[2022] KEHC 13804 (KLR)

Shabaa Civil & Engineering Construction Limited v Tullow Kenya BV (Civil Suit 2 of 2016) [2022] KEHC 13804 (KLR) (13 October 2022) (Ruling)

Neutral citation: [2022] KEHC 13804 (KLR)

Republic of Kenya

In the High Court at Lodwar

Civil Suit 2 of 2016

JK Sergon, J

October 13, 2022

Between

Shabaa Civil & Engineering Construction Limited

Applicant

and

Tullow Kenya BV

Respondent

Ruling

1. By way of a Notice of Motion dated May 19, 2022, together with a Supporting Affidavit sworn by Justus Ewoi, evenly dated; the Applicant sought for the following orders, inter alia, that:This Honourable Court be pleased to enter judgement in terms of the Plaint herein and in particular that the Respondent to pay the Applicant the following; Kshs 56,675,759. 66 arising from outstanding payments under the contract, interest on the above at 14% for sums due under IPC 4 and 5 from the due date until payment in full; damage cost for the company that KRA denied the company tax compliance certificate to operate till the company closed down since to date.

2. The said Notice of Motion is based on Order 21, 46 and 51 of the Civil Procedure Rules 2010, Section 1A, 1B and 3A, 25 of the Civil Procedure Act and all enabling provisions of the law.

3. The Respondent did not participate in this matter. The Application is unopposed.

4. The Applicant’s case was that the respondent/defendant had failed to pay the full contract sum to the applicant/plaintiff, and the Applicant/Plaintiff filed proceedings in court. The matter was directed by court that it be referred for arbitration process. The proceedings were conducted and an arbitral award entered and published on May 27, 2019.

5. The Applicant/Plaintiff was dissatisfied with the arbitration decision and award, then they filed an Application for review of the same at the High Court. The arbitral award was set aside by the High Court in a decision dated October 7, 2021.

6. Resultantly, the Applicant/Plaintiff - basing on the High Court’s decision to set aside the arbitral award - averred that the Court has thus the duty to enter judgement in terms of the filed plaint. It was further asserted that the Applicant’s/Plaintiff's claim is for a liquidated sum in which the Court can enter judgement in terms of the Plaint, and on the basis of the Court’s decision in setting aside the arbitral award.

7. In advancing their Application, the Applicant submitted that the arbitral award having been set aside, the claim by the Plaintiff stands and should be allowed as prayed. Also, that the Respondents have not sought leave of the High Court to appeal against the Court’s decision, issued on the October 7, 2022, thus no pending appeal in place.

8. The Applicant/Plaintiff maintained that Courts have held that appeals from the decision of the High Court reviewing an arbitral award is not of right but can only be pursued with leave of the Court. That in this instant case, no appeal has been preferred.

9. It was further submitted that the crux of the dispute herein had been determined. That the Court to proceed and enter judgement in terms of the Plaint that was filed herein. In the alternative, that judgement to be entered in terms of the claim presented before the arbitrator. Reliance was placed on the case of Harit Sheth T/a Harit Sheth Advocates v Sharma Charania [2014] eKLR, where the Court held as that:This court stated that the purpose of the proceedings in an application for summary judgment is to enable a plaintiff to obtain a quick judgement where there is plainly no defence to the claims. To justify summary judgment, the matter must be plain and obvious and where it is not plain and obvious, a party to a civil litigation is not to be deprived of his right to have his case tried by a proper trial where, if necessary, there has been discovery and oral evidence subject cross-examination.'

10. It was the applicants/plaintiff’s submission that the High Court in reviewing and setting the arbitral award aside; it had already considered the plausible defences that the Defendant relied on and found that the arbitrator was wrong in relying on the same defences. That therefore, this Court should find it proper to enter a summary Judgement, as per the Plaint.

11. Further, the Applicant/Plaintiff posited that there are no longer any triable issues to be considered in this instant matter. That all the triable issues have been considered through the arbitral process, and the High Court in an application for review reconsidered the same and rendered a decision. Additionally, it was asserted that proceeding on a full trial would render the matter res judicata and sub judice, contrary to Sections 6 and 7 of the Civil Procedure Act. Reliance was placed in the case of Nguruman vs Jan Bonde Nielsen & another [2017] eKLR, where it was held that;“On whether this suit is sub judice the cited suits, Section 6 of the Civil Procedure Act provides that: " No court shall proceed with the trial of any suit or proceedings in which the matter in issue is also directly and substantially in issue in a previously instituted suit or proceeding between the same parties, or between parties under whom they or any of them claim, litigating under the same title, where such suit or proceedings in the same or any other court having jurisdiction in Kenya to grant the relief claimed."

12. After considering the materials on record, the issue for determination is:i.Whether the High Court has considered the dispute on its merit and rendered a competent decision on the claim;ii.Whether this Court can enter summary judgment in favour of the Applicant in the circumstances;iii.What are the appropriate orders, if any.

