Background
1. This Ruling determines the application dated 10th September 2024 by which the Applicants seek to have the Arbitral Award issued by the Hon. John W. Mwera on 13th June 2023 adopted as a judgment of this honorable Court and that a decree do issue in terms of the said Award. The application is supported by the affidavit of JOB O. IKWAWE and opposed through a replying affidavit sworn by GRACE WAMBUI WERU on 9th June 2025. I have equally considered the written submissions filed by both parties.
Analysis and Determination
2. The Respondent argues that the application before me is defective for having been brought by way of a Notice of Motion rather than a Chamber Summons. I agree that indeed Rule 9 of the Arbitration Rules 2022 expressly provide that an application for recognition of an arbitral award shall be made by way of a Chamber Summons. That is the prescribed mode of moving the Court.
3. However, it is equally settled that procedural lapses which do not go to the jurisdiction of the Court or cause prejudice to the opposing party should not defeat substantive justice. I am guided by the decision in Dominion Farm Limited v. African Nature Stream & Another, Kisumu HCCC No. 21 of 2006, where the Court observed as follows:
“Whereas the rules of procedure are not made in vain and are not to be ignored, often times the Courts will encounter inadvertent transgressions or unintentional or ill-advised omissions through defective, disorderly and incompetent use of procedure but which if strictly observed may give rise to substantial injustice and in such circumstances, the exercise of the discretion of the Court comes into play to salvage the situation for the ends of justice.”
4. In the present case, the Respondent has been duly served and has responded to the application. As such, no prejudice has been occasioned. I therefore find that the use of a Motion rather than a Chamber Summons, though irregular, is not fatal to the application and does not warrant its dismissal.
5. That said, the parameters governing the recognition and enforcement of arbitral awards are expressly set out under Section 36 of the Arbitration Act. Once an applicant has complied with the procedural requirements of that provision, the Court is obliged to recognize and enforce the award unless the opposing party demonstrates the existence of any of the statutory grounds for refusal enumerated under Section 37 of the Act. The Court’s discretion in this regard is therefore narrowly circumscribed, and refusal of enforcement can only be justified where one or more of the specific grounds under Section 37 are proved.
6. The Respondent has opposed the application on three principal grounds, which are, first, they contend that the arbitral proceedings were commenced, conducted, and concluded without proper notice being given to them, thereby depriving them of an opportunity to participate. Second, they argue that the composition of the arbitral tribunal did not conform to the procedure agreed upon in the parties’ arbitration agreement, and third, they maintain that the proceedings infringed upon their right to a fair hearing, as they were not afforded a reasonable chance to present their case or respond to the Applicants’ claims.
7. Having carefully considered these objections, I note that while they do fall within the strict grounds for refusal under Section 37, the Act is clear in Sections 14 and 17 that such objections ought to have been raised before the arbitral tribunal itself under the doctrine of kompetenz-kompetenz. This doctrine recognizes the tribunal’s competence to rule on its own jurisdiction, including challenges to its composition, procedure, or the conduct of the proceedings.
8. No evidence has been tendered before this Court to show that the Respondent ever raised its objections at the arbitral stage. Indeed, the Respondent concedes that it became aware of the arbitral proceedings upon being served with a hearing notice by the Applicants’ advocates on 20th July 2022. This means that the Respondent was afforded an opportunity to participate and to present any jurisdictional or procedural challenges before the arbitral tribunal. Having failed to do so, they cannot now rely on its belated awareness as a basis to resist enforcement.
9. The Respondent has further contended that its sole asset is the Alma real estate project, and that any execution of the arbitral award would necessarily be directed against that project. It is argued that the Alma was financed through a combination of secured creditors, namely SBM Bank Kenya and the Regulated Cytonn High Yield Fund, together with unsecured loan notes issued under Cytonn High Yield Solutions (in liquidation). In addition, the Alma has over 300 individual purchasers whose interests are tied to the project.
10. The Respondent has referred this Court to orders issued by the Insolvency Court on 6th January 2023, which preserved the Alma and directed all creditors to file their proof of debt with the Official Receiver. Further preservation orders were issued on 22nd November 2024, empowering the Official Receiver to preserve, enforce, and take possession of the Alma. Subsequently, on 3rd December 2024, the Court of Appeal issued status quo orders confirming the Official Receiver’s authority to collect, preserve, and remain in possession of the Alma.
