Narok County Government (Being the Legal Successor of the Defunct County Council of Narok) v SEC & M Company Limited [2020] KECA 116 (KLR)

Court of Appeal

4 December 2020

ASAsike-Makhandia DMD.K. Musinga SKS. Gatembu Kairu

2,235 words in judgment

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The bottom line

Kenya's Court of Appeal confirmed that challenging an arbitral award in the High Court is the end of the road unless you first get the court's permission to appeal.

What this practically means

Executive summary

This Court of Appeal appeal arose from the High Court's refusal to set aside an arbitral award by Mr. Arthur K. Igeria dated 29th November 2013, which directed Narok County Government to pay Sec & M Company Limited fees reverting to the original Kshs.89,101,215 valuation fee after the County defaulted on a renegotiated, 50%-discounted payment within two years. The appellant contended that the letter of comfort issued by the County Clerk on 15th October 2009, permitting the reversion, was fraudulent, illegal and contrary to Kenya's public policy, including Article 10 of the Constitution, and that the learned judge failed to consider the full breadth of the issues and the principles for setting aside arbitral awards. The respondent argued the appeal failed the threshold in Nyutu Agrovet Limited v Airtel Networks Kenya Limited. The Court first addressed jurisdiction, holding, applying section 39(3) of the Arbitration Act and Nyutu Agrovet, that an appeal from a High Court section 35 decision lies only with leave of the Court of Appeal, which the appellant never sought - a serious procedural misstep. Nonetheless, the Court considered the merits and found none: the arbitrator and judge had considered the validity and credibility of the letter of comfort, alleged constitutional breaches cannot be introduced through setting-aside applications, and the judge correctly applied the setting-aside principles. The Court affirmed the High Court's decision and dismissed the appeal with costs to the respondent.

Key legal issues

Jurisdiction to hear appeals under section 35 of the Arbitration Act

Holding

An appeal to the Court of Appeal from a High Court decision under section 35 of the Arbitration Act lies only with leave of the Court; absent leave, the appeal does not lie.

Reasoning

Reading section 39(3) of the Arbitration Act alongside the Supreme Court's decision in Nyutu Agrovet, the Court held that although there is no express bar to appeals from section 35 decisions, a leave mechanism is necessary to guard against frivolous, time-wasting and opportunistic appeals. The appellant never sought leave, which was a serious procedural misstep; the Court nonetheless considered the merits.

p. 3

Public policy challenge to the arbitral award

Holding

The arbitral award was not in contravention of the public policy of Kenya; the allegation that the County Clerk's letter of comfort violated Article 10 of the Constitution could not sustain a setting-aside application.

Reasoning

The Court noted that the Supreme Court in Nyutu was emphatic that alleged constitutional breaches cannot be introduced through an application to set aside an arbitral award. The arbitrator and the learned judge had addressed the validity, legality and credibility of the letter of comfort, and the learned judge rightly declined to re-open issues canvassed before the tribunal.

p. 3

Whether the judge considered the full scope of issues and setting-aside principles

Holding

The learned judge addressed all the issues placed before the arbitrator and correctly applied the principles for setting aside an arbitral award; the appeal grounds on these points failed.

Reasoning

The Court perused the impugned ruling and found that the judge had set out the arbitrator's findings in detail, including his consideration of the validity and credibility of the letter of comfort, and that the judge considered all relevant principles of setting aside an arbitral award and arrived at the right decision.

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Legal principles established

An appeal to the Court of Appeal from a High Court decision made under section 35 of the Arbitration Act can only lie with leave of the Court of Appeal.
Alleged breaches of the Constitution cannot be introduced by way of an application to set aside an arbitral award.
A court has no jurisdiction to determine the legality or otherwise of an arbitrator's findings of fact, as that would re-open an issue that ought to have been canvassed before the arbitral tribunal.

Court orders

1.The appeal is dismissed with costs to the respondent

On appeal from: High Court of Kenya at Nairobi; H.C. Misc. Civil Case No. 71 of 2014
Jurisdiction invoked: Section 39(3) of the Arbitration Act (considered in relation to appeals from High Court decisions under section 35 of the Arbitration Act)

Key timeline

Practical implications

Frequently asked questions

Cite this brief

Caselaw, "Narok County Government (Being the Legal Successor of the Defunct County Council of Narok) v SEC & M Company Limited [2020] KECA 116 (KLR)", Case Analysis (2020). Civil Appeal No. 268 of 2015. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2020/116/eng@2020-12-04

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