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Supreme CourtPartially AllowedPetition 2 of 2017

Synergy Industrial Credit Limited v Cape Holdings Limited

Supreme Court of Kenya
6 December 2019
David Kenani MaragaDavid Kenani MaragaMohammed Khadhar IbrahimMohamed Khadhar IbrahimSmokin Charles WanjalaSmokin C. WanjalaNjoki Susanna NdunguNjoki NdunguIsaac LenaolaIsaac Lenaola
20,924 words in judgment
View original judgmentRead on Kenya LawDownload the judgment (PDF) Watch case
AI-assisted case brief
·~84 min to read original · ~4 min brief

The bottom line

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Supreme Court opens narrow door for appeals from High Court decisions setting aside arbitral awards.

What this practically means

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The Supreme Court of Kenya ruled that the Court of Appeal can hear appeals from High Court decisions that set aside arbitral awards, but only in rare cases. This happens when the High Court goes beyond the legal grounds allowed for interfering with an award. The decision balances the need for finality in arbitration with the need to correct serious injustices, giving parties a limited chance to challenge manifestly unfair rulings.

Executive summary

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The Supreme Court of Kenya, by a majority of 4 to 1, partially allowed an appeal against a Court of Appeal ruling that had struck out the appellant's appeal for lack of jurisdiction. The core issue was whether the Court of Appeal has jurisdiction to hear appeals from High Court decisions made under section 35 of the Arbitration Act, which governs applications to set aside arbitral awards. The High Court had set aside an arbitral award of Kshs 1.6 billion in favor of the appellant, and the Court of Appeal struck out the appellant's appeal, holding that no right of appeal exists from such decisions except under section 39 of the Act. The Supreme Court reviewed conflicting Court of Appeal decisions and comparative jurisprudence from the UK, Canada, and Singapore. The majority held that while article 164(3) of the Constitution does not confer an unrestricted right of appeal, the Court of Appeal has a residual jurisdiction to hear appeals from section 35 decisions in exceptional and limited circumstances. Specifically, an appeal lies where the High Court has overturned an award on grounds other than those set out in section 35(2) of the Act. Applying this test, the Court found that the High Court's decision, which left the appellant without a remedy for a substantial sum of money, raised questions of manifest unfairness warranting appellate review. The Supreme Court set aside the Court of Appeal ruling, reinstated the appellant's notice and record of appeal, and directed the Court of Appeal to hear the appeal expeditiously. The Chief Justice dissented, arguing that the Arbitration Act, read with article 159(2)(c) of the Constitution, clearly limits court intervention and that allowing such appeals would undermine the finality and efficiency of arbitration, potentially harming Kenya's status as a regional arbitration hub. 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 there is a right of Appeal to the Court of Appeal following a decision of the High Court under section 35 of the Arbitration Act.
  2. 2.Whether this court should stay the proceedings at the High Court in ELC Case No 440 of 2011.
  3. 3.What are the appropriate reliefs to give?
  4. 4.Who should bear the costs of the appeal?

Key legal issues

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01

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

Holding

The Court of Appeal has residual jurisdiction to hear such appeals, but only in exceptional and limited circumstances, particularly where the High Court has overturned an award on grounds not provided for in section 35(2) of the Act.

Reasoning

The Supreme Court reviewed conflicting Court of Appeal decisions and comparative jurisprudence from the UK, Canada, and Singapore. It held that section 35 is silent on appeals, but this silence does not create an absolute bar. The Court found that article 164(3) does not confer an unlimited right of appeal, but to completely deny the right would be inimical to the Constitution. The Court balanced the need for finality in arbitration with the need to correct manifest injustice, concluding that a residual jurisdiction exists only where the High Court has acted outside the grounds in section 35.

p. 4
02

Whether the silence of section 35 of the Arbitration Act on the right of appeal should be interpreted as a bar or as permitting an appeal.

Holding

The silence of section 35 does not by itself bar the right of appeal; the Court of Appeal has residual jurisdiction in exceptional circumstances, particularly where the High Court has exceeded the grounds for setting aside an award under section 35(2).

Reasoning

The Court rejected the argument that silence implies a bar, noting that other provisions in the Act expressly state that a decision is final. It adopted the reasoning from Inco Europe Ltd that where a section is silent about an appeal, no restriction was intended. However, the Court also rejected the argument for an unlimited right of appeal, instead crafting a limited residual jurisdiction to balance the objectives of arbitration with the need for justice.

p. 11
03

Whether the Court of Appeal should have assumed jurisdiction in the present case.

Holding

Yes, the Court of Appeal should have assumed jurisdiction because the High Court's decision left the petitioner without a remedy and raised questions of manifest unfairness.

Reasoning

The Supreme Court found that the High Court set aside the entire award without giving further directions, leaving the petitioner's claim for a substantial sum of money in limbo. The Court held that where allegations of manifest unfairness have been made, they should not be left incapable of a higher court's review. The Court emphasized that the principle of minimal court intervention should not supersede the need to correct an injustice.

p. 29

Legal principles established

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  • The Court of Appeal has residual jurisdiction to hear appeals from High Court decisions under section 35 of the Arbitration Act only in exceptional circumstances.
  • An appeal is allowed only when the High Court sets aside an award on grounds not listed in section 35(2) of the Arbitration Act.
  • Not every High Court decision under section 35 is appealable; the appellant must show that the High Court exceeded its legal authority.
  • Article 164(3) of the Constitution does not grant an unrestricted right of appeal; limits on appeals are constitutional if they meet the requirements of Article 24.
  • The silence of section 35 on appeals does not create an absolute bar, but does not create an unlimited right either.

