https://new.kenyalaw.org/akn/ke/judgment/keca/2026/944

SBM Bank (Kenya) Ltd v Afrasia Bank Ltd (Civil Application E600 of 2025) [2026] KECA 944 (KLR) (15 May 2026) (Ruling) Neutral citation: [2026] KECA 944 (KLR) Republic of Kenya In the Court of Appeal at Nairobi Civil Application E600 of 2025 P Nyamweya, LA Achode & AO Muchelule, JJA May 15, 2026 Between SBM Bank (Kenya) Limited Applicant and Afrasia Bank Limited Respondent (An application for leave to appeal from the Judgment and Decree of the High Court at Nairobi (W. Okwany J.) delivered on 21st July 2022 in Misc. Application No. E386 of 2021 Miscellaneous Application E386 of 2021 ) Ruling 1.The application before this Court is a Notice of Motion dated 14th October 2025 by SBM Bank (Kenya) Limited (hereinafter “SBM Bank or the applicant”), seeking leave to appeal from the judgment of the High Court of Kenya at Nairobi (W. Okwany J.) delivered on 21st July 2022 in Misc. Application No. E386 of 2021. The application is expressed as being brought pursuant to Articles 25, 50 and 159 of the Constitution of Kenya, 2010, Sections 3A and 3B of the Appellate Jurisdiction Act, and Rules 1 (1), 41 (b), 42, 49 (1), 50 and 55 (1) of the Court of Appeal Rules, 2022. The main ground for the application is that the intended appeal involves the determination of points of law of general public importance. 2.At this juncture it is necessary to give a brief background to the application herein, which arises from a suit filed in the High Court by Afrasia Bank Limited (the respondent herein), in HCCC No. 103 of 2019- Afrasia Bank Limited vs SNM (Kenya) Limited, seeking payment of USD 7,500,000/- and interest thereon. The claim for payment was on account of a deposit the respondent placed with Chase Bank, which was later placed under statutory receivership and acquired by the respondent. The applicant and respondent entered into a consent of dated 6th July 2020 which was adopted in the High Court (M. Kasango J.) on 9th July 2020 whereby the suit in the High Court was stayed and the parties proceeded to arbitration. In addition, the parties agreed to an appeal from the arbitral award on both facts and law. The arbitrator dismissed the respondent’s claim in an arbitral award dated 21st April 2021, whereupon the respondent moved the High Court to set the same aside by an application brought under section 35 (2) (a) (iv), and an appeal under section 39 (1) (b), (2) (a), and (2) (b) of the Arbitration Act. 3.On 21st July 2022, the High Court (W. Okwany J.) set aside the arbitral award and substituted the same with judgment in favour of the respondent to the sum of USD 7,500,000/-. Aggrieved by the said judgment, the applicant appealed to this Court in Civil Appeal No. E620 of 2022-SBM Bank (Kenya) Ltd vs Afrasia Bank Limited, which appeal was struck out by the Court (Sichale, Tuiyott & Ochieng’ JJ.A.in a judgment delivered on 28th February 2025. The applicant subsequently sought and was granted extension of time to file the instant application for leave to appeal, in a ruling delivered by this Court (Kiage J.A) on 9th October 2025. 4.The instant application is opposed the respondent by way of a replying affidavit sworn on 14th November 2025 by Navin Ramdoyal, the respondent’s Head of International Corporation (Africa). The respondent has also raised preliminary issue in the said response on the question of this Court’s jurisdiction to hear the application. It was deponed in this respect that the applicant invoked this Court’s jurisdiction under Rule 41(b) of the Court of Appeal Rules, 2022, a provision which does not exist. A second preliminary jurisdictional point raised was that this Court lacked jurisdiction to entertain an appeal from the judgment and decree of the High Court on the basis that the application was res judicata, the issues therein having been directly and conclusively determined by this Court in Civil Appeal No. E620 of 2022 - SBM Bank (Kenya) Limited vs Afrasia Bank Limited. Reliance was placed on Owners of Motor Vessel ‘Lillian S’ v Caltex Oil (Kenya) Ltd (1989) KLR 1 for the proposition that a court acting without jurisdiction must down its tools, and that proceedings founded on an inapplicable or non- existent rule are void ab initio. 5.SBM Bank responded to the preliminary issues raised by the respondent on this Court’s jurisdiction in a supplementary affidavit sworn on 8th December 2025 by Paul Kaguru, its Legal Director. The applicant conceded that the reference to Rule 41(b) in the title of the application was a mis-citation, and sought leave to amend the said reference pursuant to Rule 46 of this Court’s Rules so as to read “Rule 41(1)(b) and Rule 41(2)” instead of Rule 41(b). The applicant also invoked sections 3A and 3B of the Appellate Jurisdiction Act, contending that this Court has consistently declined to allow procedural technicalities to override the primary objective of dispensing substantive justice. It was further averred that no prejudice had been occasioned to the respondent, who had responded substantively to the application for leave. 