Seboka General Construction Company Limited v Kisii County Government [2023] KEHC 24964 (KLR)

Seboka General Construction Company Limited v Kisii County Government (Miscellaneous Application 45B of 2021) [2023] KEHC 24964 (KLR) (7 November 2023) (Ruling)

Neutral citation: [2023] KEHC 24964 (KLR)

Republic of Kenya

In the High Court at Kisii

Miscellaneous Application 45B of 2021

PN Gichohi, J

November 7, 2023

Between

Seboka General Construction Company Limited

Applicant

and

Kisii County Government

Respondent

Ruling

1. The subject of this ruling is a Chamber Summons dated 5th August 2021 and brought under section 3 A of the Civil Procedure Act, section 36 of the Arbitration Act and rules 6 and 9 of the Arbitration Rules and order 51 of the Civil Procedure Rules. The Applicant seeks orders: -1. That this Honourable Court be pleased to receive, recognize and adopt the Arbitral Award made on 20/05/2021. 2.That the Arbitral Award made on 20/05/2021 be deemed as a decree of this Honourable Court;3. That this honourable Court be pleased to grant leave to the Applicant to enforce the Arbitral Award made on 20/05/2021;4. That the Respondent do reimburse the Applicant Kshs. 415,000. 00 being costs of the Arbitration on their behalf;5. That the costs of and occasioned by this Application be awarded to the Applicant.

2. The Application was supported by the grounds on the face of the Summons and by Affidavit of Richard Ombati, Director of the Applicant. The gravamen of the Application is that the parties herein in 2014 entered to a contract after a successful tender process for the refurbishment and extension of Suneka Market and Bus Park. The contract number KCG/WKS/T/10/2013 – 2014 was valued at Kshs. 57,698,614. 00 and later enhanced to Kshs. 70,646,098. 00.

3. During the subsistence of the contractual relationship, a dispute arose between the parties herein and this led the Applicant to apply to the Chairman of the Chartered Institute of Arbitrators Kenya Branch (CIArb) to nominate an arbitrator. Consequently, the Chairman appointed Engineer Apollo Okelo Rogo as the sole arbitrator.

4. The dispute was ultimately be heard by Arbitrator by way of written submissions based on pleadings filed by parties. Then in June 2021, the Arbitrator wrote to the parties informing them that the award was ready but would be delivered upon payment of the arbitration costs which were to be borne by each party separately.

5. However, the Respondent made no effort of paying the costs and the Applicant fully catered for the costs of arbitration. The Applicant then collected the Award on 7th June 2021 and served it on the Respondent but the Respondent never settled the Award. He therefore urged this court to allow the Chambers Summons as prayed.

6. The Respondent filed a Replying Affidavit sworn on 23/11/2022 by Isaiah Mosota Nyamweya, Advocate on his own behalf and on behalf of the Respondent. He deponed that the Respondent had filed an Application in Kisii High Court Misc. Civil Application No. E. O46 of 2021 seeking setting aside of the arbitral award. In the circumstances, he termed the present Application premature since it was filed before the lapse of three (3) months/ 120 days.

7. While annexing documents , he deponed that in the meeting of 26/04/2019, parties agreed to proceed to full hearing with pre-trial conferences preceding the hearing date as set out in the Arbitration Act. It was further agreed that the costs would be guided by the provisions of the Chartered Instituted of Arbitrator’s (Kenya) Scale. In that vein, the Arbitrator would be paid Kshs. 13,700. 00 and an additional hourly cost of Kshs. 700. 00 for the venue. The deponent in this regard accused the Arbitrator of failing to prepare an agreement form capturing the said agreed terms.

8. The Respondent protested the Arbitrator’s failure to furnish him with sufficient notice but nevertheless, the Respondent later filed its response to the Statement of Claim . He accused the Arbitrator of professional misconduct for writing a letter to the then Governor, a non-party to the proceedings against the provisions of the Arbitration Act and the parties’ agreement.

9. He further deponed that on 13/01/2021 discovered that directions had been issued as to submissions but those directions were copied to the Governor, a non-party. He accused the Arbitrator of exhibiting a compromised demeanour hence arriving at a wrong decision, that is, the impugned Award.

10. The Respondent urged this court to dismiss the Application as the Award was illegal having been founded on an illegal, fraudulent and unenforceable contract. He therefore deponed that the recognition of the Award would go against public policy as the Award was marred with error de facto and de jure.

11. Finally , he lamented that the award was reached without the participation of the Respondent thereby violating his constitutional right to a fair hearing. He thus prayed that the Application be dismissed.

Submissioms 12. This Application was canvassed by way of written submissions. The Applicants’ written submissions are dated 06/06/2022 and filed on 07/06/2022 where he reproduced the contents of the Final Award. He prayed that the Court find s that the Award remains unchallenged and therefore allow its application and adopt the Award in line with section 32A, 36 (1) and 37 of the Arbitration Act.

