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Court of AppealDismissedCivil Application (leave to appeal from HCCOMMARB E025 of 2023)

Thaara Limited v WS Insight (K) Limited & another (Civil Application E218 of 2024) [2024] KECA 1464 (KLR)

Court of Appeal
25 October 2024
1,958 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~8 min to read original · ~4 min brief

The bottom line

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Kenya's Court of Appeal refused to let a company appeal an arbitration ruling, confirming that winning arbitration awards in Kenya are very hard to overturn.

What this practically means

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Executive summary

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Thaara Limited, the employer under a main contract for construction of a mall along Limuru Road, sought leave to appeal against a High Court judgment by Majanja, J dated 8th May 2024, which dismissed its application to set aside an arbitral award by Eng. Basil O. Odigie and allowed its enforcement as a decree of the court, with costs of Kshs 100,000 against Thaara. The award had been rendered in favour of WS Insight (K) Limited, the nominated sub-contractor of Parbat Sayani Construction Limited. Thaara's core complaint was that no arbitration agreement existed between it and the 1st respondent, so the arbitrator lacked jurisdiction. Before the Court of Appeal, Thaara relied on the Supreme Court's decision in Nyutu Agrovet v Airtel Networks Kenya Limited, contending that the High Court's decision was so grave and manifestly wrong as to open the narrow avenue for appeal under section 35 of the Arbitration Act. Both respondents opposed, arguing the application merely attacked the merits of the award and the arbitrator's factual findings, the arbitrator being master of facts. The Court agreed with the respondents: the High Court had correctly found an arbitration agreement between Thaara and WS Insight, grounded in the sub-contracts, letters of 13th July 2015, direct payments by Thaara, and the performance bond. Finding no exceptional circumstances warranting leave, the Court dismissed the application with costs to the respondents. The judgment reaffirms the Nyutu Agrovet threshold as the binding test for leave to appeal from section 35 determinations.

Questions the Court framed

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The issues the Court set itself to decide, in its own words.

  1. 1.Whether the applicant has met the narrow and circumscribed threshold for grant of leave to appeal from a decision under section 35 of the Arbitration Act
  2. 2.Whether the High Court's determination on the existence of an arbitration agreement was so grave and manifestly wrong as to close the door of justice

Key legal issues

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01

Threshold for leave to appeal from section 35 Arbitration Act decisions

Holding

The applicant failed to demonstrate exceptional circumstances; the intended appeal merely challenged the merits of the award and findings of fact by the arbitrator.

Reasoning

The Court applied the Supreme Court's Nyutu Agrovet test, which confines appeals from section 35 determinations to cases where the High Court stepped outside the statutory grounds and made a decision so grave and manifestly wrong that it closed the door of justice. The applicant's complaint was that the judge overruled its jurisdictional objection, but the judge made well-founded findings that an arbitration agreement existed under the sub-contracts. Since the proposed grounds attacked the arbitrator's factual findings and the merits, the narrow jurisdiction was not engaged.

p. 4
02

Existence of arbitration agreement between employer and sub-contractor

Holding

The Court agreed with the High Court that an arbitration agreement existed between Thaara Limited and WS Insight (K) Limited, entitling the sub-contractor to invoke the arbitration clause against the employer.

Reasoning

The learned judge had found, as a matter of evidence, that Thaara Limited had authority to make direct payments to WS Insight (K) Limited and could invoke clause 31 of the sub-contract; that the sub-contractor aggrieved by the employer's inaction could institute arbitration against the employer; and that the collateral agreement issue was properly before the arbitrator. The Court of Appeal endorsed these findings, holding the arbitrator was master of the facts and had made well-founded determinations on the existence of the agreement.

p. 4

Legal principles established

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  • Appeals from High Court determinations under section 35 of the Arbitration Act lie to the Court of Appeal only where the High Court stepped outside the section 35 grounds and made a decision so grave and manifestly wrong that it completely closed the door of justice; leave is granted only in the clearest of cases.
  • An application for leave to appeal that seeks to re-litigate the merits of an arbitral award, including findings on the existence of an arbitration agreement, does not meet the threshold for leave.

Court orders

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  1. 1.Application for leave to appeal dismissed
  2. 2.Costs of the application awarded to the respondents

The bench

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One judgment of the whole court — no separate or dissenting opinions.

majority
majority
majority
On appeal from
High Court
HCCOMMARB E025 of 2023
Jurisdiction invoked
Leave to appeal under section 35 of the Arbitration Act, threshold set by the Supreme Court in Nyutu Agrovet Limited v Airtel Networks Kenya Limited

Relief refused

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Leave to appeal against the High Court judgment allowing enforcement of the arbitral award

No exceptional circumstances; the intended appeal attacks the merits of the award, which lies outside the narrow leave jurisdiction

p. 4

Costs

Application dismissed with costs to the respondents.

Quotable passages

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Verbatim from the judgment, each located to the page it appears on in the official PDF — so these can be cited and checked directly.

the only instance that an appeal may lie from the High Court to the Court of Appeal on a determination made under section 35 is where the High Court, in setting aside an arbitral award, has stepped outside the grounds set out in the said section and thereby made a decision so grave, so manifestly wrong and which has completely closed the door of justice to either of the parties
p. 2Nyutu Agrovet threshold for leave to appeal under section 35 Arbitration Act
the applicant's application seeks to challenge the merits of the arbitral award. Indeed, the arbitrator is the master of facts and, in our view, the arbitrator made well founded determinations as to whether there was an arbitration agreement between the applicant and the 1st respondent
p. 4Leave applications cannot be used to challenge merits or arbitral findings of fact
In our considered view, therefore, there does not exist exceptional circumstances that would warrant grant of leave to appeal as sought by the applicant. Consequently, we hereby dismiss this application with costs to the respondents.
p. 4Disposition - dismissal of application with costs

Issues in the judgment

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minor

The 1st respondent is referred to variously as WS Insight (K) Ltd in the judgment but the case caption and party list are not fully set out in the copy; party roles are inferred from the narrative.

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, "Thaara Limited v WS Insight (K) Limited & another (Civil Application E218 of 2024) [2024] KECA 1464 (KLR)", Case Analysis (2024). Civil Application (leave to appeal from HCCOMMARB E025 of 2023). Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2024/1464/eng@2024-10-25

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