https://new.kenyalaw.org/akn/ke/judgment/keelc/2026/4616

Ahmed v Ali & 2 others (Environment and Land Miscellaneous Case E058 of 2026) [2026] KEELC 4616 (KLR) (20 July 2026) (Ruling) Neutral citation: [2026] KEELC 4616 (KLR) Republic of Kenya In the Environment and Land Court at Nairobi Environment and Land Miscellaneous Case E058 of 2026 CG Mbogo, J July 20, 2026 Between Said Abdi Ahmed Applicant and Abdi Aidid Ali 1st Respondent Mukab Homes Limited 2nd Respondent City Park View Apartments Limited 3rd Respondent Ruling 1.Before me is the chamber summons dated 11th February, 2026 filed by the applicant and it is expressed to be brought under Sections 3, 7 and 35(2)(b) of the Arbitration Act, Cap 49, Rule 3 of the Arbitration Rules 1997 and Sections 1A, 1B, 3A of the Civil Procedure Act seeking the following orders:-1.Spent.2.That pending the hearing and determination of this application interpartes, this honourable court be pleased to issue an order of stay of the arbitral proceedings before the sole arbitrator, Samuel Mbiriri, FCIArb.3.That this honourable court be pleased to set aside the partial award published on 2nd February, 2026 by the sole arbitrator, Samuel Mbiriri, FCIArb.4.That the costs of this application be provided for. 2.The application is premised on the grounds on its face. It is further supported by the affidavit of the applicant sworn on even date. The applicant deposed that the 1st respondent approached him to invest the sum of USD 1,026,000 for the purchase and development of a property in Eastleigh, being L.R No. 36/VII/325. He deposed that they agreed that upon completion, he would receive a 38.5% share of the income or equivalent shares in the 2nd and 3rd respondents. 3.The applicant deposed that he transferred the funds and the property was developed into an active hotel apartment known as Atis Suites. Once the project was completed, the 1st respondent refused to value the project or distribute the owed profits. He added that the 1st respondent instead secretly transferred the shares in the two investment companies to his two sons, Abdirahman Abdi Aidid and Jamal Abdi Aidid. This transfer was fraudulently done to defeat his lawful claim to the property. 4.The applicant further deposed that in September 2023, he sought the intervention of the eminent elders and successfully mediated a settlement agreement where he was to be refunded USD 1,600,000 but on 21st September 2023, the 1st respondent refunded only USD 1,000,000. He deposed that on 10th June 2025, the 2nd respondent challenged the arbitral tribunal’s jurisdiction and succeeded in obtaining a partial award that struck it out from the proceedings on grounds that no arbitration agreement existed between him and the 2nd respondent. 5.He deposed that striking out the 2nd respondent at a preliminary stage violated his right to a fair hearing under Article 50 of the Constitution since it deprived him of the chance to prove his beneficial interest in the company. Further, that the 1st respondent was using the legal status of the companies to hide from his obligations and defraud him. He maintained that since the 2nd respondent was the primary corporate vehicle used for the investment, its removal forecloses his ability to have the case heard on its actual merits. 6.The applicant further deposed that the arbitrator’s decision directly conflicted with and offended public policy by neutralizing interim measures of protection previously granted in ELC Case No. E529 of 2024 by Lady Justice Theresa Wairimu Murigi. He urged the court to intervene in the arbitration process since the 2nd respondent remains an indispensable party to the dispute. He added that without it attached to the proceedings, he cannot successfully claim his 38.5% stake or seek proper legal recourse for the USD 1,026,000 he had invested. 7.The application was opposed by the replying affidavit of the 2nd respondent sworn on 8th April, 2026 by its director Jamal Abdi Aidid on its behalf and on behalf of the 1st and 3rd respondents. The 2nd respondent deposed that this court lacked the jurisdiction to review or set aside the arbitral tribunal’s ruling on its own jurisdiction. 8.The 2nd respondent deposed that it was not a party to the investment agreement dated 17th January. 2022 as it was not bound by any terms agreed therein including referring any dispute to arbitration. Further, that the unsigned agreement relied on by the applicant during the arbitral proceedings did not create binding obligations. It was deposed that the 2nd respondent is a distinct and separate legal entity separate from the applicant’s disputes through the doctrine of privity of contract since it was a third party to both contracts. 9.The 2nd respondent deposed that the jurisdictional issue had already been determined by the sole arbitrator following the originating summons filed on 10th June, 2025. Further, that the arbitrator published a partial award on 2nd February, 2026 which struck out the 2nd respondent as a party to the arbitral proceedings alongside all claims against it due to the lack of an arbitration agreement. Further, that it was not a party to the mediation agreement between the applicant and the 1st respondent. The 2nd respondent deposed that the mediation agreement lacked an arbitration clause hence the arbitral tribunal would have no jurisdiction over it. 10.It was further deposed that the applicant fully participated in the process by filing responses, written submissions and presenting oral highlights and therefore he cannot claim that his right to a fair hearing was infringed. Since there was no arbitration agreement linking the 2nd respondent to the applicant, the arbitral tribunal correctly ruled it had no jurisdiction over the company. 11.The application was canvassed through written submissions. The applicant filed his written submissions dated 2nd June, 2026 while the respondents filed their written submissions dated 13th May, 2026. I have considered the application, the reply thereof and the written submissions filed by the parties. The issue for determination is whether this court has the jurisdiction and whether or not it ought to set aside the partial award dated 2nd February, 2026. 