6.The applicant further addressed the plea of res judicata raised by the respondent, and contended that the determination in Civil Appeal E620 of 2022 SBM (Kenya) Limited vs Afrasia Bank Limited was that this Court declined to entertain the said appeal on account of want of jurisdiction, and did not make any decision on the merits of the appeal. The applicant asserted that it could accordingly file the application for leave re-argue an appeal which has been struck out for lack of jurisdiction. 7.The application was listed for hearing before us on 28th January 2026 on the Court’s virtual platform. Learned Senior Counsel, Mr. George Oraro was present appearing together with learned counsel Mr. Greg Karunga and Mr. James Chepkwony for the applicant. Learned counsel Mr. James Rimui together with learned counsel Ms. J. Radol appeared for the Respondent. Mr. Oraro SC made an oral application seeking to amend the title application which the Senior counsel submitted had a typographical error, by replacing Rule 41(b) with Rule 41(1)(b) therein. 8.Mr. Rimui objected to the application for amendment on the ground that what was sought to be amended was not a typographical mistake, but was part of the abuse of the court process by the applicant, which they had addressed in their affidavits in reply and submissions. Mr. Rimui therefore proposed, with Mr. Oraro SC not objecting, that the application for amendment to be argued and determined together with the substantive application. Mr. Oraro SC and Mr. Rimui thereupon proceeded to highlight their respective submissions dated 8th December 2025 and 27th January 2026 by the applicant, and 23rd January 2026 by the respondent. 9.We shall accordingly first consider the oral application made by Mr. Oraro SC for amendment of the title to the application, and the preliminary issue raised by the respondent as regards the jurisdiction of this Court to hear and determine the application. The outcome of our findings in this regard will determine whether or not we will address the substantive issues raised by the application. 10.Mr. Oraro SC submitted that the applicant was making the oral application under Rule 44(3)(a) which allows for informal applications in the course of a hearing, and Rule 46(2) which deals with informal applications for amendment. In any event, that the applicant had indicated in its supplementary affidavit that it would be applying for leave at the hearing of the application. Senior Counsel explained that the typographical error was the omission of the number “1” when citing the Rule 41(b) in the title to the application, and there was a mis-citation since in citing Rule 41 (b) instead of Rule 41 (1) (b) of the Court of Appeal Rules. Reliance was placed on the decision in Kenya Trypanosomiasis Research Institute vs Gusinjilu (Suing for and on behalf of 112 Plaintiffs) [2019] KECA 193 (KLR) that a mis-citation of the enabling provisions does not render an application defective. Additionally, that the respondent, having substantively responded to the application had not suffered any prejudice. 11.Lastly, Senior Counsel submitted that the amendment did not go to the issue of jurisdiction. On whether the application ought to have been made under section 35 and 39 of the Arbitration Act, Senior Counsel submitted that section 39 confer the right of appeal to be exercised in accordance with the Rules of this Court, and the jurisdiction to grant leave when required from this Court is conferred by Rule 41(1)(b) of the Court of Appeal Rules and not the Arbitration Act. 12.On his part, Mr. Rimui submitted that Rule 41(b) does not exist, which fatal defect was expressly admitted by the applicant, and the law is settled beyond hat a court can only be moved through jurisdiction conferred by the Constitution or statute. Accordingly, that proceedings founded on a non-existent provision are void ab initio and incapable of salvage, and Mr. Rimui relied on the decision in Owners of the Motor Vessel "Lillian S" v Caltex Oil (Kenya) Ltd [1989) KLR 1 for this position. In addition, even if the applicant had invoked an existing procedural rule, the application would still fail since the application does not cite or invoke any provision of the Arbitration Act. Mr. Rimui’s position was that arbitration is a creature of statute, and the right of appeal, and the jurisdiction of courts to intervene in arbitral matters, are strictly