13. As regarding the first issue, notably, this Honourable Court, presided by Justice Wakiaga (J), in this matter, delivered a ruling on October 7, 2021. In the decision, the court observed that:“71. This therefore leaves the court with the issue as to whether the applicant has made up a case for setting aside of the award herein?It must be pointed out that in the application of this nature the court is not sitting on appeal from the decision of the arbitrator and can therefore not go to the merit of otherwise of the decision as was stated in the case of Cape Holdings Ltd v Synergy Industries Ltd [2010] eKLR. (Emphasis).72. In this matter the applicant has moved the court to set aside the award on the grounds that the award was contrary to public policy, the arbitrator contravened the constitution and relevant statutory provisions of the Act.”

14. As regarding the Second issue, summary judgment is provided under Order 36 Rule 1 of the Civil Procedure Rules, which provides that1)In all suits where a Plaintiff seeks judgment for—(a)a liquidated demand with or without interest; or(b)the recovery of land, with or without a claim for rent or mesne profits, by a landlord from a tenant whose term has expired or been determined by notice to quit or been forfeited for non-payment of rent or for breach of covenant, or against persons claiming under such tenant or against a trespasser, where the defendant has appeared but not filed a defence the plaintiff may apply for judgment for the amount claimed, or part thereof, and interest, or for recovery of the land and rent or mesne profits.

15. The High court in Seyani Brothers & Company (K) Limited v Acme Apartments Limited [2017] eKLR, explained the rationale for summary judgment, quoted the case of Industrial & Commercial Development Corporationvs Daber Enterprises Ltd (2000) 1 EA 75, where the court of Appeal stated that,“The purpose of the proceedings in an application for summary judgment is to enable the plaintiff to obtain a quick judgment where there is plainly no defence to the claims. To justify summary judgment, the matter must be plain and obvious and where it is not plain and obvious, a party to a civil litigation is not to be deprived of his right to have his case tried by a proper trial where if necessary, there has been discovery and oral evidence subject to cross examination.”

16. Further, the court in Seyani Brothers & Company (K) Limited v Acme Apartments Limited (Supra), observed that,“(11) It is therefore trite that Summary Judgment can only be granted in plain and obvious cases where there are no triable issues….(15) In the circumstances, it cannot be said that the amount claimed herein by the Plaintiff is undisputed. Indeed, the Defendant has raised bona fide triable issues to controvert the claim. Accordingly, it is my considered finding that this is not a fit or proper case for the entry of Summary Judgment under Order 36 Rule 1 of the Civil Procedure Rules. That being my view of the matter, I would dismiss the Plaintiff's application dated 13 September, 2016 with an order that costs thereof be in the cause.”

17. The instant application was served and the defendant did not deem it fit to file a response. It appears from the facts deponed in the application for summary that this is a clear and obvious case hence the plaintiff/applicant is entitled to the orders sought in the plaint.

18. As regarding the third issue, in this instant application, the Applicant relied on Order 46 of the Civil Procedure Rules. The High court in the case of Mohawk Limited v Leo Investment Limited & another [2013] eKLR, observed that,“The heading to Order 46 quite clearly reads: ‘Arbitration under Order of a Court’. However, the body of the Order deals with matters raised before the Court in enforcement proceedings or setting aside awards. I do not consider that the Order relates only to arbitrations which have been instituted by Order of Court. In any event, by an Order made on the January 15, 2009 by Khaminwa J. the Court directed the Chairman or the Vice-Chairman of the Architectural Association of Kenya to appoint an arbitrator. It seems to me that the arbitration before Justice (Rtd.) Edward Torgbor was, in fact, ordered by Court and consequently Order 46 necessarily applies. I find against the Plaintiff/Applicant on this point. Similarly, I have perused the provisions of Order 46 Rule 18 of the Civil Procedure Rules, 2010. I believe that the strict interpretation of that Rule clearly indicates that the Court shall, on request by any party, enter judgement according to the award except where an application under rules 13, 14 or 16 has been heard and determined. (Emphasis mine). Rule 16 under that Order clearly provides the power for the Court for setting aside an award on the grounds detailed therein.”

