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Court of AppealDismissedCivil Appeal No. 100 of 1995

KISUMUWALLA OIL INDUSTRIES LTD vs PAN ASIATIC COMMODITIES PTE LIMITED & ANOTHER [1997] KECA 219 (KLR)

Court of Appeal of Kenya
14 February 1997
495 words in judgment
View original judgmentRead on Kenya Law Watch case
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The bottom line

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Kenya's Court of Appeal confirmed that arbitration clauses in contracts must still follow Kenya's own arbitration law, not just English precedent.

What this practically means

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Executive summary

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The Court of Appeal at Mombasa (Omolo, Pall, JJ.A. and Bosire, Ag. J.A.) dismissed this appeal against an order of the High Court of Kenya at Mombasa (Mbaluto, J.) dated 25 May 1993 in H.C.C.C. No. 84 of 1993. The appellant's sole substantial contention was that the Court's own recent, unreported decision in Corporate Insurance Company v Loise Wanjiru Wachira (Civil Appeal No. 151 of 1995) was erroneous and should be departed from. That decision had held that Scott v Avery arbitration clauses, though framed in wide and mandatory terms, remain subject to Section 6 of the then Arbitration Act. The Court unanimously declined the invitation to overturn its own reserved and well-considered precedent. It reasoned that while in England Scott v Avery clauses enjoy long-standing common law status alterable only by direct legislation, in Kenya common law applies only subject to statutes enacted by the National Assembly and to local circumstances. Kenyan courts are not obliged to apply English common law wholesale; foreign commercial decisions are given their due place of honour but will not be slavishly followed without regard to Kenyan statutes and circumstances. The Court affirmed that the Corporate Insurance Company case was correctly decided, dismissed the appeal with costs, and delivered its judgment at Nairobi on 14 February 1997.

Questions the Court framed

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

  1. 1.Whether the Court of Appeal's decision in Corporate Insurance Company v Loise Wanjiru Wachira, that Scott v Avery arbitration clauses are subject to Section 6 of the then Arbitration Act, was correctly decided and should stand

Key legal issues

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01

Whether the Court should depart from its own recent precedent in Corporate Insurance Company v Loise Wanjiru Wachira on the effect of Scott v Avery arbitration clauses

Holding

The Court declined to depart from its precedent, affirming that Scott v Avery clauses are subject to Section 6 of the then Arbitration Act notwithstanding their wide and mandatory terms.

Reasoning

The earlier decision was a reserved and well-considered verdict of the Court. In England, Scott v Avery clauses have long-standing common law status alterable only by Parliament; in Kenya, common law applies only subject to statutes passed by the National Assembly and local circumstances. The Court will honour foreign commercial decisions but will not slavishly apply them without regard to Kenyan statutes and circumstances. The appeal's only substantial point therefore failed.

p. 2

Legal principles established

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  • Scott v Avery arbitration clauses, however widely and mandatorily framed, are subject to the provisions of Section 6 of the (then) Arbitration Act.
  • Kenyan courts are not obliged to apply English common law wholesale; foreign decisions receive due respect but must yield to Kenyan statutes and local circumstances.

Court orders

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  1. 1.Appeal dismissed with costs

The bench

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One judgment of the whole court — no separate or dissenting opinions.

majority

Wrote the judgment

PA
majority
BO
majority
On appeal from
High Court of Kenya at Mombasa
H.C.C.C. No. 84 of 1993
Jurisdiction invoked
First appeal to the Court of Appeal under the then-applicable appellate framework (not expressly stated in the judgment text)

Relief refused

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Appellant's invitation to depart from and overturn the Court's own decision in Corporate Insurance Company v Loise Wanjiru Wachira

The Court held that the earlier decision was a reserved, well-considered verdict correctly decided in accordance with Kenyan law as it then stood, and that Kenyan courts are not bound to apply English common law wholesale.

p. 2

Costs

Appeal dismissed with costs to the respondents

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 concluded in the CORPORATE INSURANCE COMPANY case, Supra, that such clauses though framed in wide and mandatory terms, are nevertheless subject to the provisions of Section 6.
p. 2Scott v Avery arbitration clauses subject to statutory stay provisions
We will continue to give English or any other foreign decisions, particularly on commercial matters, their due place of honour, but it is unreasonable for any one to expect that we will slavishly apply those decisions without looking at our own statutes and circumstances.
p. 2Treatment of foreign precedent in Kenyan commercial law
this appeal fails and the order of the Court shall be that it be dismissed with costs as proposed by Bosire, Ag. J.A.
p. 2Final orders - dismissal with costs

Issues in the judgment

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minor

The judgment as supplied contains only the judgment of Omolo, J.A., which refers in draft to separate judgments of Pall, J.A. and Bosire, Ag. J.A. that are not reproduced in the text; their reasoning is therefore not directly quotable.

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, "KISUMUWALLA OIL INDUSTRIES LTD vs PAN ASIATIC COMMODITIES PTE LIMITED & ANOTHER [1997] KECA 219 (KLR)", Case Analysis (1997). Civil Appeal No. 100 of 1995. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/1997/219/eng@1997-02-14

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