https://new.kenyalaw.org/akn/ke/judgment/kehc/2026/7886

**REPUBLIC OF KENYA** **THE HIGH COURT OF KENYA AT NAIROBI** **COMMERCIAL AND TAX DIVISION** **HCCOMM NO.E734/2024** **NORKAN INVESTMENTS LIMITED………………………………….PLAINTIFF** **VERSUS** **CHINA ZHONGXING CONSTRUCTION COMPANY LIMITED.DEFENDANT** **RULING** 1. This is a Ruling in respect of which the Plaintiff seeks to set aside an Arbitral Award. **Background Facts** 1. The Plaintiff filed the Originating Summons dated 4th December, 2024 seeking the following orders; 2. *THAT the Honourable Court be pleased to set aside the Ruling/Preliminary Award delivered by Isabella Njeri Wachira-Towey PhD FCIArb. on 4th November, 2024 and uphold the Plaintiff's Preliminary Objection dated 28th June 2024.* 3. *THATR the Honourable Court be pleased to issue such further Orders as it may deem fit, appropriate, and expedient to grant in the circumstances of this matter.* 4. *THAT the Cost of this Application and the Arbitration be borne by the Defendant.* 5. The Application was supported by the Affidavit of **Trevor Kanja**. He deponed that on or about 28th June, 2024, the Plaintiff filed a Notice of Preliminary Objection seeking to have the Defendant’s claim in the arbitration struck out with costs. The objection was grounded on, inter alia, the assertion that the claims were time-barred under **the Limitation of Actions Act** and the governing construction contract. 6. The Plaintiff contended that the arbitral proceedings had been instituted well outside the statutory limitation period. Hence, they were therefore fatally defective, prejudicial, and in violation of mandatory legal provisions. It maintained that the claims constituted a clear disregard of both statutory law and contractual timelines, warranting dismissal at a preliminary stage. 7. However, the Arbitral Tribunal, in a Ruling/Preliminary Award delivered on 4th November, 2024, dismissed the Preliminary Objection. This prompted the Plaintiff—being dissatisfied with the decision—to move the Court seeking to set aside the said ruling. This is on grounds of errors in law and misapplication of the principles governing limitation and jurisdiction. 8. In response, the Defendant filed the Replying Affidavit sworn on 23rd January, 2025. The Defendant confirmed that it issued a notice of dispute dated 7th December, 2020. That it invited the Plaintiff to concur in the appointment of an arbitrator. That upon the Plaintiff’s failure to do so, subsequently filed an application dated 16th October, 2023 for such appointment. Although the notice of dispute and the application were not formally placed before the Tribunal, both parties had custody of and had exchanged the documents, and no objection was raised as to their absence. Consequently, the Tribunal treated arguments founded on them as uncontested. 9. The Defendant maintained that its right to institute arbitral proceedings remained valid under both the **Limitation of Actions Act** and Clause 45 of the Contract. No dispute arose at the time of delayed or non-payment in 2016, as the contractual remedy of interest on delayed payments was still operative. Rather, the dispute crystallized upon issuance of a demand letter dated 10th September, 2020. It required payment within 14 days, and upon the Plaintiff’s failure to comply by 24th September, 2020. 10. Accordingly, the Defendant asserted that the dispute arose on 24th September, 2020. It was duly notified by the letter of 7th December, 2020, within 74 days. By inviting concurrence on the appointment of an arbitrator in the same letter, the Defendant effectively commenced arbitral proceedings within the meaning of **Section 22 of the Arbitration Act**. Thus, its claim was neither time-barred under statute nor under Clause 45.3 of the Contract, having been brought within the prescribed timelines. **Issues for determination** 1. The Court has carefully considered the Application, response and the written submissions, as well as the oral highlights by Counsel for the parties. The Court finds that there is only one issue for determination; 2. *Whether the Ruling/Preliminary Award delivered by Isabella Njeri Wachira-Towey PhD FCIArb. on 4th November, 2024 should be set aside.* **Analysis** 1. The Plaintiff’s Preliminary Objection before the Tribunal primarily pertained to the Arbitral Tribunal’s lack of jurisdiction. That it could not entertain and adjudicate the claim filed by the Defendant as against the Plaintiff. This is on the ground that the subject claims are time and statute-barred. This is by operation of the provisions of the Agreement and Conditions of Contract for Building Works dated 10th June, 2015 between the parties herein as well as applicable laws. 2. It is trite law that under **Section 17(6) of the Arbitration Act** the Court has the jurisdiction to entertain an appeal on the Arbitrator’s ruling. The section provides that: ***“6. Where the arbitral tribunal rules as a preliminary question that it has jurisdiction, any party aggrieved by such ruling may apply to the High Court, within 30 days after having received notice of that ruling, to decide the matter.”*** 1. The Plaintiff argued that it is trite law that a party is bound by the terms of the contract to which it is a party. That accordingly, this Arbitral Tribunal ought to give effect to the plain and ordinary meaning of the subject agreement between the parties. The provisions of the Contract are clear and unambiguous. That in the event the Defendant wished to refer to arbitration any dispute or difference arising between itself and the Plaintiff, it was obligated to issue a notice of dispute. This was in accordance with the Contract. It had to be within ninety (90) days of the occurrence or discovery of each matter or issue giving rise to the disputes forming the basis of its claims herein. 