[2022] KEHC 1645 (KLR)

REPUBLIC OF KENYA

IN THE HIGH COURT OF KENYA

AT NAKURU

MISCELLANEOUS APPLICATIONS NO. 358 & 145 OF 2019

IN THE MATTER OF THE ARBITRATION ACT NO 4 OF 1995

AND

IN THE MATTER OF AN ARBITRATION

BETWEEN

PETER GOUGOS ………….………………….. CLAIMANT /RESPONDENT

AND

PETER OTIENO ORIGA……..………………..RESPONDENT/APPLICANT

RULING

1. This is a ruling on two applications in consolidated files No.358 and 145 both of 2019. The two applications being application dated 11th February 2019 in Misc. file No.358 of 2019 and application dated 21st May 2019 in Misc Appl. No.145 of 2019. The application dated 21st May 2019 seeks to adopt and enforce the arbitral award dated 14th December 2018 as an order and a decree of the court. The application is brought under section 36 of the Arbitration Act and Order 51 rule 1 of the civil procedure rules. It is supported by the annexed affidavit sworn by Peter Gougos on 21st May 2019

2. The claimant deponed that parties were directed to submit their dispute to the arbitrator on 1st February 2017 and attached court order to confirm the same. He further averred that the respondent and his advocate were notified of the meeting by email and hardcopy letters were also sent out but despite sufficient notice, the respondent failed to attend the hearing and the arbitrator proceeded to render her award on 14th December 2018.

3. In response to the application for adoption of arbitral award, the respondent filed replying on 19th June 2019, and the application dated 4th July 2019 seeking to reinstate application dated 11th February 2019 which had been withdrawn by consent. On 24th July 2019 the application dated 11th February 2019 was reinstated by consent of parties herein.

4. The application dated 11th February 2019 which seeks to set aside the arbitral award published on 14th December 2019 is supported by the affidavit of Peter Otieno Orina sworn on the even date. He averred that the preliminary meeting held on 5th June 2017 was unilaterally taken and the subsequent hearing on the 12th day of June 2017 was not communicated to the respondent nor his advocate. He further averred that the applicant concealed material facts to the arbitrator.

5. The application was disposed of by written submissions.

APPLICANT’S SUBMISSIONS

6. The claimant Peter Gougos filed submissions dated 8t h November 2021 and submitted that an application seeking to set aside an arbitral award is not an appeal from the arbitral award. He submitted that the respondent was given sufficient notice of the arbitral proceedings and that the respondent in his replying affidavit dated 4th February 2020 has annexed a series of letters from the arbiter showing that the parties were served with dates for directions and hearing as evidenced by letter from respondent’s Advocate dated 22nd May 2017 in which the advocate proposed dates for the preliminary meeting and the letter was responded to by the arbiter through an email dated 16th June 2017 confirming the date for the preliminary meeting.

7. The applicant’s contention is that the respondent was given ample time to present his case and by a letter dated 21st July 2017, his advocate wrote to the arbitrator stating he had no instructions to appear for the respondent, as a result, the respondent case was closed on 24th July 2017 without the respondent presenting his case. He submitted that the respondent is not truthful and the application is brought in bad faith.

8. The claimant submitted that there was no concealment of material facts by the claimant and an award can only be set aside on conditions specified by section 35 (2) of the Arbitration Act and concealment is not provided.

9. The claimant further submitted that the amount of Kshs 200,000 was paid by the respondent on 1st august 2017 after the arbitral proceedings had been closed and the said payment confirm the respondent admits to owing the applicant.

10. In conclusion, the claimant submitted that respondent has not given sufficient reasons as to why the arbitral award should be set award; and urged this court to dismiss the application dated 11th February 2019 with costs as the due process was followed.

RESPONDENT’S SUBMISSION

11. The respondents filed submissions dated 1st December 2021 on even date. He submitted that the arbitral procedure was against the provisions of section 19, 20(1), 25 (3), 35 (2) (a) (iii) of the Arbitration Act.

