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Court of AppealPartially AllowedCivil Appeal No. 145 of 2011

Kenya Pipeline Company Limited v Hyosung Ebara Company Limited & 2 others [2012] KECA 104 (KLR)

Court of Appeal of Kenya
31 July 2012
EGE. M. GithinjiMartha Karambu KoomeM. K. KoomeKalpana RawalK. H. Rawal
5,072 words in judgment
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The bottom line

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Kenya's Court of Appeal confirmed that courts reviewing public procurement decisions can only examine how a decision was made, not whether it was right.

What this practically means

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Executive summary

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The Court of Appeal allowed an appeal by Kenya Pipeline Company Limited against a High Court ruling (Musinga, J) that had granted orders of certiorari and mandamus quashing the Public Procurement Administrative Review Board's dismissal of Hyosung Ebara Company Limited's request for review. The dispute arose from KPC's open tender for mainline pump sets, in which the 1st Respondent's bid was disqualified after KPC received a letter from Ebara Corporation terminating its joint venture with the 1st Respondent, and the manufacturer's authorization letter was found to be a mandatory requirement that had not been properly supplied. The Court held that the High Court had erred by conducting a merits review of the Board's decision: the judicial review application was 'only in name' an appeal, whereas judicial review is concerned with the decision-making process, not the correctness of the decision. Relying on the classic English authorities on judicial review, the Court held that a tribunal acting within jurisdiction is entitled to decide matters wrongly as well as rightly. It further held that the High Court erred in law in reading a temporal limitation into section 31(5) of the Public Procurement and Disposal Act: a procuring entity, through its evaluation and tender committees, may disqualify a bidder for submitting false, inaccurate or incomplete information at any stage of the procurement process. The Review Board, a specialized tribunal with wide statutory powers, was competent to determine whether the tender met the mandatory conditions, and its decisions within jurisdiction should not be lightly interfered with. The Court set aside the High Court ruling and the certiorari and mandamus orders, substituted an order dismissing the judicial review application, and awarded costs to the Appellant and the 2nd and 3rd Respondents against the 1st Respondent.

Questions the Court framed

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

  1. 1.Whether the High Court erred in treating the judicial review application as an appeal on the merits of the Review Board's decision
  2. 2.Whether the Review Board acted without or in excess of jurisdiction, in breach of natural justice, or irrationally in upholding the disqualification of the 1st Respondent's tender
  3. 3.Whether a procuring entity may invoke section 31(5) of the Public Procurement and Disposal Act only after both technical and financial evaluations are completed, or at any stage of the procurement process
  4. 4.Whether the Review Board was competent to determine whether the 1st Respondent's tender met the mandatory requirements of the tender documents
  5. 5.Whether the appropriate judicial review remedies should have been granted in light of the public interest in the procurement

Key legal issues

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01

Scope of judicial review versus merits appeal

Holding

The High Court erred in treating the judicial review application as an appeal: it reconsidered the tender process and arrived at different findings of fact and law from the Review Board, which is outside the scope of judicial review.

Reasoning

The court traced the classic principles from Lord Brightman, Lord Diplock and Lord Reid: judicial review examines the decision-making process (illegality, irrationality, procedural impropriety), not the correctness of the decision. An inferior tribunal acting within jurisdiction may decide matters wrongly without its decision being a nullity. The application before the High Court was, in substance, an appeal from the Review Board dressed as judicial review.

p. 8
02

Application of section 31(5) of the Act

Holding

The High Court erred in law in holding that a procuring entity may disqualify a person for submitting false, inaccurate or incomplete information only after both technical and financial evaluations are completed; the power may be exercised at any stage.

Reasoning

Section 31(5) contains no such temporal qualification. The words 'procuring entity' include the evaluation and tender committees established by it, which have power to reject non-responsive tenders at various stages. The tender committee superintends the procurement process under Regulation 10(2) and 11(1) and was the body that ultimately disqualified the 1st Respondent's tender.

p. 8
03

Competence of the Review Board

Holding

The High Court erred in holding that the Review Board was not competent to decide whether the tender met the mandatory conditions; that issue was directly before the Board and within its jurisdiction.

