Delta International Fze & 2 others v Mukkassa Giridhar Rao

of The Arbitration Act 1995 and any subsequent application to this Honourable Court for determination under Section 14 (3) of The Arbitration Act 1995. 5. That all proceedings taken by the Arbitrator, High Chief (Professor) Ike Ehiribe C. Arb, FCIARb without jurisdiction be declared as being void and a nullity in law. 6. That this Honourable Court be pleased to order and direct that the Arbitrator is not entitled to any fees and expenses from the Applicants and any sums paid by them by way of deposit be immediately be refunded to them. 7. That the costs of this Application and all the proceedings before the Arbitrator be awarded to the Applicant. 2. In summary, the Applicants are challenging the proceedings before the arbitrator. The Applicants allege that the arbitrator has subjected them to unequal treatment contrary to the provisions of the Arbitration Act and the CIARB Kenya Branch Rules. They also allege that the arbitrator has refused to give them a fair hearing and an opportunity to present their case, by refusing to hear and determine an application to disqualify himself as the presiding arbitrator. 3. The Applicants also allege that the arbitrator infringed on their right to be represented by an advocate of their choice which impacts on their right to a fair trial. 4. The Applicants have also alleged that the arbitrator has expanded the scope of the Tribunal’s jurisdiction beyond matters that were agreed to be arbitrated and that he has further refused to down his tools and give the Applicants an opportunity to raise the jurisdictional challenge. The Applicants have also alleged bias against the Arbitrator in his remarks subsequent to an award of 26th August 2024 which the Applicants allege is in conflict with public policy. 5. The application is supported by an affidavit dated 25th November 2024 by Umang Soni, the 3rd Applicant’s Director which more or less reproduces the grounds in the Application. 6. The Respondent, Mukkasa Giridhar Rao, has opposed the Originating Summons by a Replying Affidavit sworn on 24th April 2025 and given a detailed account of the proceedings that took place before the arbitrator from about 13th February 2024 when the first procedural order was issued to the date when this Court issued a stay of the proceedings before the arbitrator. 7. Further, the Respondent also filed a Notice of Motion application dated 9th December 2024. In the application, the Respondent has asked this Court to transfer the Applicants’ suit to the High Court of Kenya at Nairobi for purposes of consolidation and determination with Nairobi HCCOMM Petition No. E005 2021, the Nairobi Suit, which it is alleged is a dispute between the same parties. In this application, the Respondent alleges that since the arbitration proceedings commenced through proceedings in the Nairobi Suit, it is improper for the Applicants to file the present application in the High Court at Mombasa. 8. The Respondent has defended the proceedings before the arbitrator and stated that the arbitral proceedings were conducted properly and blamed the Applicants for delaying the proceedings before the arbitrator. 9. The Respondent has rebutted the Applicants’ allegations with a detailed account of the proceedings before the arbitrator and resisted the suggestion of any misconduct by the arbitrator. 10. The Respondent has also submitted that the Applicants are trying to have this Court interfere in matters where the arbitrator is competent and mandated by the Arbitration Act to deal with. https://new.kenyalaw.org/akn/ke/judgment/kehc/2025/19618/eng@2025-12-18 2

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11. The Respondents have also stated that the Applicants, having been represented by Mr. Oonge, Advocate changed advocate last minute in order to try and adjourn the hearing and further to try and raise jurisdictional arguments simply in order to avoid the hearing. 12. The Respondent also states that the Applicants consented to the application of the IBA Guidelines on the taking of evidence in International Arbitration on 13th February 2024 and cannot therefore challenge the award on disclosure of documents. 13. The Respondent contends that since the dispute between the parties was ordered to proceed to arbitration in the Nairobi Suit, he contends that any application concerning a dispute in the arbitration should be filed in Nairobi. It is also alleged that since the arbitration is seated in Nairobi by agreement of the by parties any application in respect of the arbitration can only be brought before the High Court in Nairobi. 14. The Applicants have opposed the Respondent’s transfer application through the Replying Affidavit of Umang Soni dated 6th March, 2025. The Applicants allege that the Court in the Nairobi Suit became functus officio when it determined the question of appointment of an arbitrator. 15. The Applicants also allege that courts cannot supervise arbitration proceedings and that there is only one High Court of Kenya as a result of which this Court has jurisdiction all over Kenya, and that although the seat of arbitration is Nairobi, the arbitration is being heard virtually by an arbitrator who is resident in London while the parties’ advocates are based in Nairobi and Mombasa. 16. The Respondent also filed a Preliminary Objection dated 24th April 2025 with the following grounds which I summarise as hereunder: 17. a. Section 10 of the Arbitration Act restricts this Court from interfering in matters relating to arbitration save for those provided by the Act itself. b. Section 14 (2) and 17 of the Arbitration Act provide that challenges on the suitability of an arbitrator, scope of the arbitration as well as the jurisdiction of the arbitrator ought to be determined by the arbitrator in the first instance and not the court and that the Applicants have rushed to court without giving the arbitrator an opportunity to make that determination. c. The Court lacks jurisdiction to determine any issues in respect of the Suit since the arbitration is seated in Nairobi and that any complaints over the arbitration ought to be raised in the suit filed in Nairobi. It was agreed by parties that both applications and the Preliminary Objection be heard together to dispose the Suit. Analysis and Determination 18. I have carefully gone through the pleadings and the affidavits filed by the parties together with the written submissions and the following issues that arise for determination: a. Whether the interim award on disclosure of documents ought to be set aside pursuant to Section 35 of the Arbitration Act. b. Whether this Court should interfere with the arbitral proceedings by staying further proceedings in the arbitration pending the determination of the Applicants’ challenge to the arbitrator. https://new.kenyalaw.org/akn/ke/judgment/kehc/2025/19618/eng@2025-12-18 3

