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ELCPartially AllowedChamber Summons dated 19th September 2016 (arising from suit referred to arbitration by ruling dated 7th November 2014)· [2019] KEELC 4642 (KLR)

Kifaru Investments Limited & 6 others v Kihingo Village (Waridi Gardens) Ltd Kihingo Village (Waridi Gradens) & another [2019] KEELC 4642 (KLR)

High Court of Kenya
6 February 2019
2,852 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
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The bottom line

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Kenya's High Court confirmed that ignoring arbitration deadlines and skipping hearings will not save you from an award being enforced against you.

What this practically means

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Executive summary

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This is a first-instance High Court decision on a chamber summons dated 19th September 2016 brought by the plaintiffs under Order 46 rules 10 and 18(1) of the Civil Procedure Rules and Section 36(1) and (3) of the Arbitration Act, seeking judgment in terms of a final arbitral award published on 28th July 2016 by Mr. John M. Ohaga FCIArb. The dispute had been referred to arbitration by consent-adjacent court order of 7th November 2014 (Gitumbi J). The defendants filed a preliminary objection contending the arbitrator had not determined the costs of the reference and had not completed his task, and also sought to set the award aside as having been made in denial of fair hearing and contrary to public policy, alleging the arbitrator locked them out after they changed advocates. The court framed four issues: fair hearing before the arbitrator, setting aside of the award, jurisdiction to enforce where costs were allegedly undetermined, and whether the chamber summons should be allowed. It found the defendants, who had themselves sought the reference to arbitration, were given several opportunities to file a statement of response but neglected to do so; the burden of proving a public policy conflict lay on them and was not discharged; and the award in fact directed the 1st and 2nd respondents to bear the costs of the reference and the award, defeating the jurisdictional objection. The preliminary objection was dismissed with no orders as to costs. Judgment was entered for the plaintiffs in terms of the arbitral award, with the costs of the application and the suit borne by the defendants.

Key legal issues

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01

Whether the defendants were denied a fair hearing before the Arbitrator

Holding

The defendants were accorded an opportunity to be heard but failed to present their case; the arbitrator's ruling locking them out was proper.

Reasoning

The defendants themselves sought referral to arbitration and were represented until their advocates ceased acting for lack of instructions. They were granted extensions, were directed to be served personally, and were given several opportunities to file a statement of response, all without compliance. The director swearing the replying affidavit offered no explanation for the default. The arbitrator's ruling of 30th June 2016 showed the defendants were given several opportunities but neglected to present their case, so there was no denial of fair hearing.

p. 3
02

Whether the Award ought to be set aside under Section 35 of the Arbitration Act

Holding

The threshold for setting aside the award on grounds of public policy was not met; the ground fails.

Reasoning

Section 35(2)(b)(ii) permits setting aside an award in conflict with the public policy of Kenya. Drawing on Christ for All Nations vs Appollo Insurance and National Oil Corporation vs Prisko Petroleum, the court held public policy is an elastic ground requiring cogent proof. The defendants, having been indolent and having failed to present their case in time, could not turn around and claim the award was against public policy; they gave no cogent proof of inconsistency with the Constitution, national interest, or justice and morality.

p. 4
03

Whether the court lacks jurisdiction to enforce the Award because the arbitrator did not award costs of the arbitration

Holding

The challenge is without merit because the award did determine costs, directing the defendants to bear the costs of the reference and the award.

Reasoning

Section 32B(1) of the Arbitration Act provides that costs shall be determined and apportioned by the arbitral tribunal in its award unless otherwise agreed. On examining the award dated 28th July 2016, its last paragraph directed the 1st and 2nd respondents to bear the costs of the reference and the award. Guided by Order 46 rule 13 of the Civil Procedure Rules and Section 27 of the Civil Procedure Act, the court agreed with the plaintiffs that the jurisdictional challenge was without merit.

p. 4
04

Whether the chamber summons seeking to convert the award into a judgment should be allowed

Holding

The application is merited and judgment is entered in terms of the arbitral award, with costs to the plaintiffs.

