' Background and Introduction
1. The applicant filed the application dated 19th September 2024 seeking to lift the corporate veil of the respondent company and to have its directors, being PATRICK ALUVI MUREFU and ZHANG JING together with its shareholders OUYANG GENYA and YAN YANGHUA examined on the respondent’s means to settle the decretal amount arising out of an arbitral award.
2. In response to the said application, the respondents filed a notice of preliminary objection dated 2nd December 2024. Parties filed their respective submissions which I have equally considered.
Analysis and Determination
3. The decree in question stems from the recognition and adoption of an arbitral award. As is typical in arbitration, the substantive dispute was resolved by an arbitrator, and the Court’s role was limited to recognition or setting aside of the award under the Arbitration Act. Once recognized, the award assumes the status of a decree of the Court, but the proceedings retain their miscellaneous character and do not evolve into a conventional suit.
4. This distinction is critical. Unlike decrees issued in suits, those arising from arbitration recognition do not fall squarely within the procedural framework of Section 34 of the Civil Procedure Act, which presupposes the existence of a suit in which the decree was passed. Therefore, the execution of such decrees must be approached through mechanisms tailored to arbitration-related proceedings.
5. Additionally, Order 22 Rule 35 of the Civil Procedure Rules permits the examination of persons who may possess information or assets relevant to the satisfaction of a decree. However, it does not explicitly provide for the lifting of the corporate veil, nor does it outline the procedure for examining directors or shareholders of a corporate judgment debtor.
6. In cases where the judgment debtor is a company, the Court must equally determine whether the corporate veil should be pierced to reach the individuals behind the entity. This is a substantive legal inquiry requiring judicial scrutiny and cannot be presumed under procedural rules. Since the Civil Procedure Rules do not expressly provide for veil-lifting, such relief must be sought through a separate application, which is appropriately brought as a miscellaneous application.
7. Jurisprudence is settled on the fact that miscellaneous applications serve to address procedural or ancillary matters that do not necessitate the full rigour of a suit. (See for instance, Rockland Kenya Ltd v Commissioner General of KRA & Another (2020) eKLR and Whitmore Investment Limited v County Government of Kirinyaga & 3 Others (2016) eKLR).
8. I do acknowledge that judicial opinion is divided on whether such execution-related applications should be brought within the same miscellaneous proceedings in which the arbitral award was recognized, or whether a fresh miscellaneous application is required. One school of thought maintains that once the award is recognized or set aside, the miscellaneous proceedings become spent, having fulfilled their procedural purpose. According to this view, any further steps, particularly those involving substantive determinations such as lifting the corporate veil, must be initiated through a new application.
9. Conversely, another line of thought holds that execution-related reliefs, being ancillary to recognition and enforcement, may be pursued within the same miscellaneous proceedings.
Disposition
10. In reconciling these positions, I would adopt a functional approach and find that the relief sought is substantive and independent and therefore properly brought as a fresh miscellaneous application. The preliminary objection is thus dismissed. The costs shall follow the outcome of the proceedings.
'
1. The applicant filed the application dated 19th September 2024 seeking to lift the corporate veil of the respondent company and to have its directors, being PATRICK ALUVI MUREFU and ZHANG JING together with its shareholders OUYANG GENYA and YAN YANGHUA examined on the respondent’s means to settle the decretal amount arising out of an arbitral award.
2. In response to the said application, the respondents filed a notice of preliminary objection dated 2nd December 2024. Parties filed their respective submissions which I have equally considered.
Analysis and Determination
3. The decree in question stems from the recognition and adoption of an arbitral award. As is typical in arbitration, the substantive dispute was resolved by an arbitrator, and the Court’s role was limited to recognition or setting aside of the award under the Arbitration Act. Once recognized, the award assumes the status of a decree of the Court, but the proceedings retain their miscellaneous character and do not evolve into a conventional suit.
4. This distinction is critical. Unlike decrees issued in suits, those arising from arbitration recognition do not fall squarely within the procedural framework of Section 34 of the Civil Procedure Act, which presupposes the existence of a suit in which the decree was passed. Therefore, the execution of such decrees must be approached through mechanisms tailored to arbitration-related proceedings.
5. Additionally, Order 22 Rule 35 of the Civil Procedure Rules permits the examination of persons who may possess information or assets relevant to the satisfaction of a decree. However, it does not explicitly provide for the lifting of the corporate veil, nor does it outline the procedure for examining directors or shareholders of a corporate judgment debtor.
6. In cases where the judgment debtor is a company, the Court must equally determine whether the corporate veil should be pierced to reach the individuals behind the entity. This is a substantive legal inquiry requiring judicial scrutiny and cannot be presumed under procedural rules. Since the Civil Procedure Rules do not expressly provide for veil-lifting, such relief must be sought through a separate application, which is appropriately brought as a miscellaneous application.
7. Jurisprudence is settled on the fact that miscellaneous applications serve to address procedural or ancillary matters that do not necessitate the full rigour of a suit. (See for instance, Rockland Kenya Ltd v Commissioner General of KRA & Another (2020) eKLR and Whitmore Investment Limited v County Government of Kirinyaga & 3 Others (2016) eKLR).
8. I do acknowledge that judicial opinion is divided on whether such execution-related applications should be brought within the same miscellaneous proceedings in which the arbitral award was recognized, or whether a fresh miscellaneous application is required. One school of thought maintains that once the award is recognized or set aside, the miscellaneous proceedings become spent, having fulfilled their procedural purpose. According to this view, any further steps, particularly those involving substantive determinations such as lifting the corporate veil, must be initiated through a new application.
9. Conversely, another line of thought holds that execution-related reliefs, being ancillary to recognition and enforcement, may be pursued within the same miscellaneous proceedings.
Disposition
10. In reconciling these positions, I would adopt a functional approach and find that the relief sought is substantive and independent and therefore properly brought as a fresh miscellaneous application. The preliminary objection is thus dismissed. The costs shall follow the outcome of the proceedings.
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