Christian & another v Direct Pay Limited t/a DPO (Miscellaneous Application E008 of 2023) [2024] KEELRC 1325 (KLR)
The bottom line
#A Kenyan court threw out a Kshs 45 million arbitration award because the arbitrator ignored the contract's appointment rules and the employer was never told about the case.
What this practically means
#Executive summary
#Key legal issues
#Whether the arbitral award was proper for recognition and enforcement under section 36 of the Arbitration Act
The award was not enforceable; the appointment of the sole arbitrator did not comply with the arbitration agreement in clause 25 of the employment contract, and the respondent was never notified of, or invited into, the arbitration.
Clause 25.1 required written notification of a dispute and, failing agreement, appointment of the arbitrator by the Chairman of CIArb (Kenya Branch). The respondent's sworn evidence that it first learned of the arbitration on being served with the award was uncontroverted - the applicants filed no reply to the replying affidavit. CIArb confirmed the arbitrator was not a member. Non-compliance fell squarely within section 37(1)(a)(v) of the Arbitration Act as a ground for refusing enforcement, rendering the award a nullity.
Whether the 1st Applicant acting as both arbitrator and advocate in the enforcement proceedings was conflicted
Yes - a glaring conflict of interest; and the respondent, never having been notified of the appointment, had no opportunity to challenge the arbitrator.
The arbitrator who issued the award then acted as advocate for the applicants in seeking its enforcement. The court found this a glaring conflict. The respondent's complaint of conflict could not be cured by the statutory challenge mechanism (sections 5 and 14) because the respondent only learned of the arbitration after the award was served, by which time the process was complete.
Whether the time bar in section 35(3) of the Arbitration Act barred the respondent's opposition
Irrelevant - there was no application to set aside the award before the Court; what was before the Court was an application for recognition and enforcement, to which section 37 grounds applied.
The applicants argued that any setting-aside application was time-barred under section 35(3), relying on Kenya Technical Teachers College v Will Developers. The court acknowledged no setting-aside application existed. Consequently, the respondent was not required to file one; it needed only to demonstrate grounds under section 37 for refusing recognition and enforcement, which it succeeded in doing on the appointment and notice grounds.
Who bears the costs of the application
Costs follow the event and were awarded to the Respondent, payable personally by the 1st Applicant, the arbitrator, whose unlawful acts caused a miscarriage of justice and wasted judicial time.
The court held costs follow the event. The 1st Applicant, as an arbitrator, ought to have known the arbitration process; there was no evidence of his appointment by either party. His conduct caused a miscarriage of justice and wastage of judicial time, justifying personal liability for costs. The court also found the Kshs. 29,000,000 costs awarded to the arbitrator, against an employee earning Kshs. 20,000 basic salary, exaggerated and explaining his eagerness to enforce the award.
Legal principles established
#- An arbitrator derives authority strictly from the parties' arbitration agreement; non-compliance with the agreed appointment procedure strips the process and award of validity.
- No person may act as arbitrator in a dispute without compliance with the parties' arbitration agreement.
Court orders
#- 1.The application dated 19th December 2023 seeking recognition, adoption and enforcement of the arbitral award dated 6th November 2023 is dismissed.
- 2.Costs of the application awarded to the Respondent, payable by the 1st Applicant.
- Jurisdiction invoked
- Sections 36 and 37 of the Arbitration Act; cause of action alleged unfair termination of employment
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Christian & another v Direct Pay Limited t/a DPO (Miscellaneous Application E008 of 2023) [2024] KEELRC 1325 (KLR)", Case Analysis (2024). Misc Application No E008 of 2023. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2024/1325/eng@2024-05-30
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.