Reasoning

Having found no denial of fair hearing, no public policy ground for setting aside, and no jurisdictional defect on costs, the court found merit in the chamber summons brought under Section 36 of the Arbitration Act and Order 46 of the Civil Procedure Rules. The award was final as the parties had agreed, judicial intervention being limited, and the court entered judgment in terms of the sole arbitrator's final award and awarded costs of the application and suit to the plaintiffs.

p. 4

Legal principles established

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  • The burden of proving that an arbitral award conflicts with the public policy of Kenya rests on the party seeking to set it aside, and indolence in presenting one's case before an arbitrator does not establish a public policy ground.
  • Public policy is an elastic ground requiring cogent proof before an award can be set aside on that account.
  • A party who moves the court to refer a dispute to arbitration and is given opportunities to present its case but fails cannot later claim the award violates fair hearing rights under Article 50(1).

Court orders

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  1. 1.The preliminary objection dated 17th October 2016 is dismissed.
  2. 2.Judgment be and is hereby entered in favour of the plaintiffs as against the defendants in terms of the Sole Arbitrator's Final Award published on 28th July 2016 by Mr. John M. Ohaga FCIArb.
  3. 3.The costs of this application and the suit be borne by the defendants.

Authorities

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Legislation

  • Civil Procedure Rules 2010Order 46 rules 10 and 18(1)
  • Civil Procedure Rules 2010Order 46 rule 13
  • Arbitration Act, Cap 49Section 36(1) and (3)
  • Arbitration Act, Cap 49Section 35(1), (2) and (3)
  • Arbitration Act, Cap 49Section 32B(1) and (2)
  • Arbitration Act, Cap 49Section 34(5)
  • Arbitration Rules, 1997Rules 4(1) and (2), 6 and 9
  • Civil Procedure Act, Cap 21Sections 1A, 1B and 27
  • Constitution of Kenya, 2010Articles 50(1), 159(2)(a) and 159(2)(c)

Cases cited (11)

  • National Oil Corporation of Kenya Ltd vs Prisko Petroleum Network Ltd
    [2014] 2 EA 163 / [2014] eKLR
  • Habo Agencies Limited vs Wilfred Odhiambo Musingo
    [2016] eKLR
  • Nyutu Agrovet Ltd vs Airtel Network Ltd
    [2015] eKLR
  • Erad Suppliers & General Contractors Ltd vs National Cereals & Produce Board
    H.C. Misc Civil Application No. 639 of 2009 (UR)
  • Anne Mumbi Hinga vs Victoria Njoki Gatharu
    [2009] eKLR
  • Joyce Bochere Nyamweya (suing as legal representative of Tabitha Moige Nyamweya (Deceased)) vs Charles Ratemo Nyamweya & 9 others
    [2016] eKLR
  • Murlidhar Agarwal and Another vs State of U.P and others
    [1974] 2 SCC 473
  • Evangelical Mission for Africa & Another vs Kimani Gachuhi & Another
    [2015] eKLR
  • Kenfit Limited vs Consulata Fathers
    [2005] eKLR
  • Christ for All Nations vs Appollo Insurance Company Limited
    [2002] EA 366
  • Victoria Furnitures Ltd vs Zadock Furnitures Systems Ltd
    [2017] eKLR
Jurisdiction invoked
Order 46 rules 10 and 18(1) of the Civil Procedure Rules 2010; Section 36(1) and (3) of the Arbitration Act, 1995; Rules 4(1) and (2), 6 and 9 of the Arbitration Rules, 1997

Key timeline

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Practical implications

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Frequently asked questions

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Later judgments citing this (2)

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Judgments in the corpus that rely on this one. Where the Court said how it treated the authority, that is shown.

Cite this brief

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Cite this brief

Caselaw, "Kifaru Investments Limited & 6 others v Kihingo Village (Waridi Gardens) Ltd Kihingo Village (Waridi Gradens) & another [2019] KEELC 4642 (KLR)", Case Analysis (2019). Chamber Summons dated 19th September 2016 (arising from suit referred to arbitration by ruling dated 7th November 2014). Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2019/4642/eng@2019-02-06

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