Skip to content
AI-generated case briefs sourced from Kenya Law · Not legal advice
Caselaw
AI-generated case brief
Case Brief · caselaw.co.ke
ELCDismissed· [2018] KEELC 1759 (KLR)

Gifted Hands Furnishings and Fabric Limited v Kibuwa Enterprises Limited & another [2018] KEELC 1759 (KLR)

High Court of Kenya
20 September 2018
SOS. Okong'o
5,244 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~21 min to read original · ~4 min brief

The bottom line

#

The High Court refused to overturn an arbitration award, confirming that Kenyan courts will not rewrite arbitrators' decisions just because a party disagrees with them.

What this practically means

#

Executive summary

#
The plaintiff and defendant entered an agreement for sale of L.R No. 209/494/1 dated 17th April, 2009 for Kshs. 40,000,000/=. After the plaintiff sued for specific performance and an injunction, the dispute was by consent referred to arbitration before Justice (Rtd) J.B. Havelock, who by an award dated 5th July, 2016 found that the 2009 agreement had been rescinded, rejected the plaintiff's claims for specific performance and injunction, directed the defendant to refund Kshs. 12,000,000/= with 12% interest, and directed the plaintiff to pay the defendant 12% interest on Kshs. 20,000,000/=, the balance of the purchase price payable by the interested party under a rival sale agreement dated 4th March, 2011. The arbitrator later issued a supplementary award interpreting the interest clause. The plaintiff moved the High Court under sections 35 and 39 of the Arbitration Act seeking to set aside the award or, alternatively, to strike out paragraph 52 on the interest on Kshs. 20,000,000/=, contending the arbitrator decided matters beyond the scope of the reference derived from clause 14 of the 2009 agreement, and that the award was unjust, contradictory and made in bad faith. The defendant and interested party opposed, invoking the finality of arbitral awards. The court held that clause 14 did not limit the scope of the reference; the issues framed by all parties covered the 2011 agreement and the defendant's loss, so section 35(2)(a)(iv) was not made out. It further held that errors of fact or law are not grounds for setting aside, that it had no jurisdiction to conduct merit review, and that a party who fails to challenge jurisdiction before the tribunal cannot raise it after the award. The application was dismissed with costs to the defendant and the interested party.

Key legal issues

#
01

Whether the award exceeded the scope of the reference to arbitration under section 35(2)(a)(iv) of the Arbitration Act

Holding

The award did not exceed the scope of the reference; the issues framed by the parties before the arbitrator covered both the 2009 and 2011 sale agreements and the defendant's loss, so the plaintiff failed to discharge its burden.

Reasoning

The court held that clause 14 of the 2009 agreement did not limit the nature or scope of disputes referable to arbitration; that was left to the parties' pleadings and statements of issues. Since all parties framed issues touching on the 4th March, 2011 agreement between the defendant and the interested party and on the defendant's loss, the arbitrator's award of interest on the Kshs. 20,000,000/= balance was within the reference.

p. 7
02

Whether the arbitrator misconducted himself or acted arbitrarily, capriciously or in bad faith

Holding

The allegations of misconduct, bad faith, injustice and unjust enrichment were not established and, even if established, would not constitute valid grounds for setting aside the award.

Reasoning

The court reiterated the limited grounds under section 35 and section 10's restriction on judicial intervention. Mere dissatisfaction with the outcome is not a ground; an arbitrator's error is only a ground of appeal under section 39, which the court was not entertaining. The court therefore declined any merit review of the award.

p. 7

Legal principles established

#
  • Recourse to the High Court against a domestic arbitral award lies only under section 35 of the Arbitration Act, and public policy leans towards finality of arbitral awards
  • An erroneous or wrong decision by an arbitrator is not a ground for setting aside an award; it can only be a ground of appeal under section 39, and the court cannot conduct a merit review
  • A party who failed to challenge the arbitral tribunal's jurisdiction before the tribunal cannot raise jurisdiction as a ground for setting aside the final award
  • Courts cannot interfere with an arbitrator's findings of fact; a mistake of fact or law is not a ground for setting aside or remitting an award

Court orders

#
  1. 1.The plaintiff's Notice of Motion application dated 27th October, 2017 is dismissed
  2. 2.Costs of the application awarded to the defendant and the interested party

Authorities

#

Legislation

  • Arbitration Act, 1995sections 10, 17(1), 32(c), 34(1)(b), 35(1) and (2), 39
  • Civil Procedure Actsections 1A, 1B, 59
  • Civil Procedure RulesOrder 46 Rule 16, Order 51 Rule 1
  • Arbitration Rules, 1997Rule 7

Cases cited (10)

  • Dilshad Sadruddin Mohamed v. KSA Self Selection Stores Limited & others
    Winding Up Cause No. 57 of 2001 (unreported)
  • Airtel Networks Kenya Limited v. Nyatu Agrovet Limited
    [2011] eKLR
  • Air East Africa v. Kenya Airports Authority
    [2012] eKLR
  • Tony Mark Tanui v. Andrew Stuart & Another
    [2012] eKLR
  • Evangelical Mission for Africa & Another v. Kimani Gachuhi & Another
    [2015] eKLR
  • Anne Mumbi Hinga v. Victoria Njoki Gathara
    [2009] eKLR
  • Rashid Modelina v. Noima Ginnes
    (1967) E.A 645
  • Nairobi Golf Hotels Limited v. Linotic Floor Company Limited
    [2015] eKLR
  • Christ for All Nations v. Apollo Insurance Co. Ltd.
    [2002] 2 E.A. 366
  • DB Shapriya and Co. Ltd. v. Bish International BV (2)
    (2003) 2 EA 404
Jurisdiction invoked
Sections 35 and 39 of the Arbitration Act, 1995; Sections 1A, 1B and 59 of the Civil Procedure Act; Order 46 Rule 16 and Order 51 Rule 1 of the Civil Procedure Rules

Key timeline

#

Practical implications

#

Frequently asked questions

#

Cite this brief

#

Cite this brief

Caselaw, "Gifted Hands Furnishings and Fabric Limited v Kibuwa Enterprises Limited & another [2018] KEELC 1759 (KLR)", Case Analysis (2018). . Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2018/1759/eng@2018-09-20

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