Villa Care Management Limited v Kengen Staff Retirement Benefits Scheme [2022] KEHC 16647 (KLR)

Villa Care Management Limited v Kengen Staff Retirement Benefits Scheme (Miscellaneous Application 260 of 2019) [2022] KEHC 16647 (KLR) (Commercial and Tax) (8 December 2022) (Ruling)

Neutral citation: [2022] KEHC 16647 (KLR)

Republic of Kenya

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

Commercial and Tax

Miscellaneous Application 260 of 2019

WA Okwany, J

December 8, 2022

Between

Villa Care Management Limited

Applicant

and

Kengen Staff Retirement Benefits Scheme

Respondent

Ruling

1. The respondent herein, Kengen Retirement Benefits Scheme, filed the application dated seeking leave to enforce the final arbitral award published on May 20, 2019 as a decree of the court.

2. The application is supported by the affidavit of Mr Josphat Muriuki and is premised on the grounds that: -a)By an award published by Dr Kariuki Muigua (the arbitral tribunal) on May 20, 2019, the arbitral tribunal awarded the respondent the sum of Kshs 166,102,388. 00 plus interest at the rate of 12% per annum from the date of filing the claim and costs of Kshs 5,806,533. 00 plus interest at the rate of 12% per annum from the date of the award.b)The applicant applied to set aside the award but the court dismissed the application with costs in its ruling of July 29, 2021. c)The applicant has not settled the award and the respondent wishes to enforce it as a decree of this court as permitted under section 36(1) of the Arbitration Act.d)It is in the interest of justice and fairness that this application is allowed.

3. The applicant opposed the application through the replying affidavit of its director Mr Anginyah Jairo Tabu who states that the applicant had filed an appeal against this court’s ruling of July 29, 2021 dismissing the application to set aside the award which appeal will be rendered nugatory if the award is enforced. According to the applicant, the appeal should be heard first before the award can be enforced.

4. At the hearing of the application, the respondent submitted that the Supreme Court has taken the position that an appeal arising out of an application to set aside an award is not an automatic right as leave of the court has to be obtained first. It was the respondent’s case that no appeal exists in this case since the application for leave to file a notice of appeal had been dismissed. The respondent noted that in most instances, an application to set aside an arbitral award goes hand in hand with an application for the enforcement of the award so that if the setting aside application fails, the court automatically grants the enforcement application.

5. The respondent noted that there is no impediment to the enforcement of the award as it had complied with all the conditions for enforcement by filing a certified copy of the award and arbitration agreement.

6. The applicant, on its part, reiterated its averments in the replying affidavit and submitted that since it had filed a notice of appeal seeking to challenge this court’s ruling dismissing its application to set aside the award, the enforcement will render the appeal nugatory.

7. The applicant argued that the award is for a substantial amount of money that is capable of bringing it down to its knees financially if executed.

8. I have carefully considered the rival arguments over the issue of the enforcement of the award.

9. It was not disputed that the application to set aside the award was dismissed and that there is no order stopping the respondent from proceeding with its application to enforce the award. I note that even though the applicant argued that it had filed a notice of appeal before the Court of Appeal, there is no order staying the enforcement of the award pending the hearing of the intended appeal.

10. Recognition and enforcement of arbitral awards is governed by sections 36 and 37 of the Arbitration Act. While section 36 confirms the binding nature of domestic arbitral awards and requires a party seeking enforcement of such awards to avail to the court the original arbitral award and the original arbitration agreement or their certified copies, section 37 sets out the circumstances under which the court may decline to recognize or enforce and arbitral award as follows:“37. Grounds for refusal of recognition or enforcement(1)The recognition or enforcement of an arbitral award, irrespective of the state in which it was made, may be refused only—(a)at the request of the party against whom it is invoked, if that party furnishes to the High Court proof that—(i)a party to the arbitration agreement was under some incapacity; or(ii)the arbitration agreement is not valid under the law to which the parties have subjected it or, failing any indication of that law, under the law of the state where the arbitral award was made;(iii)the party against whom the arbitral award is invoked was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present his case; or(iv)the arbitral award deals with a dispute not contemplated by or not falling within the terms of the reference to arbitration, or it contains decisions on matters beyond the scope of the reference to arbitration, provided that if the decisions on matters referred to arbitration can be separated from those not so referred, that part of the arbitral award which contains decisions on matters referred to arbitration may be recognized and enforced; or(v)the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties or, failing any agreement by the parties, was not in accordance with the law of the state where the arbitration took place; or(vi)the arbitral award has not yet become binding on the parties or has been set aside or suspended by a court of the state in which, or under the law of which, that arbitral award was made; or(vii)the making of the arbitral award was induced or affected by fraud, bribery, corruption or undue influence;(b)if the High Court finds that—(i)the subject-matter of the dispute is not capable of settlement by arbitration under the law of Kenya; or(ii)the recognition or enforcement of the arbitral award would be contrary to the public policy of Kenya. 2. If an application for the setting aside or suspension of an arbitral award has been made to a court referred to in subsection (1) (a) (vi), the High Court may, if it considers it proper, adjourn its decision and may also, on the application of the party, claiming recognition or enforcement of the arbitral award, order the other party to provide appropriate security.”

11. I have already noted that the respondent has already availed certified copies of the arbitral award and the arbitration agreement before this court. I note that the grounds set out in section 37 of the Act are similar to the grounds for setting aside of arbitral award as stated under section 35 of the Act. This is to say that section 35(2) prohibits a court from recognizing or enforcing an award if the conditions stated therein are shown to be present. This court already dismissed the application to set aside the arbitral award.

12. Consequently, I find merit in the application dated September 15, 2022 and I therefore allow it with no orders as to costs.

DATED, SIGNED AND DELIVERED VIRTUALLY AT NAIROBI THIS 8TH DAY OF DECEMBER 2022. W. A. OKWANYJUDGEIn the presence of: -Ms Sirawa for Kiragu Kimani for respondent.Ms Ndirangu for Njoroge for applicant.Court Assistant- Sylvia