https://new.kenyalaw.org/akn/ke/judgment/kehc/2026/9857

**REPUBLIC OF KENYA** **IN THE HIGH COURT OF KENYA AT NAIROBI** **MILIMANI LAW COURTS** **COMMERCIAL AND TAX DIVISION** **MISCELLANEOUS CIVIL APPLICATION NO. E 386 OF 2024** **UAP OLD MUTUAL UGANDA LIMITED……..APPLICANT/RESPONDENT** **-VERSUS-** **VS HYDRO UGANDA LIMITED…………1ST RESPONDENT/APPLICANT** **VS HYDRO (PVT) LIMITED….………..2ND RESPONDENT/APPLICANT** **BENTHOTAGE NISHAN** **CHANDANA MAHANAMA...................3RD RESPONDENT /APPLICANT** **PRABODHA KESHANA** **SUMANASEKERA……...............…………4TH RESPONDENT/APPLICANT** **RULING** 1. Capital and commerce flow seamlessly across the porous borders of the East African Community. It is a fundamental pillar of this integrated economic bloc that commercial liabilities must traverse these borders with equal fluidity. However, the powerful sword of reciprocal enforcement must always be wielded with the utmost good faith. This Court will not abide a commercial debtor using territorial boundaries to outrun a legitimate decree, nor will it countenance a judgment creditor utilizing the sanctuary of ex parte proceedings to ambush an opponent. Justice in the Commercial Court demands both economic pragmatism and procedural candour. **Background of Facts** 2. The dispute before this Court stems **from Civil Suit No. 1052 of 2023**, litigated at the High Court of Uganda (Commercial Division). On 20th March 2024, the **Honourable Justice Stephen Mubiru** of the Ugandan High Court dismissed an application by the Respondents/Applicants *(hereinafter "VS Hydro")* for leave to appear and defend, subsequently entering a default judgment in favour of the Applicant/Respondent *(hereinafter "UAP")*. 3. The resultant decree, issued on 17th April 2024, condemned VS Hydro to pay UAP sums totaling USD 6,832,325. Dissatisfied, VS Hydro filed a Notice of Appeal and an application for leave to appeal, which subsequently matured into Civil Appeal No. 243 & 244 of 2024 at the Court of Appeal of Uganda. 4. While that appellate process was progressing in Kampala, UAP crossed the border into Kenya. On 28th June 2024, UAP filed an Originating Summons in this Court seeking to register the Ugandan decree under the **Foreign Judgments (Reciprocal Enforcement) Act (Cap 43)**. UAP moved this Court ex parte, without serving VS Hydro, and crucially, without disclosing the existence of the active Ugandan appeal. Unaware of the appellate contest, this Court delivered a Ruling on 30th January, 2025, registering the foreign judgment and allowing execution to proceed. **Reliefs Claimed** 5. Awaken by the realization that execution in Kenya was imminent, VS Hydro filed the present Notice of Motion dated 27th May, 2025 under a Certificate of Urgency. VS Hydro seeks an order setting aside the 30th January, 2025 Ruling and all consequential decrees, alongside a prayer for a stay of execution, as well as costs. 6. VS Hydro's primary grievance is material non-disclosure; they argue that by secretly registering the judgment while an appeal was pending, UAP contravened **Section 5(2)(b)** of the **Foreign Judgments (Reciprocal Enforcement) Act** and denied them the right to a fair hearing. 7. In opposition, UAP filed a Replying Affidavit sworn on 3rd July, 2025, contending that under **Section 3(2)(b) of the Act**, a foreign judgment is deemed final and conclusive despite a pending appeal. UAP urges the Court to preserve the registration and merely adjourn the application to set aside under **Section 11(2)**. UAP heavily opposes the stay of execution, pointing out that VS Hydro has paid nothing towards the decree. Further, that a similar application for stay has already been dismissed by the Ugandan Court of Appeal. **Issues for Determination** 8. The Court has considered the Application, the response, the written submission as well as the oral highlights by Counsel for the Parties. The Court frames three issues for determination: * + 1. *Whether the ex parte registration of the foreign judgment was vitiated by material non-disclosure.* 2. *Whether the registration should be set aside or adjourned pending the Ugandan appellate process.* 3. *Whether VS Hydro is entitled to a stay of execution, and if so, upon what terms.* **Analysis** 9. The nature of the application before the Court calls for the exercise of discretion. * + 1. ***Whether the ex parte registration of the foreign judgment was vitiated by material non-disclosure.*** 10. The law has always spoken with clarity. A party approaching the seat of justice ex parte is strictly bound by the duty of *uberrima fides*—utmost good faith. **Section 5(2)(b) of Cap 43** dictates that an ex parte application to register a foreign judgment is only procedurally sound if the time to appeal has expired or no appeal is pending. 11. It is not lost to this Court that UAP deliberately omitted the glaring fact of the Ugandan appeal when obtaining the registration orders on 30th January, 2025. Had UAP disclosed the pending appeal, this Court would invariably have directed that the Originating Summons be served inter partes under **Section 5(3) of the Act**. 12. The Commercial Court takes a dim view of litigation by ambush. UAP’s failure to disclose the active appeal was a procedural foul that usurped the Court’s discretion. This lack of candour will be reflected in the final orders on costs. ***(b) Whether the registration should be set aside or adjourned pending the Ugandan appellate process.*** 13. Having noted UAP's procedural sleight of hand, the Court must ask: does this warrant completely throwing out the registration? The answer is no. A Commercial Court must detach itself from the theatre of procedural outrage and look at the economic and statutory realities. 