11. On the basis of these orders, the Respondent submits that it is in the interest of justice that the arbitral award be presented to the Official Receiver for verification before enforcement. It is argued that enforcement at this stage would jeopardize and obstruct the insolvency process, disrupt ongoing proceedings before both the Insolvency Court and the Court of Appeal, and contravene public policy by producing inequitable outcomes and causing irreparable harm to innocent third parties who were not privy to the arbitral proceedings.
12. This Court has already pronounced itself on the place of arbitral awards in the context of ongoing liquidation proceedings (See Misc Appl No E030/2023; Cytonn Investments Management Plc Versus Margaret Mary Njunguna and Misc Appl No. E083 of 2024; China National Aero Technology International Engineering Corporation versus Cytonn Intergrated Projects)
13. While I am guided by the Court of Appeal and its affirmation that the liquidator is entitled to verify claims received from creditors, that guidance ought to be taken within its context. It must be emphasized that the liquidator has no jurisdiction to recognize arbitral awards. That power lies exclusively with this Court and is a judicial function, distinct from the administrative role of the liquidator in verifying and ranking claims within the insolvency process.
14. As to the argument that recognition of the award will diminish the estate available to creditors, I have already addressed this issue in the above decisions. Recognition of an arbitral award does not confer any undue advantage upon the award-holder, nor does it interfere with the rights of secured or unsecured creditors. It merely affirms the existence of a valid claim, which will then be subjected to the insolvency framework alongside other claims. The estate remains preserved, and the rights of other creditors are not prejudiced by the recognition of the award.
15. Having failed to make a case for the dismissal of the application, I note that the Applicant has annexed to its application a certified copy of the Agreement for Sale executed by both parties, which contains the arbitration clause, as well as a certified copy of the final Award made on 13th June 2023, in full compliance with the requirements of Section 36 of the Arbitration Act.
Disposition
16. Accordingly, the application dated 10th September 2024 is meritorious. The Arbitral Award issued by the Hon. John W. Mwera on 13th June 2023 be and is hereby recognized and adopted as a judgment of this Honorable Court. A decree shall issue in terms of the said Award. The Applicant shall have the costs of this application.
1. This Ruling determines the application dated 10th September 2024 by which the Applicants seek to have the Arbitral Award issued by the Hon. John W. Mwera on 13th June 2023 adopted as a judgment of this honorable Court and that a decree do issue in terms of the said Award. The application is supported by the affidavit of JOB O. IKWAWE and opposed through a replying affidavit sworn by GRACE WAMBUI WERU on 9th June 2025. I have equally considered the written submissions filed by both parties.
Analysis and Determination
2. The Respondent argues that the application before me is defective for having been brought by way of a Notice of Motion rather than a Chamber Summons. I agree that indeed Rule 9 of the Arbitration Rules 2022 expressly provide that an application for recognition of an arbitral award shall be made by way of a Chamber Summons. That is the prescribed mode of moving the Court.
3. However, it is equally settled that procedural lapses which do not go to the jurisdiction of the Court or cause prejudice to the opposing party should not defeat substantive justice. I am guided by the decision in Dominion Farm Limited v. African Nature Stream & Another, Kisumu HCCC No. 21 of 2006, where the Court observed as follows:
“Whereas the rules of procedure are not made in vain and are not to be ignored, often times the Courts will encounter inadvertent transgressions or unintentional or ill-advised omissions through defective, disorderly and incompetent use of procedure but which if strictly observed may give rise to substantial injustice and in such circumstances, the exercise of the discretion of the Court comes into play to salvage the situation for the ends of justice.”
4. In the present case, the Respondent has been duly served and has responded to the application. As such, no prejudice has been occasioned. I therefore find that the use of a Motion rather than a Chamber Summons, though irregular, is not fatal to the application and does not warrant its dismissal.
5. That said, the parameters governing the recognition and enforcement of arbitral awards are expressly set out under Section 36 of the Arbitration Act. Once an applicant has complied with the procedural requirements of that provision, the Court is obliged to recognize and enforce the award unless the opposing party demonstrates the existence of any of the statutory grounds for refusal enumerated under Section 37 of the Act. The Court’s discretion in this regard is therefore narrowly circumscribed, and refusal of enforcement can only be justified where one or more of the specific grounds under Section 37 are proved.
