SBM Bank (Kenya) Limited v Afrasia Bank Limited (Civil Application E327 of 2022) [2023] KECA 366 (KLR)
The bottom line
#Kenya's Court of Appeal blocked enforcement of a USD 7.5 million judgment against SBM Bank pending appeal, and refused to strike the appeal out.
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 respondent's Motion to strike out the applicant's Motion and record of appeal under rule 86 is merited, given the contention that no appeal lies from a High Court decision under section 35 of the Arbitration Act without leave
- 2.Whether the applicant's Motion for stay of execution pending appeal satisfies the twin principles of arguability and nugatory-ness under rule 5(2)(b)
Key legal issues
#Whether an appeal can be struck out where the challenge is to whether an appeal lies
No - the question whether an appeal lies is central to the substantive appeal and cannot be resolved on a rule 86 interlocutory application
The jurisdictional grounds underpinning the strike-out Motion were the same as the main grounds of appeal. Determining them interlocutorily would decide the appeal itself before a full hearing, contrary to the principle in Airland Tours that interlocutory applications must not produce definitive findings on disputed propositions of law.
Whether the twin principles for stay under rule 5(2)(b) were satisfied
Yes - the appeal grounds were arguable, and the respondent's own admission about its adverse financial position cast doubt on its ability to refund the colossal decretal sum, rendering a successful appeal nugatory
The grounds in the memorandum of appeal were neither idle nor frivolous. On the nugatory limb, the applicant relied on Trust Bank v Investech regarding difficulties recovering from a foreign bank; the respondent's own statement that its financial position had been adversely affected by being out of pocket cast doubt on its liquidity to refund the decretal amount if paid.
Legal principles established
#- A court hearing an interlocutory application must not make conclusive or definitive findings of fact or law on contested issues
- A jurisdictional challenge that goes to the heart of the appeal should not be determined on a strike-out application, as that would prematurely shut the Court's doors on an appellant raising substantial issues
- Stay under rule 5(2)(b) is granted only on the twin principles of an arguable appeal and nugatoriness, and one arguable ground suffices for the first limb
Court orders
#- 1.Dismissal of the respondent's Notice of Motion dated September 22, 2022 with no orders as to costs
- 2.Stay of execution of the judgment and decree of the High Court of Kenya at Nairobi (W Okwany, J) dated July 21, 2022 pending hearing and determination of Civil Appeal No E620 of 2022
- 3.That the appeal be heard and determined on a priority basis
- 4.That the costs of the applicant's application abide the outcome of the appeal
The bench
#One judgment of the whole court — no separate or dissenting opinions.
- On appeal from
- High Court of Kenya at Nairobi
- Nairobi HC Misc App No E386 of 2021
- Jurisdiction invoked
- Rule 5(2)(b) of the Court of Appeal Rules (stay pending appeal); rule 86 (strike out) challenged jurisdiction under sections 35 and 39(3) of the Arbitration Act
Relief refused
#Strike out of the applicant's Motion and record of appeal
The jurisdictional issue raised is central to the substantive appeal and cannot be conclusively determined at an interlocutory stage
Costs
Respondent's Motion dismissed with no orders as to costs; costs of the applicant's application to abide the outcome of the appeal
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.
determination of the jurisdictional issue raised in the respondent's Motion would be tantamount to determination of the appeal in Civil Appeal No E620 of 2022 at an interlocutory stage
In an interlocutory application the Court is not required to make any conclusive or definitive findings of fact or law, most certainly not on the basis of contradictory afidavit evidence or disputed propositions of law.
applications under rule 5(2) (b) can only succeed if the applicant satisfies the twin principle to wit that the appeal (or intended appeal) is arguable; and that the appeal, if successful, would be rendered nugatory if stay is not granted
there be stay of execution of the judgment and decree of the High Court of Kenya at Nairobi (W Okwany, J) dated July 21, 2022 pending hearing and determination of Civil Appeal No E620 of 2022
the costs of the application do abide the outcome of the appeal
Issues in the judgment
#The cases cited by the court in support of the twin principles (Anne Wanjiku Kibeh, Yellow Horse Inns, University of Nairobi, Trust Bank) are referenced parenthetically within the court's reasoning rather than as independently argued authority; treatment labels record them as party-cited or court-referenced without clear adoption.
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "SBM Bank (Kenya) Limited v Afrasia Bank Limited (Civil Application E327 of 2022) [2023] KECA 366 (KLR)", Case Analysis (2023). Civil Appeal No E620 of 2022 (application). Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2023/366/eng@2023-03-31
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.