https://new.kenyalaw.org/akn/ke/judgment/kehc/2026/8658

**REPUBLIC OF KENYA** **IN THE HIGH COURT OF KENYA AT NAIROBI** **MILIMANI LAW COURTS** **COMMERCIAL AND TAX DIVISION** **ARB. CAUSE NO. E033 OF 2025 CONSOLIDATED WITH** **ARB. CAUSE OF E046 OF 2025** **BETWEEN** **TOTAL ENERGIES MARKETING KENYA PLC.............................……APPLICANT** **AND** **SINT COMMUNICATIONS LIMITED.……………..…….………..RESPONDENT** **RULING** **Introduction and Background** 1. On 31st March 2025, the arbitral tribunal, Hon. Mary Ang’awa (“the Arbitrator”) published an award that was corrected on 7th April 2025 where she awarded the Respondent USD 776,763 and Kshs.30,000,000.00/= for breach of contract (“the Award”). Both parties have now filed applications before the court with the Applicant seeking to set aside the Award through its Chamber Summons dated 30th April 2025 whereas the Respondent seeks to enforce it through its Chamber Summons dated 28th May 2025. The applications have been canvassed by way of written submissions that I have considered together with the pleadings and I will be making relevant references to the same in my analysis and determination below. **Analysis and Determination** 1. I propose to first deal with the Applicant’s application to set aside the Award. The Applicant depones that the Arbitrator was appointed only to handle disputes arising from the contract dated 1st February 2022. However, the Applicant claims that the Arbitrator wrongly assumed jurisdiction over an earlier "Proof of Concept" contract dated 20th April 2020, which does not have an arbitration clause and that claims related to intellectual property, trade secrets, and patent infringement for the "VITE" app should not have been decided by the Arbitrator because they arise from the 2020 contract, not the 2022 contract. 2. Further, that the Arbitrator awarded USD 776,763 as lost profits for the first year of the contract but this figure was based on the Respondent’s internal projections, not the figures the parties had actually agreed upon. It reiterates that special damages must be strictly proved but the Respondent failed to do this, using figures plucked from thin air, which makes the Award offensive to justice and fairness and contrary to public policy. The Applicant states that the Arbitrator awarded Kshs.30,000,000.00/= in general damages for breach of contract but that general damages are not normally awarded in contractual matters, that the Respondent never specifically pleaded or asked for them, and that the Arbitrator gave no legal reasoning or justification for the amount and therefore this award is described as whimsical & capricious. 3. The Applicant also states that the arbitration clause in the 1st February 2022 contract states that each party shall bear its own costs but that despite this clear clause, the arbitrator awarded costs to the Respondent which the Applicant argues directly contradicts the parties' express agreement. That the parties had also agreed on a list of key issues the Arbitrator was supposed to determine but she failed to determine several of these, including whether the Respondent had a duty to find its own funding, whether a mutual mistake about the bank guarantee voided the contract, and whether the Applicant actually accessed trade secrets. The Applicant claims that this failure is an affront to public policy. 1. In its response through the replying affidavit sworn by its director, Simon Thangu on 24th June 2025, the Respondent depones that the application improperly tries to re-open factual and legal issues already decided by the Arbitrator and that this court is not an appellate court over arbitral awards and should not interfere. 2. The Respondent avers that the issues, findings, and reliefs in the Award strictly followed the pleadings, contracts, and evidence as the 2022 main contract was directly based on the successful 2020 Proof of Concept contract. That the two contracts are related, and the Proof of Concept was the foundation for the main contract and the Arbitrator was right to consider both. 3. The Respondent also states that the USD 776,763 award for Year 1 was properly proved as this sum was expressly pleaded, supported by documentary evidence, and based on projections jointly developed by both parties during weekly meetings over several months. That the projections were not “plucked from thin air” as claimed by the Applicant as they were part of the parties’ shared expectations and deliverables under the agreement. It states that it also had its own internal projections based on actual Proof of Concept experience which were also submitted as evidence and that the Arbitrator reviewed all projections and only awarded the Year 1 amount, while rejecting the larger claims for Years 2 and 3 and the Proof of Concept investment, showing careful judicial restraint. 