6. The Respondent has opposed the application on three principal grounds, which are, first, they contend that the arbitral proceedings were commenced, conducted, and concluded without proper notice being given to them, thereby depriving them of an opportunity to participate. Second, they argue that the composition of the arbitral tribunal did not conform to the procedure agreed upon in the parties’ arbitration agreement, and third, they maintain that the proceedings infringed upon their right to a fair hearing, as they were not afforded a reasonable chance to present their case or respond to the Applicants’ claims.
7. Having carefully considered these objections, I note that while they do fall within the strict grounds for refusal under Section 37, the Act is clear in Sections 14 and 17 that such objections ought to have been raised before the arbitral tribunal itself under the doctrine of kompetenz-kompetenz. This doctrine recognizes the tribunal’s competence to rule on its own jurisdiction, including challenges to its composition, procedure, or the conduct of the proceedings.
8. No evidence has been tendered before this Court to show that the Respondent ever raised its objections at the arbitral stage. Indeed, the Respondent concedes that it became aware of the arbitral proceedings upon being served with a hearing notice by the Applicants’ advocates on 20th July 2022. This means that the Respondent was afforded an opportunity to participate and to present any jurisdictional or procedural challenges before the arbitral tribunal. Having failed to do so, they cannot now rely on its belated awareness as a basis to resist enforcement.
9. The Respondent has further contended that its sole asset is the Alma real estate project, and that any execution of the arbitral award would necessarily be directed against that project. It is argued that the Alma was financed through a combination of secured creditors, namely SBM Bank Kenya and the Regulated Cytonn High Yield Fund, together with unsecured loan notes issued under Cytonn High Yield Solutions (in liquidation). In addition, the Alma has over 300 individual purchasers whose interests are tied to the project.
10. The Respondent has referred this Court to orders issued by the Insolvency Court on 6th January 2023, which preserved the Alma and directed all creditors to file their proof of debt with the Official Receiver. Further preservation orders were issued on 22nd November 2024, empowering the Official Receiver to preserve, enforce, and take possession of the Alma. Subsequently, on 3rd December 2024, the Court of Appeal issued status quo orders confirming the Official Receiver’s authority to collect, preserve, and remain in possession of the Alma.
11. On the basis of these orders, the Respondent submits that it is in the interest of justice that the arbitral award be presented to the Official Receiver for verification before enforcement. It is argued that enforcement at this stage would jeopardize and obstruct the insolvency process, disrupt ongoing proceedings before both the Insolvency Court and the Court of Appeal, and contravene public policy by producing inequitable outcomes and causing irreparable harm to innocent third parties who were not privy to the arbitral proceedings.
12. This Court has already pronounced itself on the place of arbitral awards in the context of ongoing liquidation proceedings (See Misc Appl No E030/2023; Cytonn Investments Management Plc Versus Margaret Mary Njunguna and Misc Appl No. E083 of 2024; China National Aero Technology International Engineering Corporation versus Cytonn Intergrated Projects)
13. While I am guided by the Court of Appeal and its affirmation that the liquidator is entitled to verify claims received from creditors, that guidance ought to be taken within its context. It must be emphasized that the liquidator has no jurisdiction to recognize arbitral awards. That power lies exclusively with this Court and is a judicial function, distinct from the administrative role of the liquidator in verifying and ranking claims within the insolvency process.
14. As to the argument that recognition of the award will diminish the estate available to creditors, I have already addressed this issue in the above decisions. Recognition of an arbitral award does not confer any undue advantage upon the award-holder, nor does it interfere with the rights of secured or unsecured creditors. It merely affirms the existence of a valid claim, which will then be subjected to the insolvency framework alongside other claims. The estate remains preserved, and the rights of other creditors are not prejudiced by the recognition of the award.
15. Having failed to make a case for the dismissal of the application, I note that the Applicant has annexed to its application a certified copy of the Agreement for Sale executed by both parties, which contains the arbitration clause, as well as a certified copy of the final Award made on 13th June 2023, in full compliance with the requirements of Section 36 of the Arbitration Act.
Disposition
16. Accordingly, the application dated 10th September 2024 is meritorious. The Arbitral Award issued by the Hon. John W. Mwera on 13th June 2023 be and is hereby recognized and adopted as a judgment of this Honorable Court. A decree shall issue in terms of the said Award. The Applicant shall have the costs of this application.