circumscribed by the Arbitration Act. Further, that sections 35 and 39 of the Arbitration Act constitute a closed and self-contained appellate framework and no appeal lies outside those provisions, and no court may assume jurisdiction beyond them and jurisdiction cannot be inferred, implied, or manufactured through the Court of Appeal Rules. Mr. Rimui in this respect cited the decisions by the Supreme Court of Kenya in Warrakah & 2 Others vs Mbwana & 5 Others [2018] KESC 76 (KLR) and Daniel Kimani Njihia v Francis Mwangi Kimani & Another [2015] eKLR. 13.We have given great thought and consideration to the arguments made by Mr. Oraro SC and Mr. Rimui. Rule 46 of this Court’s rules provides as follows as regards applications for amendment of pleadings:“(1)Whenever a formal application is made to the Court for leave to amend a document, the amendment for which leave is sought shall be set out in writing and—a.if practicable, lodged with the Registrar and served on the respondent before the hearing of the application; orb.if it is not practicable to lodge the document with the Registrar, handed to the Court and to the respondent at the time of the hearing.(2)Where the Court gives leave for the amendment of a document, whether on a formal or an informal application, the amendment shall be made or an amended version of the document be lodged within such time as the Court when giving leave may specify and if no time is so specified, then within forty-eight hours of the giving of leave and on failure to comply with the requirements of this sub-rule, the leave so given shall determine.” 14.An application for amendment can therefore be made informally in Court, and Rule 44 (3) (a) and (b) of this Court’s rules describes such applications as those applications made orally in the course of a hearing, or applications made by consent of all parties by way of a letter. Whatever legal route of amendment an applicant chooses, Rule 46 provides that once such an application is allowed, the amended pleading must be filed with the Court within the timelines set out in the Rule. The principles that guide courts in making a decision whether or not to allow an amendment of pleadings are in this regard settled. It was in this respect held in Uhuru Highway Development Ltd vs Central Bank of Kenya (2002)1 EA 314 that the courts have wide discretion to permit amendments at any stage if they are necessary for determining the real question in controversy, and amendments should be allowed liberally unless they introduce entirely new causes of action or cause irreparable injury. This Court has further held in Kenya Hotels Limited vs Oriental Commercial Bank Limited [2018] eKLR and John Gakuo & Another vs County Government of Nairobi & another [2017] eKLR that allowing amendment of filed documents is discretionary, and can be allowed where the application has been made in good faith and there is no prejudice to the respondent if amendment is allowed. 15.It is not disputed by Mr. Rimui that Rule 41(b) is non-existent in this Court’s rules. The prayer by Mr. Oraro SC is that this non- existent rule be replaced with Rule 41(1)(b), which provides for the procedure for making applications for leave, in cases where an appeal lies to this Court with the leave of the Court. This procedure is that the application can be made formally or informally within fourteen days after the decision against which it is desired to appeal; or where application for leave to appeal has been made to the superior court and refused, within fourteen days after such refusal. In the present case, it is not disputed that the applicant was granted extension of time to file the instant application for leave, and we therefore find that the respondent will not suffer any prejudice if the amendment requested by the applicant to replace Rule 41(b) with Rule 41(1)(b) is allowed. 16.This finding notwithstanding, we are not convinced that the citing of Rule 41(1)(b) is sufficient to grant this Court jurisdiction to hear and determine the instant application, and that the failure to cite sections of the Arbitration Act is a mere procedural technicality as urged by Senior Counsel. Many decisions of this Court and of the Supreme Court of Kenya, including Owners of the Motor Vessel"Lillian S" v Caltex Oil (Kenya) Ltd (supra) and Macharia & another vs Kenya Commercial Bank Ltd & 2 others [2012] KESC 8 (KLR) have settled the requirement that a court’s jurisdiction flows from either the Constitution or legislation or both. Thus, a court of law could only exercise jurisdiction as conferred by the Constitution or other written law, and cannot arrogate to itself jurisdiction exceeding that which was conferred upon it by law nor cannot expand its jurisdiction through judicial craft or innovate was specifically held in Macharia & another vs Kenya Commercial Bank Ltd & 2 others (supra) that the issue as to whether a court of law has jurisdiction to entertain a matter before it is not one of mere procedural technicality; it goes to the very heart of the matter, for without jurisdiction, the court cannot entertain any proceedings. 