Kibuwa Leasing & Management Limited v Jadala Investments Limited & another (Civil Appeal 464 of 2018) [2023] KECA 895 (KLR)
The bottom line
#Kenya's Court of Appeal confirmed that if you don't object during arbitration, you can't challenge the award later, and appeals won't re-hear the merits.
What this practically means
#Executive summary
#Questions the Court framed
#The issues the Court set itself to decide, in its own words.
- 1.whether the appellant has a right of appeal to this Court from the impugned ruling and orders of the High Court (Ngetich, J.)
- 2.if the answer is in the affirmative, whether the learned Judge erred by upholding the award allegedly reached without jurisdiction and outside the scope of the reference
- 3.whether the learned Judge erred in holding that the award was not in conflict with the public policy of Kenya
- 4.what orders ought we to make in determination of this appeal, including orders on costs
Key legal issues
#Right of appeal to the Court of Appeal from a High Court decision under section 35(2) of the Arbitration Act
The appellant had no appeal as of right; having not agreed an appeal under section 39(3)(a), it required and duly obtained leave under section 39(3)(b), and the appeal was restricted to the section 35(2) grounds
Section 39(3) limits the jurisdiction of the Court of Appeal, allowing an appeal only where parties agreed before the award or where leave is granted on a point of law of general importance. The private, consensual nature of arbitration and the principle of minimal curial intervention, reflected in section 10 and Article 5 of the UNCITRAL Model Law, narrow the grounds of appeal to the section 35(2) grounds.
Whether the arbitral award exceeded the scope of the reference
No: the award was based on the terms of the lease, and the proposed use of the premises was expressly pleaded by the appellant in its statement of claim; the brochure was part of the appellant's own documents
The Court found the arbitrator determined the matter on clauses 2.10, 2.12, 2.26.2 and 2.26.3 of the lease. The marketing brochure was included in the appellant's own list and bundle of evidential documents. Further, no objection under section 17(3) was raised during the arbitration, so raising excess of jurisdiction before the High Court was an impermissible afterthought.
Whether the award conflicted with the public policy of Kenya
No: the appellant failed to demonstrate any inconsistency with the Constitution or other law, inimicality to national interest, or contrariety to justice and morality
Adopting the formulations in Christ for All Nations v Apollo Insurance and Glencore Grain v TSS Grain Millers, the Court held that none of the recognised categories of public policy violation was established. Public policy must not be narrowly construed, but the appellant did not specify with precision what public policy was violated by the award or by the Judge's ruling.
Legal principles established
#- An appeal to the Court of Appeal against a High Court decision adopting or refusing to set aside an arbitral award does not permit a merit review of the award; the appeal is confined to the grounds in section 35(2) read with section 39(3) of the Arbitration Act
- Rule 31(1)(a) of the Court of Appeal Rules does not mandate a first-instance merit review in appeals arising from arbitral award enforcement or setting-aside proceedings
- A party who contends that an arbitral tribunal is exceeding the scope of its authority must raise that plea during the arbitral proceedings as soon as the issue arises; failure to do so bars the plea in later setting-aside proceedings
- To succeed in showing that an arbitrator dealt with matters outside the scope of the reference, the applicant must show the arbitrator dealt with matters unrelated to the subject matter of the dispute
Court orders
#- 1.The appeal is dismissed with costs to the respondents
- 2.Costs of the appeal awarded to the respondents
The bench
#One judgment of the whole court — no separate or dissenting opinions.
- On appeal from
- High Court of Kenya at Nairobi
- HC Misc. App. No. 227 of 2017
- Jurisdiction invoked
- Section 39(3)(b) of the Arbitration Act - leave to appeal from a High Court decision under section 35(2) of the Arbitration Act
Relief refused
#Setting aside of the arbitral award on the ground that it exceeded the scope of the reference
No jurisdictional objection or fair-hearing complaint was raised before the arbitrator under section 17(3) of the Act; raising it before the High Court under section 35(2) was an afterthought
Setting aside of the arbitral award as being in conflict with the public policy of Kenya
None of the recognised categories of public policy violation was shown to be present in the award
Merit review of the arbitrator's findings and of the High Court ruling
Appeals against orders adopting an arbitral award do not permit a re-assessment of the merits; the appeal was confined to the grounds in section 35(2) read with section 39(3) of the Arbitration Act
Costs
The appeal was dismissed with costs to the respondents; the appellant's application in the High Court had been dismissed with costs and the respondents' Motion allowed as prayed, with the award adopted as judgment with costs to the respondents.
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.
the appeal herein fails and is hereby dismissed with costs to the respondents. Orders accordingly.
appeals against orders adopting an arbitration award as a judgment of the court (or dismissing an application to set aside the award, as the case may be) does not call for a merit review of the award by re-assessment or re-appraisal of points of law or fact
Except as provided in this Act, no court shall intervene in matters governed by this Act.
a plea that the arbitral tribunal is exceeding the scope of its authority shall be raised as soon as the matter alleged to be beyond the scope of its authority is raised during the arbitral proceedings.
consideration of public policy can never be exhaustively defined, but they should be approached with extreme caution.
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Kibuwa Leasing & Management Limited v Jadala Investments Limited & another (Civil Appeal 464 of 2018) [2023] KECA 895 (KLR)", Case Analysis (2023). Court of Appeal at Nairobi, Civil Appeal (from Nairobi HC Misc. App. No. 227 of 2017), memorandum of appeal dated 20th December 2018. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2023/895/eng@2023-07-24
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.