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19. c. Whether this Court should transfer this Suit to the High Court of Kenya at Nairobi for hearing and determination. d. Who should bear the Cost of the suit. This Court has carefully analysed the issues keeping in mind the limits of its jurisdiction under Section 10 of the Arbitration Act and the express injunction to courts not to interfere in arbitral proceedings unless that interference is within the confines of the provisions of the Arbitration Act. Whether the interim award on disclosure of documents should be set aside 20. The Applicants allege that the arbitrator published an interim award dated 26th August 2024 requiring them to produce certain documents. They claim that since the Arbitral Tribunal does not have the jurisdiction to determine the dispute, by giving an order on the production of documents to determine the value of the shares to be transferred by the Respondent to the 1st Applicant, the Tribunal expanded its jurisdiction. 21. The Respondent on the other hand has argued that there was no interim award published by the arbitrator. 22. I have perused through the document published by the arbitrator dated 26th August 2024 and it is titled “Tribunal’s Ruling on Claimant’s Requests for Production of Documents”. The Respondent contends that the ruling on production of documents is not an interim award as it did not substantively dispose of the issues in dispute between the parties. 23. The parties have presented arguments and counter arguments regarding the jurisdiction of the tribunal which stems from the Articles of Association of the company. 24. I note that a challenge to the tribunal’s jurisdiction is pending hearing so I caution myself to resist making any statements which could prejudice the arbitrator’s role in determining the jurisdictional challenge. 25. However, I have carefully examined the arbitrator’s findings in the disclosure ruling as well as the submissions by the Applicants alleging that in issuing the orders sought, the arbitrator expanded the scope of his jurisdiction. From the text of his ruling, it is clear that the Applicants responded on the merits to the Respondent’s application for disclosure of documents. In their response, the Applicants did not allege any of the jurisdictional issues that they are now raising before this Court in challenging the tribunal’s ruling on disclosure. 26. Considering the fact that the Applicants now have a belated jurisdictional challenge pending before the arbitrator on exactly the same points that they are challenging the disclosure ruling on, I see this as an attempt to pre-empt the arbitrator’s decision on the jurisdictional challenge. It would be tantamount to interfering with the arbitrator’s jurisdiction for this court to make findings that could potentially embarrass the arbitrator in his decision regarding the Applicants’ jurisdictional challenge. 27. Furthermore, the ruling on disclosure was not an “interim award” that disposed any of the issues raised in the Respondent’s statement of claim. It was simply an interim ruling on the disclosure of documents which the arbitrator determined to be material to the case before him. For that reason, I find that Section 35 of the Arbitration Act cannot be invoked to set aside an interim ruling on disclosure of documents. 28. On the Applicants argument that the arbitrator irregularly relied on the IBA Rules on taking of evidence, it is unclear how this reliance can be termed as unprocedural since this reliance was based on https://new.kenyalaw.org/akn/ke/judgment/kehc/2025/19618/eng@2025-12-18 4

