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ELCPartially AllowedChamber Summons dated 4th September 2019· [2020] KEELC 1322 (KLR)

Kenard Limited v Julius Mwangi Kihara [2020] KEELC 1322 (KLR)

High Court of Kenya
24 September 2020
2,060 words in judgment
View original judgmentRead on Kenya Law Watch case
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The bottom line

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Kenya's High Court ruled that objections to an arbitrator's authority must be raised during arbitration—not later when a party tries to block enforcement of the award.

What this practically means

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Executive summary

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This first-instance ruling by L. Gacheru J of the High Court at Thika, delivered virtually on 24th September 2020, determined a Chamber Summons dated 4th September 2019 by Kenard Limited seeking recognition and enforcement of a final arbitral award dated 13th August 2019 by sole arbitrator Charles Kanjama, awarding the Applicant Kshs. 2,110,000/= in rent arrears against Julius Mwangi Kahara under an Agreement of Lease dated 1st May 2010 over land in Thika. The Respondent opposed recognition under Section 37 of the Arbitration Act, arguing the lease agreement was invalidly executed because it was signed under seal by only one director, contrary to Article 23 of the Applicant's Articles of Association, which he said was a public document per Gondho Enterprises. The Applicant countered that Section 10 of the Arbitration Act limits judicial interference, that the Respondent was estopped having relied on the lease, and that the objection was new. The Court held that the Respondent submitted to arbitration without raising the execution defect, failed to appeal under Section 35, and that challenges to an arbitrator's jurisdiction lie first before the tribunal (kompetenz-kompetenz), relying on Chania Gardens and National Bank of Kenya v Pipeplastic Samkolit on the sanctity of contract. The Court dismissed the Respondent's objection and allowed the Chamber Summons entirely in terms of prayers 1 and 2, rendering the award binding and enforceable.

Key legal issues

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01

Whether the validity of the underlying lease agreement could be challenged at enforcement stage

Holding

No - the issue was new, was not raised before the Arbitrator, and the Respondent did not appeal under Section 35 of the Arbitration Act

Reasoning

The parties agreed by clause 7.10.2 to refer any dispute to a single arbitrator and by clause 7.10.3 that his determination would be final. The Respondent participated in the arbitration without raising the execution defect. Under the kompetenz-kompetenz principle, jurisdictional challenges belong first to the tribunal; the High Court's role is not original. Allowing the objection at enforcement would reopen litigation contrary to the purpose of arbitration.

p. 3
02

Whether the arbitral award should be recognised and enforced

Holding

Yes - the Chamber Summons was allowed entirely in terms of prayers 1 and 2

Reasoning

The award was final and binding under the parties' agreement, the Respondent failed to appeal within Section 35 of the Arbitration Act, and no ground for refusal under Section 37 was made out since the validity objection was procedurally barred.

p. 3

Legal principles established

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  • A party who submits to arbitration must first raise objections to the arbitrator's jurisdiction before the arbitral tribunal; the challenge cannot be raised for the first time at the enforcement stage.
  • Parties are bound by the terms of their agreement and a court cannot re-write the contract for the parties.

Court orders

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  1. 1.Dismissal of the Respondent's objection
  2. 2.Allowance of the Applicant's Chamber Summons dated 4th September 2019 entirely in terms of prayers No. 1 and 2
  3. 3.The final award dated 13th August 2019 be recognised as binding and enforceable by the Court

Authorities

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Legislation

  • Arbitration ActSection 10
  • Arbitration ActSection 35
  • Arbitration ActSection 37
  • Companies Act CAP 486 (now repealed)Section 34
  • Civil Procedure RulesOrder 21 rule 1

Cases cited (3)

  • Gondho Enterprises Limited v Concord Insurance Company Limited
    [2008] eKLR
  • National Bank of Kenya Ltd v Pipeplastic Samkolit (K) Ltd & Another
    Civil Appeal No.95 of 1999 (2001) KLR 112 (2002) EA 503
  • Chania Gardens Limited v Gilbi Construction Company Limited & Another
    (2015) eKLR
Jurisdiction invoked
Sections 10, 35 and 37 of the Arbitration Act; application to recognise and enforce the final arbitral award dated 13th August 2019

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, "Kenard Limited v Julius Mwangi Kihara [2020] KEELC 1322 (KLR)", Case Analysis (2020). Chamber Summons dated 4th September 2019. Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2020/1322/eng@2020-09-24

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