Vihar Construction Limited v Teejay Estates Limited [2023] KEHC 23723 (KLR)

Vihar Construction Limited v Teejay Estates Limited (Miscellaneous Civil Application E184 of 2021) [2023] KEHC 23723 (KLR) (Commercial and Tax) (19 October 2023) (Ruling)

Neutral citation: [2023] KEHC 23723 (KLR)

Republic of Kenya

In the High Court at Nairobi (Milimani Commercial Courts Commercial and Tax Division)

Commercial and Tax

Miscellaneous Civil Application E184 of 2021

A Mabeya, J

October 19, 2023

Between

Vihar Construction Limited

Applicant

and

Teejay Estates Limited

Respondent

Ruling

1. This is a ruling on the applicant’s notice of motion dated 3/2/2023. The same was brought under sections 35, 39 (3) & (4) of the Arbitration Act. The applicant sought leave to appeal to the Court of Appeal against the ruling delivered on 18/2/2022 by this Court.

2. The grounds for the application included that by that ruling, the Court ruled in favor of the respondent by setting aside the final arbitral award dated 18/12/2021 by QS Kimani Mathu against which the applicant filed a Notice of Appeal on the 25/2/2022.

3. The applicant highlighted the grounds of appeal that it intends to rely on in its appeal against the said ruling. It further averred that if leave to appeal to the Court of Appeal was not granted, it would not enjoy the fruits of the arbitral award, hence, it would suffer irreparable loss. Further, that it has an arguable appeal with high prospects of success and it is in the interest of justice that it be granted leave sought.

4. In opposition, the respondent filed grounds of opposition dated 1/3/2023 and a replying affidavit sworn on 1/3/2023.

5. In the grounds of opposition, the respondent contended that the question of whether or not to grant leave and admit an appeal to the Court of Appeal from a decision of the High Court setting aside an Arbitral Award is to be determined by the Court of Appeal itself based upon established and well settled threshold considerations. That the instant application did not meet those considerations. That an appeal from this court's determination under section 35 of the Arbitration Act was not automatic and no special circumstances existed to warrant the leave sought.

6. In its replying affidavit sworn by its director, the respondent contended that the applicant was guilty of delay and laches as the present application was being brought nearly after a year of the impugned ruling.

7. That the application was misconceived as it was specifically brought under sections 35, 39(3) and 39(4) of the Arbitration Act whilst section 35 of the Arbitration Act did not provide for grant of leave to appeal. That the other provisions did not apply as the parties had never agreed that that an appeal could lie.

8. That there was no matter of general public importance as to merit any special dispensation for grant of leave to appeal. That the question of whether or not to grant leave and admit an appeal to the Court of Appeal from a decision of the High Court setting aside an Arbitral Award is to be determined by the Court of Appeal itself based upon established and well settled threshold considerations.

9. Both parties herein filed submissions for and against the instant application which I have considered.

10. The main issue for determination is whether the Court should grant leave to the applicant to appeal against the ruling of 18/2/2022.

11. On 18/2/2022, this Court delivered a ruling setting aside the arbitral award dated 18/12/2021 as stipulated under section 35 of the Arbitration Act. The award was set aside on the basis that the award was against the public policy of Kenya and that it breached the principle of equality of arms.

12. The Supreme Court has pronounced itself on the jurisdiction of the Court of Appeal to admit appeals from determinations of the High Court under section 35 of the Arbitration Act. In Nyutu Agrovet Limited v Airtel Networks Kenya Ltd & another SC Petition No 12 of 2016 [2019] eKLR, the apex Court held: -In concluding on this issue, we agree with the Interested Party to the extent that the only instance that an appeal may lie from the High Court to the Court of Appeal on a determination made under Section 35 is where the High Court, in setting aside an arbitral award, has stepped outside the grounds set out in the said Section and thereby made a decision so grave, so manifestly wrong and which has completely closed the door of justice to either of the parties. This circumscribed and narrow jurisdiction should also be so sparingly exercised that only in the clearest of cases should the Court of Appeal assume jurisdiction.”

13. Further, in Geo Chem Middle East v Kenya Bureau of Standards [2020] eKLR, it was held: -“After our pronouncements in Nyutu and Synergy, it is not possible that the Court of Appeal can grant leave to appeal from a Section 35 Judgment of the High Court without interrogating the substance of the intended appeal, to determine whether, on the basis of our pronouncement, such an appeal lies. A general grant of leave to appeal would not suffice. Yet this is exactly what happened in the instant case before us.”

14. My understanding of the foregoing authorities is that, the Court of Appeal may admit an appeal from the High Court on a determination made under section 35 of the Arbitration Act where the appellate Court finds that the determination was made out of the scope of the grounds set out in the said section which would render the decision manifestly wrong.

15. Further that, it is the Court of Appeal which should grant leave for such an appeal after it has interrogated the substance of the intended appeal and determined whether it meets the criteria set out in the pronouncements of the Supreme Court.

16. In this regard, it will be illogical for this Court to interrogate its own decision of having set aside an award and then determine that the same should be appealed against by granting leave. That would be preposterous. Accordingly, I hold that leave to appeal against a decision under section 35 of the Arbitration Act should be sought from the Court of Appeal and not this Court.

17. On the relevance of section 39(3) and (4) of the Arbitration Act under which the present application was brought, I agree with the respondent that the said provisions do not apply. The section would only be relevant if the parties would have agreed that such an appeal could lie or if the Court of Appeal, being of the opinion that a point of law of general importance is involved, grants leave to appeal.

18. In the premises, I find that the application dated 3/2/2023 is misplaced and without merit and dismiss the same with costs.

It is so ordered.

DATED AND DELIVERED AT NAIROBI THIS 19TH DAY OF OCTOBER, 2023. A. MABEYA, FCI ARBJUDGE