12.In Cape Holdings Limited v Synergy Industrial Credit Limited (Application 5 (E007) of 2021) [2021] KESC 4 (KLR) the Supreme Court held that:-“The legal position as regards this court’s jurisdiction to hear and determine appeals arising from Section 35 of the Arbitration Act Judgment of the High Court was settled in the Geo Chem Middle East Case, wherein this Court found as follows:-Having so stated, we must reiterate that arbitration is meant to expeditiously resolve commercial and other disputes where parties have submitted themselves to that dispute resolution mechanism. The role of courts has been greatly diminished notwithstanding the narrow window created by sections 35 and 39 of the Act.” 13.Section 35 of the Arbitration Act provides as follows:-“(1)Recourse to the High Court against an arbitral award may be made only by an application for setting aside the award under subsections (2) and (3).(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; orii.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 [Rev. 2012] Arbitration cap. 49 A20-21 [Issue 1] oriii.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; oriv.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; orv.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; orvi.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.(3)An application for setting aside the arbitral award may not be made after 3 months have elapsed from the date on which the party making that application had received the arbitral award, or if a request had been made under section 34 from the date on which that request had been disposed of by the arbitral award.(4)The High Court, when required to set aside an arbitral award, may, where appropriate and if so requested by a party suspend the proceedings to set aside the arbitral award for such period of time determined by it in order to give the arbitral tribunal an opportunity to resume the arbitral proceedings or to take such other action as in the opinion of the arbitral tribunal will eliminate the grounds for setting aside the arbitral award.” 14.In this case, the applicant contends that the 2nd respondent was properly joined as a party to the proceedings by virtue of the 1st respondent having shares in the 2nd respondent. He argued that the partial award by the arbitrator striking out the 2nd respondent was not proper since it would render the mediation agreement unenforceable against the 2nd respondent if the final award was found in his favour. 15.On the other hand, the respondents maintained that the 2nd respondent was not a party to any of the agreements and that only parties to a contract could enforce its terms or be held liable. They contended that this court has no jurisdiction to set aside the partial award by virtue of Section 3,7 or Section 35 (2) (b) of the Arbitration Act. In any case, they argued that the jurisdictional issue was determined as a priority which the applicant duly participated in. Lastly, the arbitral tribunal was right in striking out the 2nd respondent from the proceedings and all claims against it. 16.In the case of Midco Holdings Limited v Summit Textiles (EA) Limited [2014] eKLR it was held as follows:-“(36)Section35(2) of the Arbitration Act circumscribes the grounds upon which an arbitral award can be set aside, and an applicant seeking to set aside an arbitral award must bring himself strictly within the legal bounds of that Section.” 17.The basis on which the applicant seeks to set aside the arbitral award is that it goes against public policy by virtue of the interim measures of protection issued on 27th June, 2025 by Lady. Justice T. Murigi. I have perused the documents relied on by the parties and it is not in dispute that the 2nd respondent was not a party to either of the agreements. 18.In the case of Christ for All Nations v Apollo insurance Company Limited [2002] EA 366 Ringera, J (as he then was), held as follows:-“Public policy is a broad concept incapable of precise definition. An award can be set aside under Section 35 (2) (b) (ii) of the Arbitration Act as being inconsistent with the public policy of Kenya if it is shown that it was either (a) inconsistent with the Constitution or any other law of Kenya whether written or unwritten, or (b) inimical to the national interest of Kenya, or (c) contrary to justice and morality.” 19.In view of the authorities cited above, and the interim measures in place, I note that that the arbitrator took time to address the issue of joinder of the 2nd respondent as a party in the arbitral proceedings. I also note that the partial award was only made at a preliminary stage and a final award is yet to be issued. It is important to note that the applicant cannot preempt the final outcome of the arbitration proceedings since he would have an opportunity to raise the same when the arbitral body gives its final award. 20.However, I am mindful to adopt a rather broad view of the applicant’s claim against the respondents in the arbitration proceedings. While I note that no orders are sought against the 2nd respondent in the amended statement of claim dated 2nd May 2025, it is my view that in order to appreciate the full claim as raised by the applicant, the 2nd respondent is a necessary party in the arbitration proceedings. In this case, the applicant contends that he is entitled to 38.5% of the entire investment which is in the 2nd respondent. It would only be fair that the applicant is given a chance to prove whether or not he is entitled to 38.5%, if at all. To determine this, it is only the 2nd respondent who can rebut such claim. 21.From the above, I find merit in the chamber summons dated 11th February, 2026 and it is allowed in the following terms:-1.The partial award dated 2nd February, 2026 by the sole arbitrator, Samuel Mbiriri, FCIArb is hereby set aside in terms of order (i) thereof.2.Costs in the cause.It is so ordered. DATED, SIGNED & DELIVERED VIRTUALLY ON THIS 20TH DAY OF JULY, 2026.HON. MBOGO C.G.JUDGE20/07/2026.In the presence of:Ms. Benson Agunga - Court assistantMs. Wanja Wanjuki for the RespondentsMr. Odipo for the Applicant