Trishcon Construction Company Limited v Mohamed Salim Shamshudin & another [2019] KECA 821 (KLR)
The bottom line
#Kenya's Court of Appeal upheld an arbitral award against Trishcon Construction, confirming that parties who consent to arbitration and participate after deadlines cannot later challenge the outcome.
What this practically means
#Executive summary
#Questions the Court framed
#The issues the Court set itself to decide, in its own words.
- 1.Whether the arbitration proceedings were conducted under the Arbitration Act or under Order 45 of the Civil Procedure Rules, and whether the judge erred in treating the matter as governed by the Arbitration Act
- 2.Whether the arbitrator erred in enjoining the 2nd respondent, Mr. Dhanji Velji, as a party to the arbitration proceedings
- 3.Whether the arbitrator exceeded the scope of his mandate by awarding damages for breach of contract beyond the valuation contemplated in the consent order
- 4.Whether the alleged secret publication of the award amounted to arbitrator misconduct justifying setting aside the award
- 5.Whether the arbitrator's failure to file the award within the extended 120-day period rendered the award a nullity
- 6.Whether the judge erred in failing to apply Nyangau vs. Nyakwara and in applying Kihuni vs. Gakunya
- 7.Whether the judge's delay of fourteen months in delivering the ruling rendered it a nullity or occasioned a miscarriage of justice
Key legal issues
#Governing framework of the arbitration: Arbitration Act vs Order 45 Civil Procedure Rules
The arbitration was conducted by consent under the Arbitration Act; Order 45 was inapplicable.
The consent order of 24th April 2007 marked the suit settled and referred any dispute on inspection and valuation to arbitration. Kimaru, J. enforced that arbitration clause. Once the suit was marked settled, the trial court ceased to be seized of the dispute, so there was no pending substantive matter over which Order 45 could operate. Both parties persistently invoked the Arbitration Act in their submissions, confirming the governing framework.
Joinder of the 2nd respondent to the arbitration
The arbitrator did not err in enjoining Mr. Dhanji Velji; the consent order itself made him a party, and the appellant's failure to appeal the dismissal of its challenge to the joinder raised an estoppel.
Paragraphs 3 and 4 of the consent order referred to disputes between Mr. Dhanji and Mr. Mohammed Salim Shamshudin, making the 2nd respondent pivotal to the reference. Further, the appellant had challenged the joinder in Miscellaneous Application No. 598 of 2008, which was dismissed and never appealed, conclusively determining the issue.
Whether the arbitrator exceeded his mandate
The arbitrator acted within his mandate; the parties affirmed the pleadings on oath as the basis of the claims, and no coercion, fraud or undue influence was proved.
The mandate is fixed by the consent order. The parties confirmed on oath before the arbitrator that the pleadings filed were the basis of each party's claim. The court cannot rewrite the contract; citing National Bank of Kenya v Pipeplastic and Alghussein v Eton College, the appellant could not take advantage of its own position to defeat the award.
Whether lapse of the 120-day period rendered the award a nullity
No: the parties extended the timeline by consent, actively participated after the lapse, and no party intimated that time was of the essence; acquiescence extended the arbitrator's timeline.
Unlike court jurisdiction, arbitral jurisdiction is conferred by consent of the parties. The parties extended time from 45 to 120 days and continued participating after the lapse. No prejudice was shown and no party asserted at the earliest opportunity that time was of the essence, so technicality cannot defeat the cause of justice.
Effect of the judge's 14-month delay in delivering the ruling
Delay does not automatically nullify a judgment; the appellant failed to prove the delay occasioned a miscarriage of justice or erroneous findings of fact.
Relying on Bond v Dunster Properties, Cobham v Frett and Kenyan decisions, findings of fact are not set aside merely because judgment was seriously delayed; the test is whether the judge was plainly wrong or his recollection of the evidence was at fault on a material point. The appellant offered only bare allegations without proof.
Alleged misconduct in secretly publishing the award
Releasing the award to a party who pays outstanding arbitration fees is an accepted practice and does not amount to misconduct warranting setting aside the award.
The trial judge found it is accepted practice that if one party does not pay its share of fees, the other may pay the full fees and collect the award. In any event, Order 45 was inapplicable, so alleged non-compliance with its publication and filing procedures could not vitiate the award.
Legal principles established
#- Where parties by consent mark a suit as settled and refer emerging disputes to arbitration, the court is no longer seized of the dispute and the arbitration is governed by the Arbitration Act, not Order 45 of the Civil Procedure Rules.
- The scope and extent of an arbitrator's mandate is fixed by contract between the parties, and a court cannot rewrite that mandate absent pleaded and proved coercion, fraud or undue influence.
- In arbitration, jurisdiction is conferred by consent of the parties; a party who actively participates in arbitration after lapse of the agreed timeline, without intimating that time is of the essence, acquiesces in an extension and cannot later claim the award is a nullity.
- Delay in delivering a judgment or ruling does not automatically vitiate it; the appellant must prove on a balance of probability that the delay occasioned a miscarriage of justice or erroneous findings of fact.
Court orders
#- 1.The appeal is dismissed with costs
- 2.The cross-appeal is dismissed with costs
The bench
#One judgment of the whole court — no separate or dissenting opinions.
- On appeal from
- High Court of Kenya at Nairobi
- Nairobi HCCC No. 200 of 2007
- Jurisdiction invoked
- Not expressly stated in the judgment; the appeal lay to the Court of Appeal from a ruling of the High Court dismissing an application to set aside an arbitral award.
Relief refused
#Setting aside the arbitral award and remitting it to the arbitrator for reconsideration on quantum
The arbitration was consensual and conducted under the Arbitration Act; Order 45 was inapplicable; the arbitrator did not exceed his mandate; and the lapse of 120 days did not nullify the award given the parties' active participation
Costs
Both the appeal and cross-appeal dismissed with costs.
Quotable passages
#Verbatim from the judgment, each located to the page it appears on in the official PDF — so these can be cited and checked directly.
Accordingly, the final order of this Court is both the appeal and cross-appeal have no merit and are respectively hereby dismissed with costs.
In light of this, we are satisfied the arbitration proceedings were not conducted pursuant to the provisions of the Civil Procedure Act and Rules. Consequently, we find Order 45 of the Civil Procedure Rules was inapplicable in this matter.
The scope and extent of mandate of an Arbitrator is an issue determined and fixed by contract between parties.
In arbitration proceedings, jurisdiction is generally conferred by consent of the parties.
On the issue of joinder of Mr. Dhanji, estoppel by law operates against the appellant.
Bare allegations that the 14month delay is tantamount to an injustice does not suffice. The appellant should go further and prove on balance of probability the alleged injustice or misapprehension of facts occasioned by the delay.
Issues in the judgment
#The judgment inconsistently renders the name of the case cited by the appellant as Kihuni vs. Gakunya, Kihuni vs. Gakunga and Kihuni vs. Gakunya (1986) eKLR, and the arbitration legislation referenced in Nyangau is cited as the Arbitration Act (cap 49) while the governing statute in this matter is the Arbitration Act No. 4 of 1995.
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Trishcon Construction Company Limited v Mohamed Salim Shamshudin & another [2019] KECA 821 (KLR)", Case Analysis (2019). Civil Appeal No. 28 of 2013. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2019/821/eng@2019-03-22
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.