2. On the other hand, it was the Defendant’s contention that that arbitration commenced on 7th December, 2020. This was when it invited the Plaintiff to concur in the appointment of an arbitrator, within the meaning of the aforesaid provisions. Accordingly, any claim arising within six years preceding 7th December, 2020, namely between 7th December, 2014 and 7th December, 2020, fell within the statutory limitation period and is therefore enforceable. The Defendant’s claims are thus demonstrably within the prescribed six-year limitation period. This shall be further illustrated in the analysis of the second issue for determination. 3. Clause 45 of the Contract referred to by the parties’ states; ***“45.1 In case any dispute or difference shall arise between the Employer or the Architect on his behalf and the Contractor, either during the progress or after the completion or abandonment of the Works, such dispute shall be notified in writing by either party to the other with a request to submit it to arbitration and to concur in the appointment of an Arbitrator within thirty days of the notice. The dispute shall be referred to the arbitration and final decision of a person to be agreed between the parties. Failing agreement to concur in the appointment of an Arbitrator, the Arbitrator shall be appointed by the Chairman or Vice Chairman of The Architectural Association of Kenya, on the request of the applying party.*** ***45.2 The arbitration may be on the construction of this contract or on any matter or thing of whatsoever nature arising thereunder or in connection therewith, including any matter or thing left by this contract to the discretion of the Architect, or the withholding by the Architect of any certificate to which the Contractor may claim to be entitled or the measurement and valuation referred to in clause 34.0 of these conditions, or the rights and liabilities of the parties subsequent to the termination of contract.*** ***45.3 Provided that no arbitration proceedings shall be commenced on any dispute or difference where notice of a dispute or difference has not been given by the applying party within ninety days of the occurrence or discovery of the matter or issue giving rise to the dispute.”*** 1. In ***West Mount Investments Ltd Vs Tridev Builders Company Ltd [2017] eKLR,*** the Court held: - ***“a dispute arises when a claim is made by one party following the actions of another party and such claim is either rejected or ignored by the other party.”*** 1. It is the Court’s understanding that the final payment due under the Contract is embodied in the Final Certificate. This was issued by the Architect on 18th October, 2022. Pursuant to clause 34.21.3 of the Contract, if the amount certified was not paid within fourteen (14) days of presentation of the Final Certificate to the Employer, the same crystallized into a debt due and payable to the Defendant. Further, under clause 34.6 of the Contract, such debt attracted interest upon non-payment. Therefore, mere non-payment or delay in payment does not, of itself, constitute a dispute; rather, a dispute only arises where a demand for payment of the principal sum and accrued interest, where applicable, is ignored, refused, or otherwise not honoured. 2. In this case, the Applicant’s failure to settle the sums demanded within fourteen (14) days of the demand letter dated 10th September, 2020 constituted the occurrence of the matter giving rise to the dispute. Consequently, the dispute crystallized on 24th September, 2020, upon expiry of the Fourteen (14) days. This triggered the ninety (90) day period for issuance of a notice of dispute under Clause 45.3. 3. The Court is hereby inclined to agree with the Arbitrator that the Claimant’s Notice of Dispute dated 7th December, 2020 was issued within the prescribed time. This is within the ninety (90) day period under Clause 45.3, as were the Claimant’s other claims. 4. Further, taking into consideration **Section 34 of the Limitation of Actions Act** the event that triggered the arbitral proceedings herein, arose on 24th September, 2020. It follows that the commencement of arbitration on 7th December, 2020, within the meaning of **Section 34(3) of the Limitation of Actions Act**, fell within the statutory six-year limitation period prescribed under the Act. Further, the Claimant’s claims arising within the six (6) years preceding commencement of the arbitration, namely between 2016 and 2019, are enforceable. 5. Accordingly, the Court finds that the Claimant’s claims are not time-barred. The Originating Summons fails. 6. As to costs, the same lie at the discretion of this Court and follow the event. The Court is persuaded that the fair and just order is to award the successful Respondent the costs of the application. **Determination** 1. The Application by the Applicant by way of an Originating Summons dated 4th December, 2024 is HEREBY dismissed for lack of merits. 2. The costs thereof are awarded to the Respondent. 3. It is so ordered. **DATED, SIGNED AND DELIVERED AT MILIMANI THIS 08TH DAY OF JUNE, 2026.** **NJOROGE BENJAMIN K.** **JUDGE** **In the presence of:** Mr. Wachira for the Plaintiff. Miss Khizi for the Defendant. Mr. John Paul - Court Assistant.