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Court of AppealAllowedRule 5(2)(b) application arising from Nairobi Milimani Commercial HC Misc. No. 41 of 2013

Devkan Enterprises Ltd v Edermann Company (K) Ltd (Civil Application E239 of 2025) [2025] KECA 1538 (KLR)

Court of Appeal of Kenya
3 October 2025
2,252 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 stopped a fresh arbitration, confirming orders that force parties into new proceedings can be stayed pending appeal.

What this practically means

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Executive summary

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This is a ruling of the Court of Appeal in Nairobi on a Notice of Motion dated 20th March, 2025 brought under Rule 5(2)(b) of the Court of Appeal Rules, seeking a stay of execution of a High Court ruling by Mong'are, J. dated 31st October, 2024 which set aside an arbitral award previously adopted as a judgment and decree by Amin, J., and directed a de novo arbitration before a different arbitrator. The underlying dispute arose from a lease between the applicant (tenant) and respondent (landlord), in which the applicant prevailed in a final arbitral award published on 17th October, 2012. Enforcement was initially refused by Kamau, J. on the ground that a certified copy of the award had not been exhibited; Amin, J. later on review adopted the award as a judgment of the court. The respondent then obtained the 2024 ruling citing discovery of new material. The Court of Appeal (W. Korir, Joel Ngugi and G. V. Odunga, JJA) applied the two-limb Rule 5(2)(b) test from Stanley Kang'ethe Kinyanjui v Tony Ketter. It found the intended appeal arguable on questions including whether a High Court could review and set aside an award already adopted as judgment, the prohibition on a review of a review, functus officio, and whether discovery of new evidence could circumvent the exhaustive grounds in section 35 of the Arbitration Act. On the nugatory limb, the court held that a de novo arbitration would impose substantial irrecoverable costs, rejecting the respondent's characterisation of the ruling as a negative order. The application was allowed with a stay of execution and a fast-tracked appeal; costs of the application abide the outcome of the appeal.

Questions the Court framed

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

  1. 1.Whether the intended appeal is arguable under Rule 5(2)(b)
  2. 2.Whether, absent a stay, the intended appeal would be rendered nugatory
  3. 3.Whether the impugned ruling is a negative order incapable of execution, as the respondent contended

Key legal issues

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01

Arguability of the intended appeal

Holding

The intended appeal raises bona fide and weighty questions of law, including whether a High Court differently constituted could review and set aside an arbitral award already adopted as judgment, and whether discovery of new evidence under Order 45 could circumvent section 35 of the Arbitration Act.

Reasoning

The court applied the settled Kangethe test that even one serious ground suffices. It identified several non-frivolous questions: the finality of adopted arbitral awards, the bar on a 'review of a review' under Order 45 Rule 6, functus officio, and the exclusive grounds of challenge under section 35 of the Arbitration Act. The existence of two potentially conflicting judicial trajectories over the same award reinforced arguability.

p. 4
02

Nugatoriness of the appeal if stay is denied

Holding

Absent a stay, the appeal risks being rendered nugatory because a de novo arbitration would impose substantial, irrecoverable costs and time on the parties.

Reasoning

The impugned ruling commands the parties to appoint a new arbitrator and commence a fresh arbitration. If that proceeds, sunk costs and expended resources cannot meaningfully be reversed even if the applicant succeeds on appeal. The prejudice is structural as well as pecuniary, concerning finality of arbitral processes and legal certainty of the judgment adopting the award, and is not compensable by damages.

p. 4
03

Whether the impugned ruling is a negative order incapable of execution

Holding

The court rejected the characterisation of the ruling as a negative order; it altered the status quo and imposed immediate positive obligations, and was therefore capable of execution.

Reasoning

The ruling did not merely dismiss or decline relief; it set aside an already adopted award and compelled a fresh arbitration. It thereby altered the status quo and imposed immediate obligations with practical and financial consequences. Such an order is executable, and if executed pending appeal, would threaten nugatoriness.

p. 4

Legal principles established

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  • A Rule 5(2)(b) applicant must satisfy both the arguability limb and the nugatory limb, with the burden on the applicant; a single arguable ground suffices.
  • An order that alters the status quo and imposes immediate positive obligations is capable of execution and may ground a stay, notwithstanding a characterisation of it as a negative order.
  • Nugatoriness extends beyond pecuniary prejudice: prejudice that is not readily remediable by damages, including institutional prejudice, satisfies the second limb.

Court orders

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  1. 1.Stay of execution of the ruling and all consequential orders of the High Court (Mong'are, J.) dated 31st October, 2024 in Nairobi Milimani Commercial HC Misc. No. 41 of 2013, pending the hearing and determination of the intended appeal
  2. 2.The intended appeal shall be fast-tracked
  3. 3.The applicant to file and serve the Record of Appeal together with its written submissions within 45 days of the ruling date
  4. 4.The respondent to file and serve its written submissions within 21 days of service of the Record of Appeal
  5. 5.The Deputy Registrar to list the appeal for hearing on priority in the next available date upon completion of filing
  6. 6.Costs of the application to abide the outcome of the appeal

The bench

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

majority
majority
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On appeal from
High Court of Kenya, Nairobi Milimani Commercial Courts
Nairobi Milimani Commercial HC Misc. No. 41 of 2013
Jurisdiction invoked
Rule 5(2)(b) of the Court of Appeal Rules (interlocutory relief pending an intended appeal)

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.

An applicant must show (i) that the appeal is arguable (not frivolous), and (ii) that unless the order sought is granted, the appeal would be rendered nugatory.
p. 3Rule 5(2)(b) test
There shall be a stay of execution of the ruling and all consequential orders of the High Court (Mong'are, J.) dated 31st October, 2024 in Nairobi Milimani Commercial HC Misc. No. 41 of 2013, pending the hearing and determination of the intended appeal.
p. 4Final orders - stay of execution
Costs of this application shall abide the outcome of the appeal.
p. 5Costs of the application
In the circumstances, the applicant has satisfied both the arguability and nugatory limbs.
p. 4Conclusion on Rule 5(2)(b) limbs
The spectre is not merely pecuniary; it is also institutional — concerning finality of arbitral processes, legal certainty of a judgment adopting an award, and the coherence of High Court orders concerning that award.
p. 4Nature of prejudice for nugatory limb

Issues in the judgment

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minor

Paragraph numbering is erratic and non-sequential: the number 7, 8, 9 and 10 are each used more than once, and the ruling concludes with paragraphs numbered 8 through 11 after paragraph 11 appeared earlier in the chronological recitation.

minor

The judgment contains two inconsistent renderings of the Hashmukhlal Virchand Shah citation, one as [2014] eKLR in the submissions and another as [2014] KECA 548 (KLR) in the court's own analysis, and a further discrepancy in the Reliance Bank citation ([2002] 1 EA 227 vs [2002] IEA 227).

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, "Devkan Enterprises Ltd v Edermann Company (K) Ltd (Civil Application E239 of 2025) [2025] KECA 1538 (KLR)", Case Analysis (2025). Rule 5(2)(b) application arising from Nairobi Milimani Commercial HC Misc. No. 41 of 2013. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2025/1538/eng@2025-10-03

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