Court orders

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  1. 1.The Ruling of the Court of Appeal dated December 20, 2016 is hereby set aside.
  2. 2.The petitioner’s Notice of Appeal dated March 15, 2016, and the Record of Appeal dated April 22, 2016 filed in the Court of Appeal in Civil Appeal No 81 of 2016 are hereby re-instated.
  3. 3.An order is hereby issued directed at the Court of Appeal to expeditiously and on a priority basis proceed to determine on merits the Petitioner’s appeal in Civil Appeal No 81 of 2016.
  4. 4.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 from a High Court decision under section 35 of the Arbitration Act. He argued that the Arbitration Act, read with article 159(2)(c) of the Constitution, limits court intervention to what is expressly provided in the Act, and that allowing such appeals would undermine the finality and efficiency of arbitration.

I have no doubt in my mind that there is no right of appeal to the Court of Appeal or to this court against decisions of the High Court on applications made to it under section 35 of the Arbitration Act.p. 32
Mohammed Khadhar Ibrahim
majority
Smokin Charles Wanjala
Smokin C. WanjalaSCJ
Currently serving
majority
Njoki Susanna Ndungu
Njoki NdunguSCJ
Currently serving
majority
Isaac Lenaola
Isaac LenaolaSCJ
Currently serving
majority
On appeal from
Court of Appeal
Civil Appeal No. 81 of 2016
Jurisdiction invoked
Article 163(4)(a) of the Constitution, section 15(2) of the Supreme Court Act, 2011 and rules 9 and 33 of the Supreme Court Rules, 2012

Relief refused

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Prayer for the Supreme Court to determine the appeal substantively

The Supreme Court's jurisdiction under the Constitution is limited to hearing appeals from the Court of Appeal, and in the absence of the Court of Appeal's decision on merit, the Supreme Court's jurisdiction cannot be invoked.

p. 30

Prayer to stay proceedings in ELC Suit No 440 of 2011

The Court did not have sufficient material before it to make any substantive determination on this issue.

p. 30

Costs

Each party shall bear its own costs.

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 Court of Appeal should have residual jurisdiction but only in exceptional and limited circumstances
p. 4 Jurisdiction of Court of Appeal in arbitration matters
not every decision of the High Court under section 35 is appealable to the Court of Appeal
p. 29 Limits on appeals from section 35 of the Arbitration Act
we do not find favour in the argument that there is an unrestricted right of appeal under article 164(3) of the Constitution in all instances
p. 26 Interpretation of article 164(3) of the Constitution
Each party shall bear its own costs.
p. 43 Costs order
where allegations of such manifest unfairness have been made, they should not be left incapable of a higher court’s review
p. 29 Residual jurisdiction to correct injustice

Key timeline

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2016-03-15
Synergy Industrial Credit files Notice of Appeal against High Court decision setting aside arbitral award.
2016-04-22
Record of Appeal filed in the Court of Appeal.
2016-12-20
Court of Appeal strikes out the appeal, ruling it has no jurisdiction.
2019
Supreme Court partially allows appeal, reinstates the appeal, and directs the Court of Appeal to hear it expeditiously.

Practical implications

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For lawyers

Limited grounds for appeal from s35 decisions

When a client loses an arbitration award set aside by the High Court under section 35, you can now appeal to the Court of Appeal, but only if the High Court exceeded the enumerated grounds in section 35(2). Your notice of appeal must specifically allege that the High Court acted outside those grounds. The Supreme Court's ruling gives a narrow path; do not assume a general right of appeal exists.

For businesses

Arbitration finality preserved with narrow exception

This ruling protects the finality of arbitration in Kenya, which is good for business. However, if a High Court judge sets aside your award on an improper basis, you now have a limited chance to challenge that decision. Ensure your arbitration agreements are drafted to minimize the risk of such challenges, and consider including clauses that limit grounds for appeal to those in the Arbitration Act.

For individuals

Access to justice in arbitration disputes

If you are involved in arbitration and the High Court sets aside your award unfairly, this ruling gives you a possible avenue to appeal. You must show that the High Court did not follow the legal rules for setting aside awards. While appeals are rare, this decision ensures that manifestly unfair High Court rulings can be reviewed by the Court of Appeal, protecting your rights.

Frequently asked questions

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Can I appeal a High Court decision setting aside an arbitral award in Kenya?+

Yes, but only in limited circumstances. The Supreme Court ruled that the Court of Appeal can hear such appeals only when the High Court sets aside an award on grounds not allowed by section 35(2) of the Arbitration Act. You must show that the High Court exceeded its legal authority.

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

Section 35 of Kenya's Arbitration Act allows a party to apply to the High Court to set aside an arbitral award. It lists specific grounds, such as the arbitration agreement being invalid or the award being against public policy. The section is silent on whether you can appeal the High Court's decision.

Does the Synergy Industrial Credit v Cape Holdings case affect arbitration in Kenya?+

Yes, it clarifies that the Court of Appeal has a residual jurisdiction to hear appeals from High Court decisions under section 35, but only in exceptional cases. This balances the finality of arbitration with the need to correct serious judicial errors, strengthening Kenya's arbitration framework.

How do I challenge a High Court decision that set aside my arbitral award in Kenya?+

First, file a notice of appeal at the Court of Appeal within 14 days. Then, in your memorandum of appeal, specifically argue that the High Court went beyond the grounds in section 35(2) of the Arbitration Act. The Supreme Court requires you to demonstrate exceptional circumstances, such as manifest unfairness.

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, "Synergy Industrial Credit Limited v Cape Holdings Limited", Case Analysis (2019). Petition 2 of 2017. Source: https://new.kenyalaw.orghttps://new.kenyalaw.org/akn/ke/judgment/kesc/2019/12/eng@2019-12-06

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