Reasoning

The Review Board is a specialized statutory tribunal for complaints of breach of duty by procuring entities, with wide powers under section 98 of the Act including annulling anything done by the procuring entity and substituting its own decision, and may engage experts under Regulation 89. The administrative review it conducts is in the nature of an appeal.

p. 9
04

Whether the Review Board's decision was vulnerable to judicial review

Holding

The 1st Respondent established no ground of illegality, irrationality, procedural impropriety or breach of natural justice; the Review Board considered all its complaints, notified it of the third-party letter (which its advocates confirmed), and the manufacturer's authorization letter was a mandatory requirement not properly supplied.

Reasoning

The Review Board found that the 1st Respondent was aware of the mutual termination agreement but failed to disclose it in its bid, that the joint venture agreement and licence were included in its technical proposal, that it was notified of the Ebara Corporation letter and confirmed the termination through its advocates, and that the authorization letter relied on was issued to a different entity.

p. 9

Legal principles established

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  • A judicial review court is confined to reviewing the decision-making process, not the correctness of the decision on law or fact; where the tribunal's proceedings are regular and it has jurisdiction, its decision cannot be quashed merely because it is wrong
  • A procuring entity, through the evaluation and tender committees, may disqualify a bidder under section 31(5) of the Public Procurement and Disposal Act at any stage of the procurement process, not only after both technical and financial evaluations are completed
  • The Public Procurement Administrative Review Board, being a specialized statutory tribunal better equipped than the High Court to handle procurement disputes, should not have its decisions within jurisdiction lightly interfered with
  • Judicial review remedies (certiorari, mandamus, prohibition) are public law remedies and are discretionary; the wider public interest in public procurement must be considered in granting them

Court orders

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  1. 1.Appeal allowed
  2. 2.Ruling of the High Court delivered on 10th May 2011 set aside together with the Orders of Certiorari and Mandamus
  3. 3.Substituted an order dismissing the Judicial Review application dated 14th December 2010
  4. 4.1st Respondent to pay the costs of the appeal to the Appellant and to the 2nd and 3rd Respondents
  5. 5.1st Respondent to pay the costs of the Judicial Review application to the Appellant and to the 2nd and 3rd Respondents

The bench

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

EG
majority

Wrote the judgment

Martha Karambu Koome
M. K. KoomeJA
Currently serving
majority

Wrote the judgment

Kalpana Rawal
majority

Wrote the judgment

On appeal from
High Court of Kenya at Nairobi, Milimani Law Courts
Misc. Judicial Review Application No. 362 of 2010
Jurisdiction invoked
First appellate jurisdiction over the High Court's ruling in a judicial review application arising from public procurement under the Public Procurement and Disposal Act, Act No. 3 of 2005

Relief refused

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Judicial review orders of certiorari and mandamus granted by the High Court

The 1st Respondent did not establish that the Review Board acted without or in excess of jurisdiction, in breach of natural justice, or irrationally; the High Court had wrongly conducted a merits review

p. 9

Costs

The 1st Respondent to pay the costs of this appeal and the costs of the Judicial Review application to the Appellant and to the 2nd and 3rd 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.

In the result, we allow the appeal, set aside the Ruling of the High Court delivered on 10th May 2011 together with the Orders of Certiorari and Mandamus and substitute therefor an order dismissing the Judicial Review application dated 14th December 2010.
p. 9Final orders - disposition
So long as the proceedings of the Review Board were regular and it had jurisdiction to adjudicate upon the matters raised in the Request for Review, it was as much entitled to decide those matters wrongly as it was to decide them rightly.
p. 9Scope of judicial review
The High Court erred in essence in treating the judicial review application as an appeal and in granting judicial review orders on the grounds which were outside the scope of Judicial Review jurisdiction.
p. 9Error of the court below
the procuring entity through the evaluation and tender committee has power to invoke S.31 (5) of the Act at any stage of the procurement process.
p. 8Section 31(5) disqualification power
It follows that its decision in matters within its jurisdiction should not be lightly interfered with.
p. 9Deference to the Review Board
A consideration of the appropriate remedy to a successful applicant in a procurement dispute should of necessity take into account the wider public interest.
p. 7Discretion and public interest in procurement remedies

Key timeline

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Practical implications

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Frequently asked questions

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Later judgments citing this (5)

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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, "Kenya Pipeline Company Limited v Hyosung Ebara Company Limited & 2 others [2012] KECA 104 (KLR)", Case Analysis (2012). Civil Appeal No. 145 of 2011. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2012/104/eng@2012-07-31

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