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JudgmentARCON WORKS LIMITED VS COUNTY GOVERNMENT OF KIAMBU7 min read

ARCON WORKS LIMITED VS COUNTY GOVERNMENT OF KIAMBU

High Court at Kiambu High Court · · Mshila, Abigail

REPUBLIC OF KENYA

IN THE HIGH COURT OF KENYA AT KIAMBU

ARB. CAUSE NO. E002 OF 2024

IN THE MATTER OF THE ARBITRATION ACT NO.4 OF 1995

AND

IN THE MATTER OF AN APPLICATION FOR ENFORCEMENT OF A FINAL AWARD DATED 29TH JANUARY 2024

BETWEEN

ARCON WORKS LIMITED ………….……………………...APPLICANT

AND

COUNTY GOVT OF KIAMBU.…………………………..RESPONDENT

AND

IN THE MATTER OF AN ARBITRATION

BETWEEN

ARCON WORKS LIMITED ………….……………………...CLAIMANT

AND

COUNTY GOVT OF KIAMBU.…………………………..RESPONDENT

IN RESPECT OF THE PROPOSED CONSTRUCTION OF A HOSPITAL BLOCK AT GITHUNGURI LEVEL IV HOSPITAL

RULING

BACKGROUND

  1. The Applicant filed a Chamber Summons dated 11th November, 2024 under Section 36(1) of the Arbitration Act, 1995 and Rules 4(2)  and Rule 6 of the Arbitration Rules, 1997 and all other enabling provisions of the Law, for orders that;
  2. SPENT
  3. Leave be granted that the Final Award published on and dated 29th January, 2024 by the Arbitrator Prof. (QS) Hezekiah Gichunge be recognized and adopted as a decree of this Honourable Court.
  4. This Honourable Court be pleased to issue orders to compel the Respondent to reimburse the Applicant Kshs5,262,204/66 being the Arbitral Tribunals fees fully settled by the Applicant.
  5. This Honourable Court be pleased to issue orders to compel the Respondent to reimburse the Applicant the sum of Kshs.92,666/- being the Stenographers fees fully settled by the Applicant.
  6. The Respondent bears the costs of this Application.
  7. Any other orders this Honourable Court may deem fit and just to grant.
  8. The Applicant in canvassing the application relied on the Supporting Affidavit made by JAMES MBURU and the certified copy of the Final Award annexed thereto; hereunder is a summary of the Applicants claim;

APPLICANTS’ CASE

  1. The Application was supported by the sworn Affidavit of JAMES MBURU who stated that he was the Applicants Managing Director of Arcon Works;
  2. The dispute between the parties arose from the non-payment of Certificates raised by the Applicant and the ejection from the construction site actions which were a breach of the terms of the contract dated 9/04/2018; The dispute was then referred to Arbitration pursuant to Clause 16 of the contract.
  3. The Arbitrator Professor (QS) Hezekiah Gichunge was on the 2nd August, 2022 appointed by the Architectural Association of Kenya as the sole arbitrator in the matter; and he made and published the Notice of Award on 29th January, 2024 informing the parties that the Final Award was ready for collection. The collection of the Final award was contingent on full payment of the Arbitrators fees and the Stenographers fees;
  4. The total Arbitral Tribunals fees and expenses inclusive of VAT was in the sum of Kshs.5,262,205/-. A copy of the Invoice was annexed to the application; The Applicant wrote to the Respondent on several occasions encouraging them to settle the arbitration costs to no avail resulting in the Applicant fully settling the amount; On the 3rd June, 2024 the Applicant fully settled the sums adjudged as due and payable in the said award. In addition, the Respondent has not taken any steps to set aside the Final Award within the limited time which has since lapsed;
  5. The Respondent prayed that the Final Award be adopted, recognized and enforced as a judgment of this Honourable Court.

RESPONDENTS CASE

  1. In response the Respondent filed its Grounds of Opposition stating that the application was made in bad faith and was therefore frivolous, vexatious and an abuse of the court process.
  2. The Respondent had not refused and or neglected to satisfy and settle the costs in question but that the applicant ought to follow the proper laid down procedure; Therefore the order sought under prayer 3 and 4 of the application could only be issued through a Judicial Review application and not otherwise;
  3. The Applicants application was untenable and the Respondent prayed that the same be dismissed with costs.

ISSUES FOR DETERMINATION

  1. After reading the Application, the Supporting Affidavit and perusing the Annexures this court has framed the following issues for determination;
  2. Whether the Applicant has made out a case for recognition and adoption and enforcement of the Final Award as a judgment of the court;
  3. Whether the sums paid by the Applicant as fees can be reimbursed.

ANALYSIS

Whether the Applicant has made out a case for recognition and adoption and enforcement of the Final Award as a judgment of the court;

  1. Being that the Arbitral process is a consensus, voluntary procedure through which parties choose to resolve their dispute; the court can only intervene in that process as set out under Section 10 of the Arbitration Act which provides that:

“Extent of court intervention

Except as provided in this Act, no court shall intervene in matters governed by this Act.”

