[2020] KEHC 9594 (KLR)
The court held that although the contract between the parties was found to be illegal for failing to comply with procurement laws, the arbitrator correctly awarded the respondent payment on a quantum meruit basis for actual work performed under a pilot project. The arbitrator found, and the court agreed, that the...
Source-derived case information.
- Citation
- [2020] KEHC 9594 (KLR)
- Parties
- Applicant: Nairobi City County; Respondent: The Illuminator Limited
- Court
- High Court
- Court Station
- High Court at Nairobi (Milimani Commercial Courts)
- Jurisdiction
- Kenya
- Case Number
- Miscellaneous Civil Application 354 of 2017
- Procedural Posture
- Miscellaneous Application / Ruling on Application to Set Aside Arbitral Award
- Outcome
- application dismissed
- Judges
- MM Kasango
- Legal Topics
- Arbitration Award Setting Aside, Public Policy Exception, Quantum Meruit, Breach of Contract
- Source Language
- en
Source-derived case record
Summary, issues, holding and outcome
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Parties
Nairobi City County
Applicant
The Illuminator Limited
Respondent
Procedural Posture
Miscellaneous Application / Ruling on Application to Set Aside Arbitral Award
Legal Issues
- 1 Whether the arbitral award should be set aside on grounds of public policy under section 35 of the Arbitration Act.
- 2 Whether an award can be made on quantum meruit where the underlying contract is found to be illegal.
Ratio Decidendi
The court held that although the contract between the parties was found to be illegal for failing to comply with procurement laws, the arbitrator correctly awarded the respondent payment on a quantum meruit basis for actual work performed under a pilot project. The arbitrator found, and the court agreed, that the county had received and benefited from the services provided by the respondent, and there was no defence advanced to avoid payment for those services. The court found no basis in law to set aside the award on public policy grounds, as the award was not based on the illegal contract but on the equitable principle of quantum meruit for work actually done and accepted by the...
Court Disposition
application dismissed
Orders
- The Notice of Motion dated 17th August, 2017 is dismissed with costs to the respondent.
Full Case Text
Judgment text and source record
29 paragraphs
REPUBLIC OF KENYA
IN THE HIGH COURT OF KENYA AT NAIROBI
COMMERCIAL AND ADMIRALTY DIVISION
MISC. CIVIL APPLICATION NO. 354 OF 2017
IN THE MATTER OF THE ARBITRATION ACT NO. 4 OF 1995
AND
IN THE MATTER OF THE ARBITRATION RULES, 1997
BETWEEN
NAIROBI CITY COUNTY.....................................................APPLICANT
- VERSUS -
THE ILLUMINATOR LIMITED.......................................RESPONDENT
RULING
1. In the case Kenyatta International Convention Centre (KICC) v Greenstar Systems Limited Justice Olga Sewe citing an English case stated:
“The arbitrators are masters of facts.”
2. I will bear the above as I consider the Notice of Motion dated 17th August 2017 filed by Nairobi City County (hereinafter called the county).
3. The county by that application prays for the setting aside of the Final Award made by Justice R.O. Kwach, the sole arbitrator. By that award the arbitrator awarded The Illuminator Limited, the respondent Ksh 5 million plus interest at 12% per annum.
4. The respondent’s claim before the arbitrator was for breach of contract by the county for unilaterally repudiating the contract. The arbitrator found the contract was illegal for failing, inter alia, to follow the procurement laws. The arbitrator however found that the respondent undertook a pilot project. It was the arbitrators finding that it undertook that pilot project and the county did not provide a defence to that evidence and therefore could not avoid paying for the work done.
5. The County argued before me that it was against public policy as provided under section 35 of the Arbitration Act for the arbitrator to find the contract was invalid then proceed to give an award to the respondent on the basis of quantum meriut, as an equitable doctrine.
6. It needs to be stated that the arbitrator made a finding that the respondent’s claim based on the illegal contract could not be awarded. The award, however, was on the actual work carried out. This is what the arbitrator stated in the award.
“Although the claim for loss of expected earnings is not sustainable, that is not the end of the matter. There is irrefutable evidence that Senior officers in the City Planning Department and more specifically Mr Kibinda and the mayor engaged the claimant to undertake a pilot project. The claimant carried out the project and there is evidence to that effect. There is no defence the respondent can advance to avoid paying for the work carried out by the claimant under the pilot project.”
7. The arbitrator finding cannot be faulted. The Country obtained the services of the respondent, in the pilot project, and it was liable to pay for those services. Since the issue of that award was the single issue raised in the application and because I have found it has no basis in law the application does then fail.
8. The Notice of Motion dated 17th August, 2017 is dismissed with costs.
DATED, SIGNED and DELIVERED at NAIROBI this 29th day of APRIL, 2020.
MARY KASANGO
JUDGE
ORDER
In view of the measures restricting court operations due to the COVID-19 pandemic and in light of the Gazette Notice No 3137 of 17th April 2020 and further parties having been notified of the virtual delivery of this decision, this decision is hereby virtually delivered this 29th day of April, 2020.
MARY KASANGO
JUDGE