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Supreme CourtPartially AllowedPetition 12 of 2016

Nyutu Agrovet Limited v Airtel Networks Kenya Limited; Chartered Institute of Arbitrators-Kenya Branch

Supreme Court of Kenya
6 December 2019
David Kenani MaragaD. K. MaragaMohammed Khadhar IbrahimM. K. IbrahimSmokin Charles WanjalaS. C. WanjalaNjoki Susanna NdunguNjoki NdunguIsaac LenaolaI. Lenaola
15,194 words in judgment
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AI-assisted case brief
·~61 min to read original · ~4 min brief

The bottom line

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Supreme Court allows limited appeals from High Court arbitration decisions only in exceptional cases.

What this practically means

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Nyutu Agrovet and Airtel had a dispute that went to arbitration. The High Court set aside the arbitrator's award. Nyutu tried to appeal to the Court of Appeal, but that court said no appeal is allowed under the Arbitration Act. The Supreme Court disagreed in part. It ruled that while there is no automatic right to appeal, a very narrow exception exists: if the High Court steps outside the legal grounds for setting aside an award and makes a decision that is gravely wrong and shuts out justice, then an appeal can be heard. The case now goes back to the Court of Appeal to decide if Nyutu meets that high bar.

Executive summary

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This appeal arose from a dispute between Nyutu Agrovet Limited (Nyutu) and Airtel Networks Kenya Limited (Airtel) concerning an arbitration award. The High Court (Kimondo J) had set aside the arbitral award under section 35 of the Arbitration Act. Nyutu sought leave to appeal to the Court of Appeal, which was granted by the High Court. However, the Court of Appeal, sitting as a five-judge bench, struck out the appeal, holding that there is no right of appeal to the Court of Appeal against a decision made under section 35 of the Arbitration Act. The Supreme Court certified the matter under Article 163(4)(b) as raising a matter of general public importance. The main issues were whether sections 10 and 35 of the Arbitration Act are unconstitutional for limiting access to justice, and whether there is a right of appeal to the Court of Appeal from a High Court decision under section 35. The Supreme Court (by a majority of 4 to 1, with Chief Justice Maraga dissenting) held that sections 10 and 35 are not unconstitutional. The Court further held that while there is no automatic right of appeal, in exceptional circumstances where the High Court has stepped outside the grounds set out in section 35 and made a decision so grave, manifestly wrong, and which has completely closed the door of justice, a circumscribed appeal lies to the Court of Appeal. The Court set aside the Court of Appeal's order striking out the appeal, dismissed the respondent's application to strike out, and remitted the matter to the Court of Appeal to determine whether Nyutu's appeal meets the threshold for admission. Each party was ordered to bear its own costs.

Questions the Court framed

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The issues the Court set itself to decide, in its own words.

  1. 1.Whether sections 10 and 35 of the Act contravene a party’s right to access justice under articles 48, 50(1) and 164(3) of the Constitution and are therefore unconstitutional to that extent.
  2. 2.Whether there is a right of appeal to the Court of Appeal following a decision by the High Court under section 35 of the Arbitration Act.
  3. 3.What are the appropriate reliefs?
  4. 4.Who should bear the costs of the Appeal?

Key legal issues

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01

Whether sections 10 and 35 of the Arbitration Act contravene the right to access justice under articles 48, 50(1) and 164(3) of the Constitution.

Holding

Sections 10 and 35 of the Arbitration Act are not unconstitutional. Article 164(3) confers jurisdiction on the Court of Appeal but does not grant an unfettered right of appeal. The limitation on appeals in arbitration matters is reasonable and justifiable, and does not deny access to justice because parties voluntarily choose arbitration as an alternative forum.

Reasoning

The Court held that article 164(3) defines the Court of Appeal's jurisdiction but does not create a right of appeal for every litigant. A right of appeal must be conferred by the Constitution or statute. The Court rejected the argument that limiting appeals fetters access to justice, noting that arbitration is a voluntary choice and that the proceedings before the arbitrator and High Court were not impugned. The Court also noted that the issue of unconstitutionality was raised for the first time in the Supreme Court, which it frowned upon.

p. 17
02

Whether there is a right of appeal to the Court of Appeal following a decision by the High Court under section 35 of the Arbitration Act.

Holding

There is no automatic right of appeal, but in exceptional circumstances where the High Court has stepped outside the grounds set out in section 35 and made a decision so grave, manifestly wrong, and which has completely closed the door of justice, a circumscribed appeal lies to the Court of Appeal.

Reasoning

The Court analyzed section 35, which is silent on appeals, and section 10, which limits court intervention. It reviewed comparative jurisprudence from Canada, the UK, and Singapore. The Court concluded that while the Act does not expressly bar appeals, an unfair determination by the High Court should not be absolutely immune from appellate review. However, such jurisdiction must be exercised sparingly and only in the clearest of cases, such as where the High Court steps outside the grounds in section 35 or decides on constitutional grounds not properly before it.

p. 27

Legal principles established

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  • No automatic right of appeal from High Court decisions under section 35 of the Arbitration Act.
  • A limited appeal lies only if the High Court steps outside section 35 grounds and makes a grave, manifestly wrong decision that closes the door to justice.
  • Article 164(3) of the Constitution does not grant an unfettered right of appeal; a right must be conferred by statute.
  • Sections 10 and 35 of the Arbitration Act are constitutional; limiting appeals in arbitration is reasonable and justifiable.
  • Parties voluntarily choose arbitration, so restricted appeals do not deny access to justice.