14. **Section 3(2)(b)** of the **Foreign Judgments (Reciprocal Enforcement) Act** explicitly provides that a judgment is deemed to be final and conclusive notwithstanding that an appeal may be pending against it in the original Court. This statutory provision neutralizes VS Hydro’s argument that the judgment was unripe for registration. See **[Amra Leasing Limited v DAC Aviation (EA) Limited & 2 others [2022] KEHC 12737 (KLR)](https://new.kenyalaw.org/akn/ke/judgment/kehc/2022/12737/eng%402022-08-30)**. 15. Furthermore, **Section 11(2) of the Act** provides a pragmatic failsafe. It dictates that where an application to set aside is made on the ground of a pending appeal, the Court may set aside the registration, or it may adjourn the application until the appeal is disposed of. Setting aside this registration completely—only for UAP to potentially win the Ugandan appeal next month and file a fresh Originating Summons—is an exercise in judicial futility. On the other hand, should the Court of Appeal in Uganda reverse the decision of the High Court in Uganda, the Applicants would breeze through this Court with their application for setting aside. That is the stark reality before this Court. The main litigation between the parties is still the Ugandan Courts, Kenya is only involved in the registration and enforcement. For now, the Court is faced with a Foreign Judgement that is challenged through an appellate process. However, it has not been set aside. 16. Within our jurisdiction, a Judgement from this Court remains a valid judgement capable of execution, unless it is stayed or set aside through the appellate processes. The enforcement of foreign judgements is therefore not speaking a legal language on validity of judgements, that is foreign to us. 17. Therefore, invoking its discretion under **Section 11(2)**, this Court elects to save the registration and adjourn VS Hydro’s application to set aside pending the determination of the Ugandan appeal. **(c) Whether VS Hydro is entitled to a stay of execution, and if so, upon what terms.** 18. By adjourning the application, the registration remains intact. This brings us to VS Hydro's prayer for a stay of execution. Equity is not a cloak for commercial delinquency. VS Hydro admits that it has not paid a single cent towards the USD 6,832,325 decretal sum since the judgment was delivered in March, 2024. Moreover, the record reveals a fatal hurdle for VS Hydro. It has been deponed that the Court of Appeal in Uganda already dismissed their application for a stay of execution. 19. To grant VS Hydro an unconditional stay of execution in Kenya would effectively mean sitting as an Appellate Court over the Ugandan Court of Appeal. This Court has no such jurisdiction. However, allowing ruthless execution to proceed on an ambushed party would undoubtedly render the pending Ugandan appeal nugatory. 20. The solution lies in a conditional stay. As applied in **CTM Uganda Limited v Owala [2021] KEHC 47 (KLR)**, this Court is empowered to impose strict terms to protect the substratum of the dispute. In arriving at the quantum of security, the Court must balance the equities. The decretal sum of USD 6,832,325 is no simple sum. Demanding one hundred percent (100%) security upfront from a party that was ambushed via ex parte proceedings risks commercially strangling the debtor and stifling their active appeal before the Ugandan Court of Appeal can even make its pronouncement. 21. Therefore, guided by the principles of commercial proportionality, the Court finds that ordering security for fifty percent (50%) of the decretal sum perfectly balances the scales. It sufficiently protects UAP's core exposure from asset flight without prematurely bankrupting VS Hydro. **Determination** 22. The Applicants application by way of a Notice of Motion dated 27th May, 2025 is determined as follows: * + 1. *THAT the Respondents/Applicants' Notice of Motion dated 27th May 2025, in so far as it seeks to completely set aside the Ruling and Registration Orders of 30th January, 2025, is HEREBY adjourned pursuant to* ***Section 11(2) of the Foreign Judgments (Reciprocal Enforcement) Act****, pending the final determination of Civil Appeal No. 243 & 244 of 2024 at the Court of Appeal of Uganda.* 2. *THAT an order of Stay of Execution of the decree is HEREBY granted, pending the outcome of the aforementioned Ugandan appeal, but strictly on the following condition:* 1. *THAT the Respondents/Applicants (VS Hydro) shall, within Sixty (days) days from the date of this Ruling, provide a Bank Guarantee from a reputable Kenyan Commercial Bank in favour of the Applicant/Respondent (UAP) for fifty percent (50%) of the decretal sum, being USD 3,416,162.50 (or its Kenya Shilling equivalent).* 2. *THAT in the event of default by the Respondents/Applicants to furnish the Bank Guarantee within the stipulated sixty (60) days, the order for stay of execution shall automatically lapse without further reference to this Court, and the Applicant/Respondent shall be at liberty to proceed with execution.* 3. *THAT as a direct consequence of the Applicant/Respondent's failure to disclose the pending Ugandan appeal during the initial ex parte registration proceedings, the Applicant/Respondent (UAP) shall bear the costs of this application.* 23. It is so ordered. **DATED, SIGNED AND DELIVERED AT MILIMANI THIS 07TH DAY OF JULY, 2026** **NJOROGE BENJAMIN K.** **JUDGE** **In the presence of:** Mr. Peter Mbithi for the Applicants. Mr. Terer for the Respondent. Mr. John Paul - Court Assistant