[2022] KEHC 66 (KLR)

Kenya Commercial Bank Limited v The County Government Of Nairobi (Miscellaneous Application E1122 of 2020) [2022] KEHC 66 (KLR) (Commercial and Tax) (4 February 2022) (Ruling)

Neutral citation number: [2022] KEHC 66 (KLR)

Republic of Kenya

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

Miscellaneous Application E1122 of 2020

EC Mwita, J

February 4, 2022

Between

Kenya Commercial Bank Limited

Applicant

and

The County Government Of Nairobi

Respondent

Ruling

1. The Applicant took out a Chamber Summons dated 2nd October 2020 under section 36(1) and (3) of the Arbitration Act, 1995 and rules 6 and 9 of the Arbitration Rules, 1997, (The Rules), seeking an order to recognize the Third Interim Award made on 12th November 2019 and the Final Award made on 14th May 2020 by the sole Arbitrator as a judgment of the court. The Applicant also seeks leave of court to enforce the two awards.

2. The Applicant states in the grounds on the face of the application, that parties took arbitral proceedings before the sole Arbitrator, Mr. Phillip Bliss Aliker, FCIArb, who then rendered a Third Interim Award on 12th November 2019, resolving all the issues in dispute between the parties, save for the question of costs. The Third Interim Award was published on 17th December 2019 for Kshs. 4,295,191,372. The Final award for costs of Kshs. 6,049,349 was published on 14th May 2020. Despite the awards being published, the Respondent has not paid or shown willingness to pay, thus necessitating this Application.

3. The Application is supported by an affidavit by Mohamed Musa Mohamed, Acting head of institutional banking with the Applicant, essentially giving the background of the matter leading up to the arbitration proceedings and the resultant arbitral awards. The affidavit reiterates the grounds on the face of the Application which need no regurgitation.

4. The Respondent filed a replying affidavit by Eric Abwao, the Respondent’ s counsel, opposing the Application. The deponent states that the Respondent filed an Application through Misc Application No. E174 of 2021, seeking among other orders, to set aside the Arbitral Award dated 14th May 2020 (Final Award on costs). He states that if the present Application is allowed and their Application to set aside that award succeeds, it will lead to an untidy situation as the Third Interim Award and the Final award will have been enforced.

5. It is the Respondent’s view that to avoid such an eventuality, it would be prudent to await their Application (E174 of 2021) to be heard and determined first. It is their case that even if the awards were not enforced now, the Applicant would still enforce them on a future date once their Application in E174 of 2021 is determined.

6. The Respondent states that under rule 6 of the Rules, the Applicant is not entitled to apply ex parte to have the awards recognized and enforced. It therefore urges that this Application be disallowed.

7. The Applicant filed written submissions dated 28th June 2021. It argues that the respondent has only challenged the Final Award on costs dated 14th May 2020 and not the Third Interim Award. According to the Applicant, under rule 6, no orders can be made in favour of the Respondent since no challenge was mounted against the awards within three months.

8. The Applicant further argues that it has complied with the law (section 36 (3) by furnishing the court with a certified copy of the awards, and that none of the grounds for refusal to recognize a domestic award under section 37(1)(a) and (b) have been raised. The Applicant again argues that the Respondent had notice of the appointment of the sole arbitrator and it did not challenge the awards within the time allowed by law.

9. According to the Applicant, the Respondent does not even raise the issue of public policy and cites Kenya Shell Limited v Kobil Petroleum Limited [2006] eKLR, on public policy. The Applicant maintains that there is no allegation by the Respondent that the Third Interim Award or Final Award is against the Constitution or the law.

10. The Applicant asserts that the interim Award was published and sent to parties electronically by the Sole Arbitrator to counsel for the parties, a fact the Sole Arbitrator confirmed to both counsel during Arbitration proceedings on 17th December 2019 in Procedural Order No. 2 issued on the same date. The Application in E174 of 2021 is for enlargement of time to apply to set aside the Final Award on costs and not the Third Interim Award, which, in any event, was filed 6 months after publication of the Award and, therefore, offends the law (section 35(3). The Applicant urges that the Application be allowed with costs.

