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ELCPartially AllowedMisc. 17 of 2017· [2017] KEELC 1481 (KLR)

Bennet Ezekiel Okumu Udoto v Classis Interiors Limited [2017] KEELC 1481 (KLR)

High Court of Kenya
11 October 2017
3,129 words in judgment
View original judgmentRead on Kenya Law Watch case
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The bottom line

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The High Court in Kakamega let an arbitration award stand and be enforced as a court judgment, rejecting arguments that the arbitrator got it wrong.

What this practically means

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Executive summary

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Two competing applications arose from a sale of land agreement dated 22nd March 2016 between Bennet Ezekiel Okumu Udoto and Classic Interiors Ltd for three plots at an agreed price of Ksh. 22,000,000, of which only a 10% deposit was paid. Clause 5.7 provided for arbitration before a single arbitrator, whose decision would be conclusive and binding. J.J. Mukavale, the agreed arbitrator, delivered an award on 10th March 2017 ordering the purchaser to pay the balance while retaining the property. Bennet sought adoption of the award as judgment of the court by Notice of Motion dated 1st April 2017 under Sections 1A, 1B and 3A of the Civil Procedure Act and Order 46 rule 20. Classic Interiors filed a Notice of Motion dated 22nd May 2017 under Section 35(2) of the Arbitration Act seeking to set aside the award on the grounds that it dealt with matters beyond the scope of the reference, notably the location, position and size of parcels 5325 and 5879, and that it offended Article 159(3) of the Constitution and public policy. The purchaser also objected that the set-aside application was duplicative of a pending appeal, Kakamega HCCA 28 of 2017. The court held that judicial intervention in arbitral awards is strictly confined to the Section 35 grounds and does not confer appellate jurisdiction. It found the arbitrator had in fact addressed the contested issues, and that no element of public policy violation was established. The adoption application succeeded; the set-aside application failed; each party was ordered to bear its own costs. Delivered at Kakamega on 11th October 2017 by N.A. Matheka, Judge.

Key legal issues

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01

Scope of court's power to set aside an arbitral award under Section 35 of the Arbitration Act

Holding

The court's intervention is confined to the Section 35 grounds and it cannot review the arbitrator's findings as if on appeal; the set-aside application therefore failed.

Reasoning

The court applied the Nyutu Agrovet five-judge decision and the Anne Mumbi Hinga decision, which restrict judicial intervention to the statutory grounds. It found the arbitrator had in fact dealt with the contested issue of the location, position and size of parcels 5325 and 5879 by determining that map amendment was the purview of the regional lands office and that the purchaser, having had the land transferred, was estopped from rescinding. Going into the facts would be appellate review, which the Act forbids.

p. 4
02

Whether the award conflicted with the public policy of Kenya or Article 159(3) of the Constitution

Holding

No conflict with public policy was established; nothing in the arbitral process was injurious to the public, offensive, illegal or violative of basic societal norms.

Reasoning

Adopting Justice Mabeya's definition of public policy in Rwama Farmers, the court tested the award against the criteria of public injury, offensiveness, illegality and violation of basic norms. It found no evidence of any such element in the arbitral process, so the public policy ground under Section 35(2)(b) failed.

p. 5
03

Whether the adoption application was premature and whether duplicity with the pending appeal barred its determination

Holding

The adoption application was not premature since no set-aside application was pending when filed, and the court exercised its inherent power to determine both applications notwithstanding the pending appeal.

Reasoning

The respondent argued the adoption application should be stayed because of the later set-aside application. The court held that when the adoption application was filed nothing else was pending and there was nothing to stay. On the duplicity objection based on Sections 6 and 80 of the Civil Procedure Act given the pending appeal in Kakamega HCCA 28 of 2017, the court invoked its inherent powers under Section 3A and proceeded to determine both applications on the merits.

p. 2

Legal principles established

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  • Intervention of the court in an arbitral award is strictly limited to the grounds set out in Section 35 of the Arbitration Act, and the court does not exercise appellate jurisdiction over the arbitrator
  • Setting aside under Section 35 is a narrower avenue of challenge than an appeal, with restricted grounds
  • A conflict with public policy under Section 35(2)(b) connotes that which is injurious to the public, offensive, illegal, unacceptable or violative of the basic norms of society

Court orders

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  1. 1.The Application by way of Notice of Motion dated 1st April 2017 succeeds
  2. 2.The Notice of Motion application by the respondent filed in court on 22nd May 2017 fails
  3. 3.Each party is to bear its own costs of the applications
Jurisdiction invoked
Sections 1A, 1B and 3A of the Civil Procedure Act and Order 46 rule 20 of the Civil Procedure Rules (adoption of award); Section 35(2) of the Arbitration Act (setting aside of award)

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, "Bennet Ezekiel Okumu Udoto v Classis Interiors Limited [2017] KEELC 1481 (KLR)", Case Analysis (2017). Misc. 17 of 2017. Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2017/1481/eng@2017-10-11

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