Court orders

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  1. 1.The Petition of Appeal dated July 15, 2016 is hereby allowed as prayed.
  2. 2.The Order of the Court of Appeal made on March 6, 2015 is hereby set aside in its entirety.
  3. 3.The notice of motion application dated May 3, 2012 in Civil Appeal No 61 of 2012 Nyutu Agrovet Limited v Airtel Networks Kenya Ltd is hereby dismissed.
  4. 4.Civil Appeal No 61 of 2012 aforesaid shall be heard and determined by the Court of Appeal on an expeditious basis.
  5. 5.Each party shall bear its own costs.

The bench

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Judges wrote separately. A dissent does not bind; a concurrence may narrow the ratio.

David Kenani Maraga
dissenting

Wrote the judgment

The Chief Justice dissented, holding that there is no right of appeal to the Court of Appeal against a High Court decision under section 35 of the Arbitration Act, and that sections 10, 32A and 35 of the Act, read together, limit appellate court intervention in domestic arbitrations and are not unconstitutional. He would have dismissed the appeal with no order as to costs.

For these reasons, I would myself dismiss this appeal with no order as to costs. However, as the majority hold a contrary opinion, the final orders of the court shall be as set out in their Judgment.p. 32
Mohammed Khadhar Ibrahim
majority
Smokin Charles Wanjala
S. C. WanjalaSCJ
Currently serving
majority
Njoki Susanna Ndungu
Njoki NdunguSCJ
Currently serving
majority
Isaac Lenaola
I. LenaolaSCJ
Currently serving
majority
On appeal from
Court of Appeal at Nairobi
Civil Appeal No 61 of 2012
Jurisdiction invoked
Article 163(4)(b) of the Constitution

Quotable passages

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Verbatim from the judgment, each located to the page it appears on in the official PDF — so these can be cited and checked directly.

the only instance that an appeal may lie from the High Court to the Court of Appeal on a determination made under section 35 is where the High Court, in setting aside an arbitral award, has stepped outside the grounds set out in the said section and thereby made a decision so grave, so manifestly wrong and which has completely closed the door of justice to either of the parties.
p. 27 Right of appeal under section 35 of the Arbitration Act
article 164(3) defines the extent of the powers of the Court of Appeal but does not grant a litigant an unfettered access to the Court of Appeal.
p. 15 Interpretation of Article 164(3) of the Constitution
we do not find a proper basis for finding that there is denial of access to justice and thus we reject the plea to declare sections 10 and 35 of the Arbitration Act unconstitutional.
p. 17 Constitutionality of sections 10 and 35 of the Arbitration Act
The Petition of Appeal dated July 15, 2016 is hereby allowed as prayed.
p. 32 Final orders
Each party shall bear its own costs.
p. 32 Costs order

Key timeline

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2012-05-03
Airtel files application to strike out Nyutu's appeal in the Court of Appeal.
2015-03-06
Court of Appeal strikes out Nyutu's appeal, ruling no right of appeal under section 35 of Arbitration Act.
2016-07-15
Nyutu files Petition of Appeal to the Supreme Court.
Supreme Court judgment date not specified
Supreme Court allows appeal in part, sets aside Court of Appeal order, dismisses strike-out application, and remits case to Court of Appeal.

Practical implications

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For lawyers

Limited appeal route for arbitration set-aside decisions

Lawyers must now carefully assess whether a High Court decision under section 35 of the Arbitration Act can be appealed. Only if the High Court stepped outside the statutory grounds and made a manifestly wrong decision that closes the door to justice. This is a very high threshold; most cases will not qualify. Prepare to argue exceptional circumstances at the Court of Appeal.

For businesses

Arbitration finality strengthened but with narrow escape

Businesses choosing arbitration should know that arbitration awards are nearly final. The High Court's power to set aside an award is limited, and appealing that decision is even harder. Only in extreme cases where the High Court clearly oversteps will the Court of Appeal hear the case. This reinforces arbitration as a final dispute resolution mechanism.

For individuals

Your arbitration award is almost always final

If you are in an arbitration, the decision is binding and hard to challenge. Even if the High Court sets aside the award, you cannot easily appeal that. Only if the High Court makes a serious error that blocks justice completely might you get a second chance. This means you should take arbitration seriously and prepare your case well.

Frequently asked questions

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Can I appeal an arbitration award in Kenya?+

Generally, no. The Arbitration Act limits court intervention. You can challenge an award in the High Court under section 35, but appealing that High Court decision is only allowed in very rare cases where the High Court steps outside its legal grounds and makes a grave, manifestly wrong decision that shuts out justice.

What is section 35 of the Arbitration Act in Kenya?+

Section 35 of the Arbitration Act allows a party to apply to the High Court to set aside an arbitral award on specific grounds, such as incapacity, invalid arbitration agreement, or procedural unfairness. It does not provide for an appeal from the High Court's decision.

Is the right to appeal in arbitration cases limited in Kenya?+

Yes, the right to appeal is limited. The Supreme Court in Nyutu Agrovet v Airtel confirmed that sections 10 and 35 of the Arbitration Act are constitutional. There is no automatic appeal from a High Court decision on an arbitration award. Only a narrow exception exists for exceptional cases.

What did the Supreme Court decide in Nyutu Agrovet v Airtel?+

The Supreme Court ruled that sections 10 and 35 of the Arbitration Act are constitutional. It held that while there is no automatic right to appeal a High Court decision under section 35, a very limited appeal is possible if the High Court steps outside the statutory grounds and makes a decision so grave and manifestly wrong that it closes the door to justice.

Later judgments citing this (25)

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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, "Nyutu Agrovet Limited v Airtel Networks Kenya Limited; Chartered Institute of Arbitrators-Kenya Branch", Case Analysis (2019). Petition 12 of 2016. Source: https://new.kenyalaw.orghttps://new.kenyalaw.org/akn/ke/judgment/kesc/2019/11/eng@2019-12-06

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