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Court of AppealPartially AllowedCivil Appeal No. 113 of 1998· [1998] KECA 276 (KLR)

Gitonga Warugongo v Total Kenya Limited

Court of Appeal
11 December 1998
ROR. S. C. OmoloPhilip Kiptoo TunoiP. K. TunoiEOE. Owuor
937 words in judgment
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The bottom line

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What this practically means

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Executive summary

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The Court of Appeal (Omolo, Tunoi and Owuor JJ.A) allowed in part an appeal against a High Court ruling (Hayanga J, 19 March 1998) setting aside an arbitral award in a rent-review dispute between a landlord and Total Kenya Limited. The lease provided for rent review after seven years, with disagreements to be resolved by a mutually appointed valuer. Professor Syagga's award fixed the monthly rent at KShs.167,000/= but also recommended a 20% increment every two years. The respondent applied under section 35(1) of the Arbitration Act, 1995 - the only recourse against an award - to set it aside, and the High Court set aside the entire award as being beyond the reference terms. The Court of Appeal agreed the arbitrator exceeded his authority in imposing the 20% two-yearly increment, since that amounted to making a new contract for the parties. However, applying the severability proviso to section 35(1), it held the increment determination was separate and severable from the rent determination, which was made in accordance with the lease. The Judge ought only to have set aside the offending part. The Court restored the award of KShs.167,000/= monthly rent, set aside the 20% increment portion, and awarded the appellant half the costs of the appeal and of the High Court proceedings, with each party bearing its own costs before the arbitrator.

Key legal issues

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01

Whether an arbitrator who imposes terms not in the parties' agreement exceeds his authority

Holding

By imposing a 20% increment every two years not found in the lease, the arbitrator made a new contract for the parties and exceeded his authority.

Reasoning

The lease provided for rent review after seven years with an agreed mode of calculation. There was no mention of a 20% increment or a two-year period. By purporting to impose those terms the arbitrator went beyond the reference, exceeding his authority as arbitrator.

p. 2
02

Severability of the ultra vires part of the award

Holding

The 20% two-yearly increment was separate and severable from the rent determination, so only that part should have been set aside, not the entire award.

Reasoning

The arbitrator correctly determined the monthly rent of KShs.167,000/= using the method in the parties' agreement. The increment determination was not referred to him and was severable. Under the proviso to section 35(1)(a)(iv), only the part containing decisions on matters not referred may be set aside.

p. 2

Legal principles established

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  • Under section 35(1) of the Arbitration Act 1995, recourse to the High Court against an arbitral award is only by application to set aside; there is no provision for modification or remission for modification.
  • Where an arbitrator exceeds the terms of the reference, only the severable part of the award containing decisions on matters not referred may be set aside.

Court orders

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  1. 1.Appeal allowed
  2. 2.Order of the High Court setting aside the arbitral award set aside
  3. 3.Arbitrator's award of monthly rent of KShs.167,000/= restored
  4. 4.Part of the award allowing a rental increase of 20% after every two years set aside
  5. 5.Appellant awarded half the costs of the appeal and half the costs of the High Court proceedings; each party to bear its own costs before the arbitrator
On appeal from
High Court of Kenya at Nairobi
H.C.MISC.C.S. No. 718 of 1998
Jurisdiction invoked
Section 35(1) of the Arbitration Act, Act No. 4 of 1995

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, "Gitonga Warugongo v Total Kenya Limited", Case Analysis (1998). Civil Appeal No. 113 of 1998. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/1998/276/eng@1998-12-11

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