12. He further submitted that the essence of arbitration is to allow both parties a fair chance to represent their case and the parties should be accorded a fair trial in legal proceedings cited the case of EVANS ODHIAMBO KIDERO &4 OTHERS VS FERDINARD NDUNGU WAITITU & 4 OTHERS PETITION NO. 18 OF2014as consolidated withPETITION NO. 20 OF 2014 (2014) eKLR.

13. The respondent submitted that a party should be given sufficient notice in order to present their case before a court or tribunal but in this case, he was not given proper notice of arbitral proceedings and was not therefore able to represent his case.

14. The respondent further submitted that the arbiter issued a correspondence of 16th May 2017 directing the parties to set a tentative date for the proceedings and the tentative date picked was 5th June 2017 but the arbitrator failed to confirm the availability of the date and proceeded to hear the matter on the said date of 5th June 2017 in the absence of the Respondents; that unilateral decisions were made in the absence of the respondent and a hearing date was set for 12th June 2017 a date which was not communicated to the respondent.

15. The respondent submitted that he was excluded from all the proceedings; that he was denied a chance to present his case and as a result, he lacked confidence in the arbitrator’s ability to render a fair and just conclusion.

16. The respondent submitted that by virtue of section 35(2) (a) (iii) of Arbitration Act, an arbitral award can be set aside if a party was not given proper notice of arbitral proceedings or was otherwise unable to present his case and it is clear that the respondent was not given sufficient notice to attend the arbitral proceedings and therefore has a valid ground for the arbitral award to be set aside; that he has met the legal threshold to set aside the arbitral award and urged this court to dismiss the application dated 21st May 2019.

ANALYSIS AND DETERMINATION

17. I have considered grounds in support of the two applications, averments by the parties and submissions filed. What I consider to be in issue is whether the respondent has proved any of the grounds for setting aside an award provided in section 35 of the Arbitration Act. If not, whether the arbitral award should be recognized and adopted.

18. The respondent herein aver that he was not given a chance to present his case and was therefore condemned unheard.

19. On perusal of annexures, I note that by letter dated 16th may 2017,the arbitrator proposed dates for preliminary meeting which dates included 5th June 2017. In response to the said letter and letter by claimants Advocate dated 12th may 2017,the respondent’s Advocate wrote a letter dated 22nd may 2017 to the Claimants Advocate requesting 14 days to inform their clients about arbitration process and proposed a tentative date of 5th My 2019. I have not seen any communication confirming the date.

20. The arbitrator’s letter dated 6th June 2019 addressed to the respondent’s Advocate confirm that a meeting was held on 5th June 2019 where rules of engagement were agreed with parties present and a date for hearing set as 12th June 2019. It is not disputed that only the claimant and his Advocate attended the initial meeting of 5th June 2019. From the averments of the claimant, the respondent was not present during the hearing and therefore never presented his case. The date (5th June 2017) was one of the tentative dates proposed by arbitrator and upon picking the date, the respondents Advocate was expected to have diarized and informed his client.

21. The applicant contends the respondent was given sufficient notice and was therefore aware of the arbitral proceedings but failed to attend. There is however, no confirmation that the initial date was confirmed and the same communicated to the respondent. There is no evidence to disapprove the respondent’s argument that the respondent’s Advocate proposed the date but there was no confirmation from the arbitrator.

22. The arbitrators letter to respondents Advocate is dated 6th June 2017. The question is was the letter received before the hearing date 12th June 2017. I note that In the letter dated 14th June 2017 the respondent confirm having received email dated 5th June 201917. In the letter ,the Advocate express shock at the rules of engagement set on 5th June 2017. The contents of the letter dated 14th June 2017 confirm the contents of the arbitrator’s letter dated 6th June 2017.