4. The Respondent also states that the Kshs.30,000,000.00/= general damages award is justified as the Applicant committed a deliberate and anticipatory breach of contract. That after benefiting from the Respondent’s intellectual property, technology, and market insight, the Applicant failed to perform its key obligations like providing a bank guarantee. It contends that general damages for breach of contract are compensatory and are meant to place the innocent party in the position they would have been in had the contract been performed. On costs, the Respondent states it was the successful party and that the Arbitrator followed the principle that “costs follow the event” 5. It denies that the Award violates public policy as compensation for breach of contract based on substantiated loss of income is well-established in law, that the Award was carefully limited to proven Year 1 projections, not speculative future claims, that the Arbitrator published the corrected Award which corrected minor typographical errors which shows the Arbitrator acted within her powers under **section 34** of the ***Arbitration Act***. The Respondent states that it is a small Kenyan start-up suffering immense financial hardship because the Applicant is refusing to comply with the Award. It urges the court to dismiss the Applicant’s application and proceed to recognize and adopt the Award as a judgment of the court under **section 36** of the ***Arbitration Act*** 6. It is not in dispute that under **section 35** of the ***Arbitration Act*** the court has jurisdiction to set aside an Award if it dealt 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. The Court of Appeal, in **Synergy Industrial Credit Limited v Cape Holdings Limited [2020] KECA 208 (KLR)** observed as follows: *In determining whether the arbitral tribunal has dealt with a dispute not contemplated or falling within the terms of the reference, or whether its award contains decisions on matters beyond the scope of the reference to arbitration, the arbitral clause or agreement is critical. Other relevant considerations, with-out in any way prescribing a closed catalogue, would include the subject matter, pleadings and submissions by the parties, as well as their conduct in the arbitration. Pleadings, however, must be considered with circumspection because, as the US Court of Appeals for the Ninth Circuit observed in Ministry of Defence of the Islamic Republic of Iran v. Gould, Inc. (supra), the real issue in such an inquiry is whether the award has exceeded the scope of the arbitration agreement, not whether it has exceeded the parties’ pleadings.* 1. As this court (Gikonyo J.,) in **Kenya Tea Development Agency Ltd & 7 others v Savings Tea Brokers Limited [2015] KEHC 6030 (KLR)** expressed itself, the jurisdiction of the arbitrator is tethered by the arbitration agreement, reference and the law. The express words used in the arbitration agreement or as interpreted with reference to the subject matter of the contract will determine whether the issues raised by an applicant are contemplated by the agreement or fall within the terms or scope of the reference to arbitration. Even where general, broad, generous and elastic words are used in an arbitration agreement or reference to arbitration, courts will still interpret them by reference to the subject matter of the contract. 2. The arbitration clause in the 2022 contract limits disputes to those *“…arising between the parties from the performance of this agreement*”. The 2020 Proof of Concept contract, which had a similar clause, was not invoked in the appointment letter to the Chartered Institute of Arbitrators dated 12th May 2023 as that letter expressly refers only to the 2022 contract. The Arbitrator’s finding at para. 27 that *“…the two contracts are related*” and that *“…without the first POC contract the second contract would….be rejected*” is a factual and interpretive finding. However, as stated, jurisdiction cannot be created by relation but it is must be derived from the arbitration agreement. The Arbitrator went on to make findings about patent infringement, trade secrets, and cage designs, all of which arose from the 2020 Proof of Concept period contract and the *Vite* app, not from the 2022 contract which replaced *Vite* with *Easy Gas*. 3. Nevertheless, the claim for USD 776,763 which was Year 1 projected revenue did arise from the 2022 contract itself as the termination clause prohibited termination in year one. Under **section 35(2)(a)(iv)** of the ***Arbitration Act***, if part of the award deals with matters not referred, only that part may be set aside if separable. I find that the Year 1 claim is separable and I agree with the Applicant that the Arbitrator exceeded her jurisdiction by adjudicating on intellectual property and trade secret claims rooted in the 2020 Proof of Concept contract and the findings on that part of the Award including patent, trade secrets, cages are hereby set aside. 4. It is also common ground that the court also has jurisdiction to set aside an award if it goes beyond the public policy of the country. It is not lost to me that a claim that an award is "contrary to public policy" is a high-threshold argument and it has been held that this ground is not a backdoor for appealing the merits of an award. It is reserved for awards that shock the conscience, are inherently immoral, or violate the fundamental principles of justice and morality in Kenya (see **Christ for All Nations v Apollo Insurance Co Ltd [2002] 2 E.A 366** and **Centurion Engineers & Builders Limited v Kenya Bureau of Standards [2023] KECA 1289 (KLR)**]. 5. It is not in dispute that special damages must be specifically pleaded and strictly proved. The record of proceedings shows the Respondent’s own witness confirmed the agreed figures as per “Scenario B” in Year 1 was USD 154,534 and he admitted that the USD 776,763 came from the Respondent’s internal projections, which were not agreed by both parties. No independent auditor or accountant testified to verify those internal projections. The Award at para. 35 simply states “*I find that the Claimant was entitled to the relief for the one-year contract … This is USD 776,763.00.