  1. In Prof. Lawrence Gumbe & Another vs. Honourable Mwai Kibaki & Others, High Court Miscellaneous No. 1025 Of 2004, the Court held that:

“Our Section 10 is based on the United Nations Model Law on arbitration and all countries who have ratified it recognize and enforce the autonomy of the arbitral process. Courts of law can only intervene in the specific areas stipulated in the Act and in most cases that intervention is usually supportive and not obstructive or usurpation-oriented...”

  1. Under section 32(A) of the Act an arbitral award is final and binding upon the parties and no recourse is available against the award otherwise than in the manner provided by the Act. It reads as follows;

Section 32A of Arbitration Act states:

“Except as otherwise agreed by the parties, an arbitral award is final and binding upon the parties to it, and no recourse is available against the award otherwise than in the manner provided by this Act.”

  1. The High Court under Section 36 has the power to recognize and enforce domestic arbitral award on the following terms:

“36 (1) A domestic arbitral award, shall be recognized as binding and, upon application in writing to the High Court, shall be enforced subject to this section and Section 37

(2) …

(3) Unless the High Court otherwise orders, the party relying on an arbitral award or applying for its enforcement must furnish

(a) the original arbitral award or a duly certified copy of it; and

(b) the original arbitration agreement or a duly certified copy of it.”

  1. The Applicant has annexed to the Summons a certified copy of the Final Arbitral Award (Annexture ‘JM14’). There were no grounds presented to this court by the Respondent as provided by Section 37(1) of the Arbitration Act that would have vitiated the Final Award; having perused the documents presented and after satisfying itself that the necessary provisions of the law had been complied with this court is satisfied that there are no anomalies in the Final Award that may lead this court to refuse to recognize and adopt the Final Award;
  2. In the absence of any application to set aside the award under the listed grounds for non-recognition or any other challenge or any preferred appeal, this court finds that the Applicant has satisfied the conditions precedent and finds the application to be merited.

Whether the sums paid by the Applicant as fees can be reimbursed.

  1. It was the Applicants submission that the total Arbitral Tribunals fees and expenses inclusive of VAT was in the sum of Kshs.5,262,205/-. A copy of the Invoice was annexed to the application and marked ‘JM9’; The Applicant contends that it wrote to the Respondent on several occasions encouraging them to settle their portion of the arbitration costs; The Respondents lack of response resulted in the Applicant fully settling the amount; On the 3rd June, 2024 the Applicant fully settled the sums adjudged as due and payable in the said award inclusive of Respondents portion; copies of proof of transfer of funds by the Applicant in favour of the Arbitrator and Stenographer was annexed and marked as ‘JM13’;
  2. The response by the Respondent was that it was unable to pay these amounts as it had not been provided with monies by the National Government through the Treasury to enable it settle its outstanding debts;
  3. Its contention was that the application for reimbursement was untenable and could only be done through a Judicial Review Application.
  4. Upon perusal of the Final Award this court notes that the Final Award at paragraph 355 (Y) as read with paragraph 343 the Respondent was directed to pay the Stenographers fees and expenses in the sum of Kshs,102,666/- inclusive of VAT; and the terms of reimbursement are clearly provided for;
  5. At paragraph 355(Z) a declaration was made that the Respondents shall pay and bear the Arbitral Tribunals fees and expenses amount
  6. The Respondent has not denied that it had a duty and an obligation to settle the fees but only pleads that the monies have not been remitted by the National Government through the Treasury;
  7. It is this Courts considered view that by the use of the word ‘forthwith reimburse’ in the forgoing paragraphs is misleading as any attempt made by the Applicant to enforce reimbursements of such payments before moving a competent Court to adopt and recognise the Final Award is found to be untenable and premature;
  8. The Applicants’ prayers for reimbursement before a Decree is issued and execution proceedings initiated is also found to be premature.
  9. Nevertheless, upon the Final Award  being adopted, recognized and enforced as a judgment of this Honourable Court the said Arbitral costs are included therein and the Applicant will be at liberty to pursue the decree and proceed to execution.

FINDINGS AND DETERMINATION

  1. In light of the foregoing this court makes the following findings and determinations;
  2. This court finds the application to be partially merited and it is hereby partially allowed;
  3. The Final Award delivered on 29/01/2024 by the Prof. (QS) Hezekiah Gichunge the Arbitrator, be and is hereby recognized and adopted as a judgment of this Honourable Court.
  4. Judgment be and is hereby entered in terms of the Final Award by the Prof. (QS) Hezekiah Gichunge the Arbitrator.
  5. The prayer for reimbursement before a decree is issued and/or execution proceedings is found to be premature and it is hereby disallowed.
  6. Each party to bear its own costs.

Orders accordingly.

DATED SIGNED AND DELIVERED VIA TEAMS AT KIAMBU THIS 14TH DAY OF MARCH, 2025.

A. MSHILA

JUDGE

In the presence of;

Sanja – Court Assistant

Amadi – for Applicant

Nguru – for Respondent

    ARCON WORKS LIMITED VS COUNTY GOVERNMENT OF KIAMBU ARCON WORKS LIMITED VS COUNTY GOVERNMENT OF KIAMBU