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ELCDismissedChamber Summons dated 31st March 2021 (arising from award of Arbitrator Klaus Von Mitzlaff dated 2/03/2021)· [2022] KEELC 1613 (KLR)

Dartstar Limited v Kilifi Boatyard Limited [2022] KEELC 1613 (KLR)

Environment and Land Court
10 February 2022
3,608 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~14 min to read original · ~4 min brief

The bottom line

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A Kenyan court refused to overturn an arbitration decision over a lease dispute, confirming that land arbitration awards stand unless proven illegal or immoral.

What this practically means

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Executive summary

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This Environment and Land Court ruling at Malindi, delivered by M.A. Odeny J on 10 February 2022, disposed of the Respondent's preliminary objection challenging jurisdiction and the Applicant's Chamber Summons seeking to set aside an arbitral award by Klaus Von Mitzlaff dated 2 March 2021. The award resolved a dispute over renewal of a 20-year lease over a beach property bordered by Kilifi Creek, between the 1st and 2nd Respondents. The Applicant, claiming to be the registered owner and asserting it was not a party to the lease or the arbitration agreement of 1 November 2001, sought stay of the award, setting aside of the award, and a declaration that it was discharged from the award's obligations. The Respondent objected that only the High Court established under Article 165(1) could entertain setting-aside applications under section 35 of the Arbitration Act. The court rejected this objection, relying on Godfrey Mwampembwa v Nation Media Group and holding that the ELC, established under Article 162(2)(b) and sections 4 and 13 of its Act, has jurisdiction over arbitral awards concerning land matters, including lease disputes. On the merits, the court found the lease-renewal dispute was arbitrable under the lease's arbitration clause, that the Applicant was aware of the proceedings but chose not to participate, and that it failed to prove the award was inconsistent with the public policy of Kenya, particularly having never raised the TOL ownership issue during arbitration. The Chamber Summons was dismissed with each party bearing their own costs.

Key legal issues

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01

Jurisdiction of the Environment and Land Court to entertain setting-aside applications under section 35 of the Arbitration Act

Holding

The ELC, a court of equal status under Article 162(2)(b), has jurisdiction over applications from arbitral awards whose subject matter falls within section 13 of the Environment and Land Court Act

Reasoning

The ELRC has been held to have such jurisdiction (Godfrey Mwampembwa v Nation Media Group), since the Arbitration Act predates courts of equal status and could not have intended to exclude them. The ELC is established under Article 162(2)(b) and section 4 of its Act, with jurisdiction over disputes relating to land, leases and contracts granting enforceable interests in land. The arbitration here concerned a lease over land, so the ELC has jurisdiction.

p. 4
02

Whether the subject matter of the dispute was capable of settlement by arbitration

Holding

A dispute on renewal of a lease is arbitrable under the arbitration clause in the lease agreement

Reasoning

The Applicant contended the TOL was in the name of KPL and a TOL could only be issued by government, but it was not disputed that the TOL was in KPL's name and that Mr. Christopher Wilson identified himself as director of KPL during lease negotiations. The dispute concerned renewal of a lease, which is a proper subject of the ADR mode agreed in the lease, and the Applicant was aware of the arbitration and chose not to participate.

p. 5
03

Whether the award conflicts with the public policy of Kenya

Holding

The Applicant did not prove the award was immoral, illegal or contrary to basic legal/moral principles

Reasoning

Adopting the Ringera J test in Christ for All Nations v Apollo Insurance, an award is set aside for public policy reasons only if inconsistent with the constitution or laws, inimical to national interest, or contrary to justice and morality. The Applicant knew KPL held the TOL but never raised the issue during arbitration. Section 35 is not an appeal on questions of law, and litigation must come to an end.

p. 5

Legal principles established

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  • Courts with the status of the High Court established under Article 162(2) have jurisdiction to hear applications to set aside arbitral awards under section 35 of the Arbitration Act where the dispute falls within their statutory mandate

Court orders

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  1. 1.The Preliminary Objection on jurisdiction is dismissed, the Court finding it has jurisdiction over applications from arbitral awards involving matters listed under Section 13 of the Environment and Land Court Act
  2. 2.The Applicant's Chamber Summons dated 31st March 2021 seeking to set aside the award is dismissed

Authorities

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Legislation

  • Constitution of Kenya, 2010Article 165(1); Article 162(2); Article 165(3); Article 165(5); Article 40; Article 42; Article 50(1); Articles 69 and 70
  • Arbitration ActSections 35(1), 35(2), 35(3), 35(2)(b)(ii), 39
  • Environment and Land Court Act, 2011Sections 4 and 13
  • Interpretation and General Provisions Act
  • Employment & Labour Relations Act, 2012Section 12
  • Land ActSection 26
  • Arbitration RulesRule 7
  • Civil Procedure RulesOrder 21 [1]
  • Industrial Court Act, 2011Section 12
  • Public Order No. 2 of 2021

Cases cited (11)

  • S. K. Macharia & Another v Kenya Commercial Bank Ltd & 2 Others
    [2012] eKLR
  • Tanzania National Roads Agency v Kunder Singh Construction Co Ltd
    [2014] eKLR
  • Scope Telematics International Sales Limited v Stoic Company and Another
    [2017] eKLR
  • Castle Investments Company Limited v Board of Governors Our Lady of Mercy Girls Secondary School
    [2019] eKLR
  • Savings & Loan {K} Limited v Kanyenje Karangaita Gakombe & another
    [2015] eKLR
  • Godfrey Mwampembwa v Nation Media Group Limited
    [2021] eKLR
  • CMC Aviation Limited, Trident Enterprises Limited v Anastacio D Thomas
    Miscellaneous Application No 559 of 2016
  • United States International University v Attorney General
    Nairobi Petition No. 170 of 2012 (eKLR)
  • Christ for All Nations v Apollo Insurance Company Limited
    NRB HCC No. 477 of 1999
  • Glencore Grain Limited v TSS Grain Millers
    [2002] I KLR 606
  • Karissa Chengo case
Jurisdiction invoked
Article 162(2)(b) of the Constitution and sections 4 and 13 of the Environment and Land Court Act, 2011

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, "Dartstar Limited v Kilifi Boatyard Limited [2022] KEELC 1613 (KLR)", Case Analysis (2022). Chamber Summons dated 31st March 2021 (arising from award of Arbitrator Klaus Von Mitzlaff dated 2/03/2021). Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2022/1613/eng@2022-02-10

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