13. On 19/07/2023, the Respondent filed its written submissions dated 17/07/2023 and maintained the contents of the Replying affidavit. He urged this court to re-examine and re-investigate the Award before adopting it due to the nature of enforcement. He objected to the adoption of the award and maintained that the contract was founded on an illegality thus in breach of the public procurement process and that the Award was marred with error. Further , he submitted that the Arbitrator was biased. He prayed that the Application be dismissed.

Determination 14. This Court has considered the material presented by both parties. There is no dispute that the parties herein had entered into a contract which contained an arbitration clause. Further, it is a fact by both parties that a dispute did arise and it was referred for arbitration.

15. At the conclusion of the arbitral proceedings, the Sole Arbitrator Engineer Okelo Rogo finally published the Final Award on 20th May 2021 which Award was in the following terms:-a.The Respondent shall pay the Claimant Kshs. 11,770,660. 70 within 21 days from the date of this Award, failing which penalty in the interest rate of 11. 99% per annum (simple interest) to accrue until full payment is made.b.The Respondent shall pay the Claimant Kshs. 12,000,000. 00 within 21 days from the date of this Award, failing which penalty in the interest rate of 11. 9% per annum (simple interest) to accrue until full payment is made.c.The Respondent shall meet 80% costs of Arbitration and incidental administrative cost and the Claimant to meet 20% of these costs.d.Each party to meet its portion of the Arbitration and administration costs as in C above; failing which a party shall pay full costs of Arbitration and administrative costs and recover its portion from the other party. If this recovery is not made within 21 days from the date of the demand, then the outstanding amount shall attract interest penalty at the rate of 11. 9% per annum (simple interest) until fully recovered.

16. Once Award is published, section 35 (3) of the Arbitration Act comes into play if a party is aggrieved and wishes to have the Award set aside. Specifically, the section provides that:-“An application for setting aside the arbitral award may not be made after 3 months have elapsed from the date on which the party making that application had received the arbitral award, or if a request had been made under section 36 from the date on which that request had been disposed of by the arbitral award.”

17. Indeed, the Respondent filed a Notice of Motion dated 19th August 2021 in High Court Misc. Application No. 46 of 2021 Section 35 of the Arbitration Act seeking :-1. That the Arbitral Award dated 20th May 2021 between Seboka Construction Limited and Kisii County Government by Engineer Apolo OkelO Rogo be and is hereby set aside.2. That an order be and is herby issue compelling Eng. Apollo Okelo Rogo to resume proceedings and treat all the parties fairly equally .3. That the costs of this application be borne by the Respondent

18. That Application was argued before Ougo J who vide a Ruling dated 25th May 2022 held:“Having considered the entirety of the Applicant’s case, I find the application to be lacking in merit. The applicant having failed to establish any of the grounds under Section 35 of the Act and the same is hereby dismissed with costs.”

19. Th parties acknowledge the above fact. That being the case, there is no pending application under section 35 of the Arbitration Act. As a consequence, the only issue for determination by this Court is whether the Applicant herein has satisfied the provisions of section 36 of the Arbitration Act in regard to adoption and recognition of the Final Arbitral Award. The section specifically provides:-(1)A domestic arbitral award, shall be recognized as binding and, upon application in writing to the High Court, shall be enforced subject to this section and section 37. (2)An international arbitration award shall be recognised as binding and enforced in accordance to the provisions of the New York Convention or any other convention to which Kenya is signatory and relating to arbitral awards.(3)Unless the High Court otherwise orders, the party relying on an arbitral award or applying for its enforcement must furnish—(a)the original arbitral award or a duly certified copy of it; and(b)the original arbitration agreement or a duly certified copy of it.(4)….(5)…”

20. The issues now being raised by the Respondent herein are none issues in the circumstances stated herein. This Court is not sitting on an appeal. Parties who choose arbitration as a mode of resolving their dispute should embrace the principle of finality in resolution of that dispute. What they need is a final and enforceable outcome and from the records availed, the Applicant has satisfied the provisions of Section 36 of the Act .

21. In the upshot ,the Application dated 5th August 2021 is allowed as follows:1. The Final Award of the Sole Arbitrator Eng. Appollo Okelo Rogo published and dated 20th May 2021 be and is hereby recognised as binding and thus be adopted as a Judgment and Decree of this Court.2. The Applicant is granted leave to enforce the said Award as the decree of this court.3. The Respondent do reimburse the Applicant Kshs. 415,000. 00 being costs of the Arbitration on their behalf.4. The costs of this application and expenses incidental to the adoption , enforcement and execution of the Final Award be borne by the Respondent.

DATED, SIGNED AND DELIVERED (VIRTUALLY) AT KISII THIS 7TH DAY OF NOVEMBER, 2023. PATRICIA GICHOHIJUDGEIn the presence of:Applicant in personN/A for RespondentAphline , Court Assistant