23. The rules of engagement included communication through both email and hard copy letters. The fact that the letter by respondents Advocate capture the contents of the hard copy letter dated 6th June 2017, confirm that he had notice of the date of hearing being 12th June 2019 as contained in hard copy letter dated 6th June 2017.

24. The email communication was on 5th June 2017 which is7 days before the date set for hearing. If the date was not convenient to the respondent, there was time to write to the arbitrator before the set date to reschedule the hearing.

25. It is no disputed that the respondent was represented by an Advocate and the arbitrator communicated to the respondents Advocate on the date of hearing. There no doubt that the Advocate was aware that the preliminary meeting was held on the day he had proposed being 5th June 2017 and was informed of directions give via email on 5th June 2017 and further through hard copy letter dated 6th June 2017

26. Section 32A provides for the Effect of award as follows: -

“Except as otherwise agreed by the parties, an arbitral award is final and binding upon the parties to it, and no recourse is available against the award otherwise than in the manner provided by this Act.”

27. Section 10 of the Arbitration Act limits the powers of the High court in interfering with arbitral awards by providing as follows: -

“Except as provided in this Act, no court shall intervene in matters governed by this Act”.

28. Section 35 of the Arbitration Act provide circumstances under which an arbitral award can be set aside as follows: -

(2) An arbitral award may be set aside by the High Court only if—

(a) the party making the application furnishes proof—

i. that 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, the laws of Kenya; or

(iii) the party making the application 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 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, only that part of the arbitral award which contains decisions on matters not referred to arbitration may be set aside; or

(v) the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties unless that agreement was in conflict with a provision of this Act from which the parties cannot derogate, or failing such agreement, was not in accordance with this Act; or

(vi) the making of the award was induced or affected by fraud, bribery, undue influence, or corruption;

(b) 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 award is in conflict with the public policy of Kenya

29. From the foregoing, there is no doubt that a party who wishes to urge the High court to set aside an arbitral must prove any of the grounds set out in section 35 of the Arbitration Act. The ground cited by the respondent is not being given sufficient notice to attend the arbitral proceedings which fall under section 35 2 a (iii).

30. In view of the above and upon perusing correspondences between the arbitrator and the parties, I am satisfied that the respondent was granted sufficient notice and time to present his case before the arbitrator. I find that he has failed to demonstrate any ground provided under section 35 to set aside arbitral award nor any ground under section 37 of the arbitration Act for this court to refuse to recognize and adopt the arbitral award.

31. The High court is empowered to recognize and enforce the domestic arbitral award under section 36 subject to Section 37 which provide the following grounds upon which the high court may decline to recognize or enforce an arbitral award.

“37. The recognition or enforcement of an arbitral award, irrespective of the state in which it was made, maybe refused only—

i. At the request of the party against whom it is invoked, if that party furnishes the High Court proof that;

ii. a party to the arbitration agreement was under some incapacity; or

iii. 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;

i. 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

ii. 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 decision 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

iii. 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

iv. 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

v. The making of the arbitral awards 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.

32. The respondent while seeking to urge this court to refuse to recognize and adopt award cited the ground of not being notified of the proceedings. I have considered the ground above while considering whether to set aside the award.

33. From the foregoing, I find no reason to set aside Arbitral award published on 14th December 2018. I hereby recognize and adopt the award as judgment of this court.

34. FINAL ORDERS: -

1) Application dated 21st May 2019 is hereby allowed

2) Application dated 11th February 2019 is hereby dismissed

3) Arbitral award delivered by Nasimiyu G. Wekesa published on 14th December 2018 is hereby recognized and adopted as the judgment of this court.

4) The applicant is granted leave to enforce the arbitral award as the decree of this court.

5) Costs of the applications to the claimant

RULING DATED and DELIVERED virtually at KIAMBU this 10th day of FEBRUARY, 2022.

RACHEL NGETICH

JUDGE

Coram:

Court Assistant : Kinyua

For Claimant/Respondent : - Absent

For Respondent/Applicant : - Absent

Rulingdelivered virtually.