order were on record, and the respondent had neither applied under rule 84 nor sought leave under rule 104(b). On the merits, the Court held that service of the notice of filing of the award satisfied rule 5 of the Arbitration Rules, and since no application to set aside the award had been made under section 35, rule 6 entitled the respondent to apply ex parte to enforce the award as a decree. The appeal was dismissed in its entirety with costs to the respondent.

Key legal issues

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01

Jurisdiction of the Court of Appeal over appeals on enforcement of arbitral awards

Holding

The Court had jurisdiction because the appeal challenged the enforcement process under the Civil Procedure Code, not the arbitral award; Anne Mumbi Hinga and Nyutu Agrovet were distinguishable.

Reasoning

The appellant never sought to set aside or vary the award within the 90-day period under section 35(3), so the award became final and binding under section 32A. Its complaint was confined to the procedure used to make the award a decree, a matter governed by the Civil Procedure Code and Rules, from which an appeal lies as of right once a party is aggrieved by the High Court's determination.

p. 5
02

Competence of the appeal

Holding

The appeal was competent; the notice of appeal and certified order were on record, and in any event the respondent could not raise competence objections without invoking rule 84 or seeking leave under rule 104(b).

Reasoning

The notice of appeal was on the record and a certified copy of the order was in the supplementary record filed on 20th February 2013. Even if the objections were valid, the respondent never moved the court under rule 84 nor sought leave under rule 104(b), so the objections could not be entertained. Salama Beach Hotel was distinguishable because there a rule 84 application was actually before the court.

p. 6
03

Whether service of a draft decree for approval before extraction was mandatory

Holding

The ex parte enforcement route under rule 6 of the Arbitration Rules was properly available, so the High Court did not err in dismissing the application to set aside the decree.

Reasoning

Rule 5 was satisfied by service of the notice of filing of the award on the appellant's advocates. The appellant filed no application to set aside the award under section 35, and rule 6 expressly entitled the filing party to apply ex parte by summons for leave to enforce the award as a decree. The enforcement proceedings were therefore regular.

p. 6
04

Whether the appellant was denied the right to be heard

Holding

No denial of natural justice; the ex parte procedure was sanctioned by rule 6 of the Arbitration Rules given the absence of a section 35 application.

Reasoning

The right to be heard in enforcement of an arbitral award is conditioned by the Arbitration Act and Rules: once the 90-day window for a section 35 application lapsed, the legislature's policy of minimal court intervention in arbitration permitted ex parte enforcement. The appellant's remedy lay in challenging the award timeously, which it did not do.

p. 6

Legal principles established

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  • Where no application to set aside an arbitral award has been made under section 35 of the Arbitration Act, the party filing the award may apply ex parte for leave to enforce it as a decree under rule 6 of the Arbitration Rules, 1997.
  • An appeal lies to the Court of Appeal against a High Court decision on enforcement of an arbitral award as a decree where the challenge is to the enforcement process under the Civil Procedure Code, not to the award itself; such an appeal is outside section 39 of the Arbitration Act.
  • A respondent who fails to apply under rule 84 of the Court of Appeal Rules to strike out an appeal cannot raise competence objections without leave under rule 104(b).

Court orders

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  1. 1.Appeal dismissed in its entirety
  2. 2.Costs of the appeal to the respondent
On appeal from
High Court of Kenya
HCMC No. 846 of 2010
Jurisdiction invoked
Appeal as of right under Order 43 of the Civil Procedure Rules (leave unnecessary), the appeal challenging the High Court's exercise of powers under the Civil Procedure Code in enforcement of an arbitral award, not an appeal under section 39 of the Arbitration Act

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, "Broadway Trust Ltd v China Young Tai Engineering Co. Ltd", Case Analysis (2018). Civil Appeal No. 291 of 2012. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2018/885/eng@2018-01-19

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