Skip to content
AI-generated case briefs sourced from Kenya Law · Not legal advice
AI-generated case brief
Case Brief · caselaw.co.ke
Court of AppealPartially AllowedCivil Appeal No E620 of 2022 (application)

SBM Bank (Kenya) Limited v Afrasia Bank Limited (Civil Application E327 of 2022) [2023] KECA 366 (KLR)

Court of Appeal of Kenya
31 March 2023
2,333 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~9 min to read original · ~4 min brief

The bottom line

#

Kenya's Court of Appeal blocked enforcement of a USD 7.5 million judgment against SBM Bank pending appeal, and refused to strike the appeal out.

What this practically means

#

Executive summary

#
Before the Court of Appeal (Musinga, P, Omondi and Laibuta, JJA) were two applications arising from the High Court's decision (Okwany, J, July 21, 2022) setting aside an arbitral award and entering judgment of USD 7,500,000 against SBM Bank (Kenya) Limited in favour of Afrasia Bank Limited, a foreign bank whose deposit with Chase Bank was caught by that bank's receivership. SBM sought stay of execution pending its intended appeal under rule 5(2)(b) of the Court of Appeal Rules; Afrasia cross-applied to strike out SBM's Motion and record of appeal under rule 86, contending that no appeal lies from a High Court decision under section 35 of the Arbitration Act without leave under section 39(3), and that the Motion was res judicata. The Court dealt first with the strike-out application and declined to determine the jurisdictional question, holding that doing so would decide the substantive appeal at an interlocutory stage and prematurely shut the Court's doors on an appellant raising substantial issues; it applied Airland Tours on the limits of interlocutory determinations. On the stay application, the Court found the appeal grounds arguable - one arguable ground sufficing - and, noting Afrasia's own admission that its financial position had been adversely affected, found that a successful appeal would be rendered nugatory if the colossal decretal sum left the jurisdiction. Stay of execution was granted, the appeal to be heard on a priority basis, with the costs of the stay application to abide the appeal. The decision below was not disturbed at this interlocutory stage.

Questions the Court framed

#

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

  1. 1.Whether the respondent's Motion to strike out the applicant's Motion and record of appeal under rule 86 is merited, given the contention that no appeal lies from a High Court decision under section 35 of the Arbitration Act without leave
  2. 2.Whether the applicant's Motion for stay of execution pending appeal satisfies the twin principles of arguability and nugatory-ness under rule 5(2)(b)

Key legal issues

#
01

Whether an appeal can be struck out where the challenge is to whether an appeal lies

Holding

No - the question whether an appeal lies is central to the substantive appeal and cannot be resolved on a rule 86 interlocutory application

Reasoning

The jurisdictional grounds underpinning the strike-out Motion were the same as the main grounds of appeal. Determining them interlocutorily would decide the appeal itself before a full hearing, contrary to the principle in Airland Tours that interlocutory applications must not produce definitive findings on disputed propositions of law.

p. 3
02

Whether the twin principles for stay under rule 5(2)(b) were satisfied

Holding

Yes - the appeal grounds were arguable, and the respondent's own admission about its adverse financial position cast doubt on its ability to refund the colossal decretal sum, rendering a successful appeal nugatory

Reasoning

The grounds in the memorandum of appeal were neither idle nor frivolous. On the nugatory limb, the applicant relied on Trust Bank v Investech regarding difficulties recovering from a foreign bank; the respondent's own statement that its financial position had been adversely affected by being out of pocket cast doubt on its liquidity to refund the decretal amount if paid.

p. 4

Legal principles established

#
  • A court hearing an interlocutory application must not make conclusive or definitive findings of fact or law on contested issues
  • A jurisdictional challenge that goes to the heart of the appeal should not be determined on a strike-out application, as that would prematurely shut the Court's doors on an appellant raising substantial issues
  • Stay under rule 5(2)(b) is granted only on the twin principles of an arguable appeal and nugatoriness, and one arguable ground suffices for the first limb

Court orders

#
  1. 1.Dismissal of the respondent's Notice of Motion dated September 22, 2022 with no orders as to costs
  2. 2.Stay of execution of the judgment and decree of the High Court of Kenya at Nairobi (W Okwany, J) dated July 21, 2022 pending hearing and determination of Civil Appeal No E620 of 2022
  3. 3.That the appeal be heard and determined on a priority basis
  4. 4.That the costs of the applicant's application abide the outcome of the appeal

The bench

#

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

majority
majority
majority
On appeal from
High Court of Kenya at Nairobi
Nairobi HC Misc App No E386 of 2021
Jurisdiction invoked
Rule 5(2)(b) of the Court of Appeal Rules (stay pending appeal); rule 86 (strike out) challenged jurisdiction under sections 35 and 39(3) of the Arbitration Act

Relief refused

#

Strike out of the applicant's Motion and record of appeal

The jurisdictional issue raised is central to the substantive appeal and cannot be conclusively determined at an interlocutory stage

p. 3

Costs

Respondent's Motion dismissed with no orders as to costs; costs of the applicant's application to abide the outcome of the appeal

Quotable passages

#

Verbatim from the judgment, each located to the page it appears on in the official PDF — so these can be cited and checked directly.

determination of the jurisdictional issue raised in the respondent's Motion would be tantamount to determination of the appeal in Civil Appeal No E620 of 2022 at an interlocutory stage
p. 3strike-out applications and premature determination of jurisdiction
In an interlocutory application the Court is not required to make any conclusive or definitive findings of fact or law, most certainly not on the basis of contradictory afidavit evidence or disputed propositions of law.
p. 4limits of interlocutory determinations
applications under rule 5(2) (b) can only succeed if the applicant satisfies the twin principle to wit that the appeal (or intended appeal) is arguable; and that the appeal, if successful, would be rendered nugatory if stay is not granted
p. 4twin principles for stay of execution pending appeal
there be stay of execution of the judgment and decree of the High Court of Kenya at Nairobi (W Okwany, J) dated July 21, 2022 pending hearing and determination of Civil Appeal No E620 of 2022
p. 5final orders - stay of execution granted
the costs of the application do abide the outcome of the appeal
p. 5final orders - costs

Issues in the judgment

#
minor

The cases cited by the court in support of the twin principles (Anne Wanjiku Kibeh, Yellow Horse Inns, University of Nairobi, Trust Bank) are referenced parenthetically within the court's reasoning rather than as independently argued authority; treatment labels record them as party-cited or court-referenced without clear adoption.

Key timeline

#

Practical implications

#

Frequently asked questions

#

Cite this brief

#

Cite this brief

Caselaw, "SBM Bank (Kenya) Limited v Afrasia Bank Limited (Civil Application E327 of 2022) [2023] KECA 366 (KLR)", Case Analysis (2023). Civil Appeal No E620 of 2022 (application). Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2023/366/eng@2023-03-31

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