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Court of AppealDismissedCivil Appeal No. 256 of 2019· [2021] KECA 1072 (KLR)

John Oriri Nyandoro v Transmara Sugar Company Limited

Court of Appeal of Kenya
29 January 2021
4,159 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~17 min to read original · ~4 min brief

The bottom line

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Kenya's Court of Appeal ruled that a sugarcane contract's arbitration clause stayed valid despite law changes, and the cane farmer's lawsuit must go to arbitration.

What this practically means

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Executive summary

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This is a second appeal to the Court of Appeal at Kisumu against the judgment of the High Court at Migori (Mrima, J.) which had upheld a ruling by the Senior Resident Magistrate's Court at Rongo staying the appellant's breach-of-contract suit over a sugarcane growing and supply agreement dated 22nd June 2011 and referring the dispute to arbitration under Clause 9 of the agreement. The appellant argued that the arbitration clause became inoperative or incapable of performance because the Sugar Act 2001, which created the named arbitral participants and the Sugar Arbitration Tribunal appeal mechanism, was repealed by the Crops Act 2013, leaving him without a right of appeal. The Court of Appeal, in a unanimous judgment delivered by Nambuye, Okwengu and Sichale, JJ.A., disagreed. Applying clause 7 of the Sixth Schedule to the Constitution and Article 259, it held that pre-existing law must be construed with the alterations and adaptations necessary to conform to the Constitution: the District Officer becomes the Assistant County Commissioner, the Kenya Sugar Board's functions passed to the Agriculture, Fisheries and Food Authority, and the county agricultural officer replaces the divisional agricultural officer. The appeal mechanism to the defunct Sugar Arbitration Tribunal is preserved through section 39 of the Arbitration Act, which permits an appeal to the High Court on a question of law. The Court upheld the High Court judgment and dismissed the appeal with costs. The decision binds lower courts to construe contractual references to abolished offices and tribunals through transitional provisions rather than declaring arbitration clauses inoperative.

Key legal issues

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01

Effect of transitional constitutional and statutory provisions on a contractual arbitration clause referencing abolished officers and institutions

Holding

The clause remains valid and operative; the court must construe pre-existing law with alterations and adaptations to conform to the Constitution, substituting successors such as the Assistant County Commissioner for the District Officer and the Agriculture, Fisheries and Food Authority for the Kenya Sugar Board.

Reasoning

Article 259 obliges the court to interpret the law to give effect to the Constitution's purpose, values and principles. Clause 7 of the Sixth Schedule mandates that pre-existing law be construed with alterations, adaptations, qualifications and exceptions necessary to conform to the Constitution. The transitional provisions changed designations rather than extinguishing powers; the Authority under section 3(3) of the AF&FA Act succeeded to the Kenya Sugar Board, and the out-grower entity was not a creature of the repealed Sugar Act.

p. 5
02

Whether loss of the Sugar Arbitration Tribunal, the agreed appeal forum, rendered the arbitration clause incapable of performance under section 6(a) of the Arbitration Act

Holding

No. The clause is not incapable of performance or inoperative; the parties' intention to preserve a right of appeal is achieved through an appeal to the High Court on a question of law under section 39 of the Arbitration Act.

Reasoning

The tribunal became defunct with the repeal of the Sugar Act, so a dissatisfied party can no longer access it. However, the parties' intention was to preserve a right of appeal against the arbitral committee's decision. In accordance with the transitional provisions, the court must construe clause 9 so as to protect that intention, with the appeal now lying to the High Court under section 39 of the Arbitration Act on questions of law arising in the course of the arbitration or out of the award.

p. 5

Legal principles established

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  • A contractual arbitration clause referencing officers or institutions abolished or altered by a change in law remains operative where transitional provisions (Article 7 of the Sixth Schedule to the Constitution and saving clauses in successor statutes) allow the referenced offices, institutions or functions to be construed as their constitutional or statutory successors.
  • Where an agreement's agreed appeal mechanism to a tribunal abolished by repeal is lost, the parties' intention to preserve a right of appeal is protected by construing the agreement to allow an appeal to the High Court on a question of law under section 39 of the Arbitration Act.

Court orders

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  1. 1.The appeal is dismissed with costs
  2. 2.The judgment of the learned Judge of the High Court is upheld
On appeal from
High Court of Kenya at Migori
HCCC No. 167 of 2018
Jurisdiction invoked
Second appeal to the Court of Appeal under the Court of Appeal's appellate jurisdiction (the judgment describes itself as 'a second appeal' from the High Court); no specific provision is quoted

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, "John Oriri Nyandoro v Transmara Sugar Company Limited", Case Analysis (2021). Civil Appeal No. 256 of 2019. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2021/1072/eng@2021-01-29

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