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the agreement of the parties. Both parties having agreed for the tribunal to refer to the IBA Rules, the Applicants cannot now turn around and fault the arbitrator for placing reliance on the rules. 29. The Applicants have also alleged that further to the ruling, the arbitrator has stated that he has taken a dim view of the Applicants’ non-compliance with the ruling on disclosure. The Applicants have admitted that they have not complied with the ruling on disclosure and are faulting the arbitrator for the result of their non-compliance. 30. The Applicants have claimed that the arbitrator does not have a right to make an adverse inference against them for non-compliance with the order to produce documents and that his statement that he will make an adverse inference is contrary to public policy and demonstrates bias. 31. While these allegations do not have any nexus to the jurisdictional argument in respect to the disclosure ruling, it would appear that the Applicants have raised the jurisdictional argument challenging the disclosure ruling in response to the arbitrator’s remarks in respect of the Applicants’ non-compliance. The reason I say this is that apart from the fact that the Applicants did not raise these jurisdictional arguments when the Respondent made the application for disclosure, after the ruling was delivered, the Applicants took no steps to challenge it. They only challenged it after their application for adjournment was declined. They filed the challenge to the disclosure ruling close to 3 months after it was handed down. 32. In Chase Bank (Kenya) Limited v Cannon Assurance (K) Limited [2019] KECA 313 (KLR) the Court of Appeal held as follows in relation to the making of adverse inferences: “ Again, the court is at liberty to conclude from such omission, an adverse inference by weighing the evidence before it. Where the court has ordered for production of certain documents, and the party so ordered fails to produce the documents, the court can permit the leading of secondary evidence. It is further open to the court to draw adverse inference as provided under Section 119 of the Evidence Act which states: “The court may presume the existence of any fact which it thinks likely to have happened, regard being had to the common course of natural events, human conduct and public and private business, in their relation to the facts of the particular case.” This provision in our Evidence Act embodies the doctrine of spoliation or suppression of evidence. Under this doctrine, it is generally the duty of the party to lead the best evidence in his possession, which could throw light on the issue in controversy. Where such material is withheld, the court may draw adverse inference. (See Woodroffe’s Law of Evidence, 9th Edition at Page 811-816).” 33. From the above, even in the absence of the IBA Guidelines, the arbitrator would be entitled to draw an adverse inference. The withholding of evidence or refusal by a party to produce evidence shown to be in his possession would entitle a court of law to draw an adverse inference against that party to the effect that if the evidence was produced, it would be detrimental to that party’s case. 34. The ability of an arbitrator to make adverse inferences does not in any way prejudice the arbitrator from making a determination on the jurisdictional issues raised before him. It is simply an endorsement of the principal espoused by the arbitrator post the ruling on disclosure stemming from the Applicants’ non-compliance with the arbitrator’s ruling. Differently viewed, it was also an invitation to the Applicants to comply with the disclosure ruling to avoid any adverse inferences being made. 35. Based on the reasons given herein above, this court declines to set aside the ruling on disclosure of documents. https://new.kenyalaw.org/akn/ke/judgment/kehc/2025/19618/eng@2025-12-18 5

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Whether the Court should stay the arbitral proceedings pending the determination of the Applicants’ challenge to the arbitrator 36. The proceedings relating to the commencement of the arbitration have a chequered history and it is a fact that the arbitration commenced after this Court sitting in Nairobi (Lady Justice Fredah Mugambi) issued an order on 8th November 2023 directing CIARB Kenya Branch to appoint an arbitrator to determine the dispute between the parties. 37. From that ruling, the Court was already made aware of the dispute between the parties and that the parties could not agree on the choice of arbitrator but did not challenge the fact that the dispute between them was supposed to be resolved by way of arbitration. There is no evidence that the ruling ordering parties to submit to arbitration was challenged by way of an appeal. 38. In the Applicants’ Challenge to jurisdiction dated 4th November 2024 submitted to the arbitrator, the Applicants alleged that the arbitrator did not have jurisdiction to determine the dispute that was before him. The issue was raised by the Applicants close to 9 months after the parties first met before the arbitrator. It is noteworthy that from the nature of the challenge, it is being argued that the company’s Articles of Association do not contemplate that the nature of the dispute that exists between the parties should be submitted to arbitration. 39. That may be so, however, a question arises as to why the Applicants did not raise that issue before the High Court at Nairobi which directed the appointment of an arbitrator or raise it at the very first instance before the arbitrator. Furthermore, preceding the application seeking the appointment of an arbitrator, there is on record engagement between the parties about the choice of an arbitrator which is an indication of submission to the arbitral process. 40. On the ground that the arbitrator has conducted the arbitral proceedings in a manner that demonstrates bias against the Applicants, the main reason for these allegations appears to be the refusal by the arbitrator to adjourn proceedings to accommodate Mr. Kishore Nanji, Advocate who had been appointed to replace the Applicants’ counsel Mr. Oonge. This was communicated to the parties and the tribunal on 28th October 2024, a day prior to the Pre-Hearing Review Meeting. In his said letter, Mr. Nanji was also asking the Tribunal to allow him to lodge a jurisdictional challenge to the Tribunal’s jurisdiction after Mr. Nanji returned to the office on 9th November 2024. 41. As I have stated above, it appears to the Court that the allegations about bias and the manner in which the arbitrator had conducted himself were only raised after the arbitrator refused to adjourn the PreHearing Review Meeting. In the Challenge to the Arbitrator dated 4th November 2024, the Applicants have cast aspersions and made allegations about the historical conduct of the arbitration and used that as a basis to suggest that the arbitrator is biased against them. 42. The Respondent stated that on 4th November, just as the hearing commenced, the Applicants, through counsel Mr. Nanji, issued a letter of even date as well as written submissions challenging the arbitrator to recuse himself on several grounds which the Applicants believed amounted to bias. 43. The Respondent has further stated that prior to the commencement of the hearing, the Arbitrator requested parties to respond to the recusal application. Upon hearing the parties, the Arbitrator ruled that the hearing would proceed and that parties would be allowed to file any documents or submissions regarding all the issues in dispute, including any jurisdictional issues and the recusal of the arbitrator. 44. The Respondent further states that following this determination, the Applicants refused to participate in the hearing before the arbitrator which concluded with directions on the filing of written https://new.kenyalaw.org/akn/ke/judgment/kehc/2025/19618/eng@2025-12-18 6

