T K M Maestro Limited v Kenya Railways Corporation [2017] KEHC 10041 (KLR)

REPUBLIC OF KENYA

IN THE HIGH COURT OF KENYA AT NAIROBI

COMMERCIAL AND TAX DIVISION

MISCELLANEOUS SUIT NO. 512 OF 2016

T K M MAESTRO LIMITED……….....................................APPLICANT

VERSUS

KENYA RAILWAYS CORPORATION….........................RESPONDENT

RULING

1. The applicant, T K M MAESTRO LIMITED, has requested the court to set aside the Arbitral Award which was made and published on 5th January 2016.

2. The sole arbitrator, DR. KARIUKI MUIGUA, had dismissed the applicant’s claim in its entirety.

3. The applicant contends that the arbitrator had failed to appreciate that extrinsic evidence can form part of a written contract.

4. It was the applicant’s case that the respondent had not denied that the applicant had carried out additional works, and that the said works continue to benefit the respondent to-date.

5In the circumstances, the applicant expressed the view that the arbitrator’s decision was contrary to Public Policy and Public Interest.

6. The applicant also stated that the Arbitral Award was marred with findings which are inconsistent with the Constitution and also with the other Laws of Kenya.  In particular, the applicant pointed out that the findings in issue were inconsistent with the provisions of the Law of Contract Act.

7. Finally, the applicant said that the award was contrary to justice and morality.

8. When canvassing the application, the applicant submitted that the learned arbitrator erred in law, when he held that extrinsic evidence could not be adduced to vary/contradict the express written terms of the contract between the parties.

9. As far as the applicant was concerned, the additional agreement was collateral and essential to the main agreement, as it would have been impossible for the applicant to proceed with the contracted work without first doing the drawings, the technical survey and the line of survey.

10It was conceded by the applicant that the general rule was to the effect that parole evidence cannot be admitted to add to, vary or to contradict a written deed.  Indeed, the applicant explained that that general rule was necessary in order to promote certainty and to save time on litigation.

11. However, the applicant was of the view that;

“…extrinsic evidence can be admitted in to prove the factual background known to the contracting parties.  It is to be included if it brings certainty”.

12. In this case, the applicant’s position is that the “additional agreements” were purely to ensure the workability and efficacy of the main contract.

13. It was said that the person who gave verbal instructions to the applicant was the respondent’s I.T Manager, and that he told the applicant to;

“Design as you go…”

14. Apparently, the respondent had not done a feasibility study, that ought to have informed the drawing up of the Bill of Quantities.

15. According to the applicant, it is because there had been no initial feasibility study that the respondent told the applicant that it could develop the designs whilst the work was going ahead.

16. In the circumstances, the applicant submitted that it was only fair and just that the additional work which it did, be paid for by the respondent.

17. In answer to the application, the respondent pointed out that the court needs to bear in mind the fact that the objective of the Arbitration Act was to have finality in the disputes which had been subjected to arbitration.

18. It is well settled that when parties to a contract have chosen arbitration as the medium through which they would resolve disputes that arise between them, the law recognizes the need and desirability of severely limiting the court’s intervention in both the arbitral process as well as in the arbitral award.

19. In the case of CAPE HOLDINGS LIMITED Vs. SYNERGY INDUSTRIAL CREDIT LIMITED, MISC APPLICATION No. 114 of 2015, C. Kariuki J noted that the provisions of Section 35 (2) of the Arbitration Act recognize;

“…the principle of party autonomy and limits the role of the courts in commercial arbitration.

The principle of party autonomy, underpinning arbitration, is premised on the platform that, provided it does not offend limits imposed by law, parties in a relationship have the right to choose their own means of resolving disputes without recourse to the courts or by limiting the circumstances under which recourse to the courts may be had.  See the case of Kenya Oil Company Limited & Another Vs. Kenya Pipeline Company [2014] e KLR”.

20. First, it is to be noted that the authority cited above was provided by the applicant.  Therefore, I believe that the applicant is persuaded about the correctness of the said decision.

21. However, whether or not the applicant was so persuaded, I reiterate the said pronouncement as an embodiment of the correct legal position.

22. Justice Charles Kariuki went on to state as follows in the said decision;

“74. The Court cannot therefore go to the merits or otherwise of the Award when dealing with an application under Section 35 of the Act, as this court is not sitting on an appeal from the decision of the arbitrator when considering whether or not to set aside the award.

75. Further, the court cannot interfere with the findings of fact by an arbitrator.  See the case of D B Shapriya & Co. Ltd Vs Bish International BV [2003] 2 E.A. 404”.

23. In this case, the applicant is effectively finding fault with the decision made by the arbitrator.  The applicant believes that the arbitrator erred by rejecting the parole or the extrinsic evidence, which were not incorporated into the written contract.

24. The applicant did, correctly, describe the alleged error in the arbitrator’s decision as an error of law.

25. If this court were to delve into the question as to whether or not the arbitrator had erred in law, when making his determination, that would constitute an appeal in respect to that decision.  I decline to constitute myself as an appellate court as the law does not permit an appeal from the decision of the arbitrator.

26. In any event, when parties have consciously made a decision to enter into a written contract, the terms of the said contract would be those that are contained in the document; that is the general position in law.  It would therefore appear that even if the court had had authority and jurisdiction to re-evaluate the decision made by the arbitrator, the same would have been upheld.

27. In this case of CAPE HOLDINGS LIMITED Vs SYNERGY INDUSTRIAL CREDIT LIMITED (above-cited),the court noted that the arbitrator was right to have held that he did not have jurisdiction to venture into the pre-contract negotiation phase.  If the court had ventured into the said pre-contract negotiation phase, he would have entered into an area which was outside the scope of his authority.

28. The same would be said about the case before me.

29. Of course, I appreciate that in this case, the applicant has suggested that even whilst it was executing the contract, there were things which it had to do, in order to make it possible to perform the written contract.  The applicant described the extra tasks as constituting “a design as you go basis”.

30. However, the applicant did not persuade the arbitrator that such additional work, which was being designed whilst the contract was being performed, could not have been incorporated into the main agreement.

31. I find that the decision of the arbitrator;

a) Was not contrary to any Public Policy or the Public Interest;

b) Was not inconsistent with the Constitution or the Law of Contract Act, or with any other written law;

c) Was not contrary to justice or morality.

32. In effect, the application lacks merit.  It is therefore dismissed with costs to the respondent.

DATED, SIGNED and DELIVERED at NAIROBI this7th dayof November2017.

FRED A. OCHIENG

JUDGE

Ruling read in open court in the presence of

Miss Nyamai for Mwongela for the Applicant

Nyaanga for the Respondent

Collins Odhiambo – Court clerk.