17.It is thus our view that the enabling jurisdictional provision of a statute or of the Constitution must be explicitly cited to lay the legal basis for the court's authority, particularly where the jurisdiction of a court in a matter is specifically limited or circumscribed, for the court to confirm it has authority to hear the matter and that it has been properly moved. This position was underscored by the Supreme Court of Kenya in its decision in Aluochier vs Independent Electoral and Boundaries Commission & 17 Others (2022) KESC 77 (KLR). In differentiation, the discretion given to the courts under Article 159 of the Constitution is with regard to purely procedural or administrative provisions, whose citation can be dispensed with in the interests of substantive justice. 18.In this respect, it is evident that the provisions of Rule 41(1)(b) of this Court’s rules address the procedural aspects of applications where leave is sought to appeal to this Court, and can very well capture the procedure for applications for leave to appeal from a decision of the High Court on an arbitral award. However, before we apply the procedure, we must be satisfied that we have the jurisdiction to do so. In this regard the jurisdiction of this Court to hear and determine an appeal originating from an arbitral award is granted under section 39(3) and (4) of the Arbitration Act as follows:“(3)Notwithstanding sections 10 and 35 an appeal shall lie to the Court of Appeal against a decision of the High Court under subsection (2)—a.if the parties have so agreed that an appeal shall lie prior to the delivery of the arbitral award; orb.the Court of Appeal, being of the opinion that a point of law of general importance is involved the determination of which will substantially affect the rights of one or more of the parties, grants leave to appeal, and on such appeal the Court of Appeal may exercise any of the powers which the High Court could have exercised under subsection (2).(4)An application or appeal under this section shall be made within the time limit and in the manner prescribed by the Rules of Court applicable, as the case may be, in the High Court or the Court of Appeal.” 19.It is notable in this respect that section 10 of the Arbitration Act explicitly limits the jurisdiction of courts in matters referred to arbitration, and states that no court shall intervene in matters governed by the Act except as provided therein; while section 35 provides that recourse to the High Court against an arbitral award may be made only by an application for setting aside the award. The jurisdiction of this Court to hear appeals emanating from arbitral awards is consequently narrow and restricted, as explained by the Supreme Court in Nyutu Agrovet Limited vs. Airtel Networks Kenya Limited; Chartered Institute of Arbitrators – Kenya Branch (Petition 12 of 2016) [2019] KESC 11 (KLR) as follows:“In concluding on this issue, we agree with the Interested Party to the extent that the only instance that an appeal may lie from the High Court to the Court of Appeal on a determination made under section 35 is where the High Court, in setting aside an arbitral award, has stepped outside the grounds set out in the said section and thereby made a decision so grave, so manifestly wrong and which has completely closed the door of justice to either of the parties. This circumscribed and narrow jurisdiction should also be so sparingly exercised that only in the clearest of cases should the Court of Appeal assume jurisdiction.” 20.By failing to anchor its application on section 39 of the Arbitration Act, and for the reasons explained in the foregoing, we find that we are deprived of jurisdiction to entertain the instant application, which essentially seeks leave to appeal the decision of the High Court on an arbitral award. In the circumstances we must down our tools and cannot proceed to determine any other issue arising in this application. 21.We accordingly strike out the Notice of Motion dated 14th October 2025 with costs to the respondent. 22.Orders accordingly. DATED AND DELIVERED AT NAIROBI THIS 15TH DAY OF MAY, 2026.P. NYAMWEYA................................JUDGE OF APPEALL. ACHODE................................JUDGE OF APPEALA. MUCHELULE................................JUDGE OF APPEALI certify that this is a true copy of the originalSignedDEPUTY REGISTRAR