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submissions. Instead of complying with the arbitrator’s directions on the procedure for the hearing of the challenge, the Applicants filed the application before this court. 45. The arbitrator is yet to make a determination on the issues raised before him. Section 14 (2) of the Arbitration Act provides as hereunder: “ (2) Failing an agreement under subsection (1), a party who intends to challenge an arbitrator shall, within 15 days after becoming aware of the composition of the arbitral tribunal or after becoming aware of any circumstances referred to in section 13(3), send a written statement of the reasons for the challenge to the arbitral tribunal, and unless the arbitrator who is being challenged withdraws from his office or the other party agrees to the challenge, the arbitral tribunal shall decide on the challenge.” 46. As per Section 14 (2), the arbitrator is supposed to decide on the challenge. The arbitrator has not made a decision on the challenge and it is premature for this Court to interfere with the arbitrator’s mandate under the Arbitration Act. Although the Applicants seek an order staying proceedings pending the determination of the challenge, based on the circumstances in this case, the court is not inclined to interfere for the reasons set out above. The Arbitrator is perfectly within the scope of his mandate to determine the challenge in the procedural manner he deems most appropriate. 47. Further, Section 17 of the Arbitration Act provides: “ 17. Competence of arbitral tribunal to rule on its jurisdiction (1) The arbitral tribunal may rule on its own jurisdiction, including ruling on any objections with respect to the existence or validity of the arbitration agreement………………………………………………………………. (2) A plea that the arbitral tribunal does not have jurisdiction shall be raised not later than the submission of the statement of defence……………………………………….” 48. Jurisdiction is a fundamental point of law and must be determined, even though it was raised late. The arbitral tribunal is fully seized of the proceedings and is at liberty to determine its own procedure including determining a jurisdictional issue in its final award. I find that the Applicants will not suffer any prejudice since the tribunal has expressly stated that it will consider whatever jurisdictional or other issues they may have when it renders its final award. In the event that the arbitrator accepts the jurisdictional challenge, the obvious consequences of that decision will follow. 49. I therefore reject the Applicants’ contentions on this point and decline the order for stay of the arbitral proceedings pending the hearing and determination of the jurisdictional challenge and the challenge to the arbitrator. Whether the Court should transfer this Suit to the High Court at Nairobi for hearing and determination 50. As it was agreed that both applications ought to be heard and determined together, my view is that based on my findings above, the transfer application has now become moot. The Originating Summons having been determined, there is nothing left to transfer. Further, in allowing the transfer application, this would keep this dispute lingering for several more months to allow the court in https://new.kenyalaw.org/akn/ke/judgment/kehc/2025/19618/eng@2025-12-18 7

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Nairobi to consider the application. For that reason, I proceed to dismiss the Respondent’s Notice of motion application dated 0th December, 2024. Determination 51. The upshot of the foregoing is that the court renders itself as hereunder: a. The Originating Summons dated 26th November 2024has got no merits and is hereby dismissed. b. The Respondent’s application dated 9th December 2024 has got no merits and is hereby dismissed. c. An order is hereby issued directing the parties to place this Court’s Judgment before the Arbitral Tribunal for perusal and further action. d. Each party to bear its own costs. It is so ordered. RULING DELIVERED AT MOMBASA ON THIS 18TH DAY OF DECEMBER, 2025 THROUGH MICROSOFT TEAMS. ……………………….. HON. F. WANGARI JUDGE In the presence of; Ms. Mulongo Advocate for the Applicants Mr. Ameyo Advocate for the Respondent Ms. Salwa, Court Assistant NB: Typed Judgment released to the parties via CTS on 5th January, 2026. The delay was occasioned by the bereavement of the trial Judge. https://new.kenyalaw.org/akn/ke/judgment/kehc/2025/19618/eng@2025-12-18 8

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