19. Further the High Court in the case of Exclusive Estates Limited v Telkom Kenya Limited & another; Aftraco Limited (Interested Party/Applicant) [2021] eKLR, observed that,“246. Order 46 Rule 16(1) of Civil Procedure Rules sets out the conditions under which an award can be set aside. It provides as follows: - “16. (1) The court may set aside an award on the following grounds only—(a) corruption or misconduct of the arbitrator or umpire; or (b) that either party has fraudulently concealed any matter which he ought to have disclosed, or has willfully misled or deceived the arbitrator or umpire.”247. Order 46 Rule 16(2) of the Civil Procedure also requires an application based on Order 46 Rule 16(1) of the Civil Procedure be served upon the arbitrator or umpire.248. Telkom and Aftraco’s applications are founded on allegations of misconduct on the part of the Arbitrator. They have both raised various complaints which the court will endeavor to consider in determining whether misconduct has been established. Before the court embarks on the same however, it is important to note that Order 46 Rule 16 of theCivil Procedure Rulesdoes not envisage the setting aside of an award for being against public policy. I concur with the Plaintiff’s submissions that the said ground falls under Section 35 of theArbitration Actand as such, the court will not delve into the issues raised in that regard by Aftraco. (Emphasis)249. Misconduct is defined in the Black’s Law Dictionary (8th Edition) as follows: “Any unlawful conduct on the part of a person concerned in the administration of justice which is prejudicial to the rights of parties or to the right determination of the cause…The term is also used to express a dereliction from duty, injurious to another, on the part of one employed in a professional capacity.”250. The Supreme Court of India in the case of M/s Cochin Shipyard Ltd vs M/s Apeejay Shipping Ltd SLP(supra) pronounced itself as follows regarding what constitutes misconduct of an arbitrator: “Misconduct, as has been laid down, does not always have a moral connotation. To elaborate, it may not have any connection with the individual/personal conduct of the arbitrator. The said conduct would be in sphere of moral misconduct. As far as legal misconduct is concerned, as the authorities would demonstrate, the same must be manifest or palpable from the proceedings before the arbitrator. To elaborate, a person urging the ground of legal misconduct has to satisfy the court from the records of the arbitral proceedings that there has been a legal misconduct on the part of the arbitrator as a consequence of which the award gets vitiated”251. In Nyangau v Nyakwara [supra] the Court cited with approval the holding in William v Wallis and Cox (1914) 2K.B. 468, at pages 484 and 485) where it was stated that: “Misconduct is not necessarily personal misconduct. If an arbitrator for some reason which h thinks good declines to adjudicate upon the real issue before him or rejects evidence which, if he had rightly appreciated it would have been seen by him to be vital, that is, within the meaning of the expression, “misconduct” in the hearing of the matter which he has to decide, and misconduct which entitles the person against whom the award is made to have it set aside...” (Emphasis added)252. Similarly, in the case of Rashid Moledina v Hoima Ginners Ltd (supra), Spry J.A stated that: “Under the statute law, an award can only be set aside for misconduct on the part of the arbitrator and that has been extended by interpretation (subject to an exception not relevant to these proceedings) to include an error of law apparent on the face of the award?”253. In my considered view, most of the grounds raised by Telkom and Aftraco do not constitute misconduct of the Arbitrator. They relate to the Arbitrator’s interpretation and analysis of the evidence tabled before her. Indeed, it is not this court’s role to micromanage the Arbitration process. For that reason, the court will only consider the allegations of misconduct which will have a direct impact on the court’s finding namely: a. Rewriting the Contract b. Unjust Enrichment c. Bias274. Thus, having found against the Plaintiff and the 2nd Defendant, Order 46 Rule 16 (3) of the Civil Procedure Rulesobligates the court to pronounce itself on the final order. The same provides as under: “Where an award is set aside under this rule the court shall supersede the arbitration and shall proceed with the suit.”

20. In the instant Application, the arbitral award was set aside on grounds of the Arbitrator contravening the constitution and relevant statutory provisions of the Act, amongst other grounds. In my view, such grounds qualifies as misconduct of the arbitrator, and therefore Order 46 of the Civil Procedure Rules is thus applicable. Further to the fact that the arbitration proceedings was by the order of the court by consent of the parties, Order 46 of the Civil Procedure Rules applies.

21. In particular, Order 46 Rule 16 (3) of the Civil Procedure Rules obligates the court to pronounce itself on the final order. The same provides as under: “Where an award is set aside under this rule the court shall supersede the arbitration and shall proceed with the suit.”

22. To that end, this court finds the appropriate orders be as provided by Order 46 Rule 16 (3) of the Civil Procedure Rules; to the effect that considering the arbitral award was set aside, on grounds amongst the misconduct of the Arbitrator, this court thus supersedes the Arbitration and the suit shall proceed in court. This court has been beseeched to enter summary judgment in favour of the plaintiff. I have already stated that the defendant did not deem it fit to file a response to the application. Being convinced that the case is plain and obvious, I am constrained to allow the motion. Consequently.i.Judgment is entered in favour of the plaintiff and against the defendant in the sum of ksh.56,675,759/66 being the outstanding payments under the contract. Interest on the above at 14% for the sums due under IPC 4 and 5 from the due date until payment in full.ii.Costs of the suit.

DATED, SIGNED AND DELIVERED VIRTUALLY THIS 13TH DAY OF OCTOBER, 2022. ………………………J. K. SERGONJUDGEIn the presence of:……………………………. for the Applicant……………………………. for the Respondent