*” There is no analysis of how that figure is derived from the evidence, nor does it reconcile with the admitted agreed figures. I agree with the Applicant that this is indeed a case of awarding special damages without strict proof and as the late Ochieng’ J., (as he was then) held in **Kenya Agricultural and Livestock Research Organization (formerly Kenya Agricultural Research Institute v Njama Limited [2015] KEHC 8167 (KLR)**, *“If thereafter the Arbitrator made an award in respect of special damages which were not specifically proved, such a decision would be deemed to be inconsistent with public policy.”* I find that the award of USD 776,763 violated public policy as it was awarded and yet it was not specifically proved. 6. On the award of Kshs.30,000,000.00/= as general damages, I am in agreement with the Applicant’s submission where it cites the Court of Appeal decision in **Kenya Tourist Development Corporation v Sundowner Lodge Limited [2018] KECA 312 (KLR)** which dealt with an almost identical situation of an award of Kshs.30,000,000.00/= as general damages for breach of contract which the appellate court found to have had no foundation, no authority, no discussion and no justification. The Court of Appeal held that the judge “*whimsically and capriciously imposed that figure, literally plucking it out of the air”*. The same reasoning applies here as the Award of Kshs.30,000,000.00/= for “general damages for breach of contract” is not supported by any legal analysis, citation of authority, or explanation of how the figure was reached. This is indeed a clear violation of public policy as it is contrary to fundamental justice and fairness and this award is thus set aside. 7. On costs of the arbitration, the arbitration clause is clear and unambiguous that “*each party shall bear its own costs*.” **Section 32B** of the ***Arbitration Act*** expressly states “*Unless otherwise agreed by the parties, the costs and expenses of an arbitration, being the legal and other expenses of the parties, the fees and expenses of the arbitral tribunal and any other expenses related to the arbitration, shall be as determined and apportioned by the arbitral tribunal in its award under this section, or any additional award under section 34 (5)* “. In this case, the parties have otherwise agreed that each party is to bear its own costs and the Arbitrator had no basis to award costs to the Respondent. 8. I have also noted the Applicant’s contention that the Arbitrator issued a further correction on 8th May 2025 without a formal application, without giving the Applicant 14 days to comment as required by **section 34(2)** of the ***Arbitration Act*** and after the Applicant had questioned the Arbitrator’s jurisdiction. Thus, the Applicant submits that it was condemned unheard. In response, the Respondent submits that the Applicant was notified, appeared on 30th April 2025, consented to the 8th May 2025 hearing date, and then voluntarily chose not to attend. That the correction merely reinstated interest dates that had been omitted which was a clerical error within **section 34(5)** and therefore, the Arbitrator was not *functus officio* for such corrections. 1. It is correct that **section 34(3)** of the ***Arbitration Act*** “*The arbitral tribunal may correct any error of the type referred to in subsection (1)(a) on its own initiative within thirty days after the date of the arbitral award.”* In this case, the Applicant itself stated that it appeared on 30th April 2025 where it questioned whether a formal application existed but that the Arbitrator did not clearly clarify the agenda but set a further hearing for 8th May 2025. The Applicant then wrote a letter on 5th May 2025 declining to attend, asserting the Arbitrator was *functus officio*. Looking at the 8th May 2025 ruling, the Arbitrator corrected an omission, that is, the specific dates for interest, which I find to be within the scope of **section 34(1)(a)** on correction of clerical or typographical errors and **section 34(3)** on her own initiative. Further, the Applicant’s voluntary absence on 8th May 2025 after having participated in setting the date weakens the claim of being condemned unheard. I find this ground not sufficiently proved to reach the high public policy threshold, especially because the substantive change was minor and did not affect the Award. 2. The upshot is that the Applicant has made a case to set aside the Award on the grounds of the Arbitrator going outside the scope of the arbitration agreement and her jurisdiction and violation of public policy. The Respondent’s arguments, while raising legitimate points about finality and the limited scope of judicial intervention, do not overcome the fundamental defects in the Award itself. My findings above mean that the Respondent’s application seeking to enforce the award is struck out. **Conclusion and Disposition** 1. In conclusion, the Applicant’s application dated 30th April 2025 is allowed whereas that of the Respondent dated 28th May 2025 is struck out. I therefore order that the Final Arbitral Award published on 31st March 2025 and corrected on 7th April 2025 be set aside. The Respondent shall bear the costs of both applications assessed at Kshs.70,000.00/=. **DATED SIGNED and DELIVERED virtually at NAIROBI this 19TH DAY of JUNE 2026** **............................................................................** **J.W.W. MONGARE** **JUDGE** **IN THE PRESENCE OF** 1. Mr. Onyancha holding brief for Mr. Onyango for- Sint Communications. 2. Mr. Ekisa holding brief for Mr. Munyalo for -Total Energies 3. Amos - Court Assistant