11. The Respondent has also filed written submissions dated 11th August 2021. It argues that if the present Application is allowed, its Application in E174 of 2021 will be dealt a blow. According to the Respondent, the main reason why it opposes this Application, is because it has its own Application for enlargement of time to apply to set aside the Award made on 14th May 2020 (Final Award on costs) that is pending before court.

12. The Respondent admits in the submissions, that under section 35(3) it ought to have filed an Application to set aside the Award within three months but it has filed an Application for enlargement of time that is pending in E174 of 2021. It argues that this court has jurisdiction to consider an Application for stay of enforcement and execution of an award. It relies on Oltukai Mara Limited v Conservation Corporation (Kenya) Limited[2006] eKLR, that the court has inherent jurisdiction to consider an application for stay of enforcement and execution of an award.

13. In the circumstances, the Respondent beseeches the court not to allow the present Application, in order to first consider its Application for enlargement of time to challenge the Final Award.

14. I have considered the Application, the Response, Submissions and the decisions relied on. The Application has been brought under section 36 of the Arbitration Act, and the Rules (rules 4 and 5), seeking an order to recognize, adopt and enforce the Arbitral Awards dated 12th November, 2019 and 14th May 2020 respectively. According to the Applicant, there is no reason why the awards should not be recognized since there is no application to set them aside. The Respondent on its part opposes the Application, arguing that it has filed its own Application for extension of time to apply to set aside the Final Award dated 14th May 2020.

15. There is no dispute that parties agreed to go for arbitration, settled on the sole Arbitrator and proceeded before him. Subsequently, the Sole Arbitrator published the Third Interim Award dated 12th November 2019 on 17th December 2019, determining the core dispute between the parties. He awarded the Applicant Kshs. 4,295,191,372. The Final Award for costs of Kshs. 6,049,349 was published on 14th May 2020. The Respondent neither challenged the Third Interim Award published on 17th December 2019 nor the Final Award published on 14th May 2020 within the time allowed by law.

16. The Respondent’s opposition to this Application is based on the ground that it has its own Application in E174 of 2021 for extension of time to challenge the Final Award on costs dated 14th May 2020. The fact of the matter, however, remains that the Third Interim Award which is the core determination on the dispute between the parties has not been challenged or set aside and no appeal is pending.

17. Section 36 of the Act states that a domestic arbitral award, is to be recognized as binding and, on application to court in writing, it shall be enforced unless the court refuses to recognize it on grounds set out in section 37.

18. The dispute between the parties was head and awards were made by the Sole Arbitrator appointed by parties. The Applicant has attached certified copies of the awards dated 12th November 2019 and 14th May 2020 respectively, thus satisfying the requirements of the law under section 36 of the Act. The Respondent’s contention that it has an application seeking extension of time to apply to set aside the Final Award would not, in my respectful view, serve any purpose given that the core determination made in the Third Interim Award published on 17th December 2019 is not the subject of any legal challenge.

19. In the circumstance, therefore, having considered the Application, the Response and Submissions as well as the law and the decisions relied on by parties, and upon giving due consideration to all those, the conclusion, I come to is that the Application dated 2nd October 2020 has merit. It is allowed as follows:a.The Interim Arbitral Award dated 12th November 2019 and published on 17th December 2019 is hereby recognized and adopted as a judgment of the court.b.The Final Award dated and published on 14th May 2020 is hereby recognized and adopted as judgment of the court.c.Leave is hereby granted to the Applicant to enforce and execute the Third Interim Award dated 12th November 2019 and published on 17th December 2019 and the Final Award dated and published on 14th May 2020. d.The applicant shall have costs of the application.

DATED, SIGNED AND DELIVERED AT NAIROBI THIS 4THDAY OF FEBRUARY 2022EC MWITAJUDGE