1. Before this Court for determination is the Applicant’s application dated 19th July 2024 brought under Section 35 of the Arbitration Act, Rule 11 of the Arbitration Rules, Sections 1A. 1B, 3A of the Civil Procedure Act, and Rule 51 of the Civil Procedure Rules 2010. In the application, the Applicant seeks the following orders:-
a) The Arbitral Tribunal erred in law by upholding the 1st Respondent’s Preliminary Objection based on facts vide its Ruling dated 7th June, 2024 in the matter of an Arbitration between Kenchuan Architects Limited and Kenya Development Corporation.
b) The Ruling given on the 7th of June 2024 be set aside/and or dismissed, and the Preliminary Objection dated 4th April 2024 in the matter of an Arbitration between Kenchuan Architects Limited and Kenya Development Corporation be dismissed.
c) The Claimant's Statement of Claim dated 18th March 2024 in the matter of Arbitration between Kenchuan Architects Limited and Kenya Development Corporation that was struck out on the 7th of June 2024, be reinstated and the dispute be heard and determined on its merits before a different Arbitral Tribunal.
d) That the fees paid to the Arbitral Tribunal be reimbursed to the parties.
e) Costs of this application be borne by the Respondents.
2. The grounds of the application are that the Arbitral Tribunal in its Ruling of 7th June 2024 erred in its finding that the Applicant’s claim against the Respondent was time-barred, having been brought outside the 6-year timeline allowed under Section 4 of the Limitation of Actions Act.
3. The Applicant also averred that the Arbitral Tribunal, in upholding the Respondent’s preliminary objection, delved into matters of fact, contrary to the laid down principles of law that a preliminary objection must be limited only to questions of law.
4. The Application is supported by two affidavits, both sworn by David Situma, the Applicant’s Managing Director, on 19th July 2024 and 17th October 2024, respectively.
5. In the affidavits, Mr. Situma, gave the background of the dispute and stated that the disputed arose from a consultancy contract entered into in 2011 between the Claimant and the Kenya Tourist Development Corporation (KTDC), which later rebranded as Tourism Finance Corporation (TFC), and then to Development Corporation (KDC) in 2021.
6. According to Mr. Situma, while the contract was entered into in 2011, initial partial payments under the contract were made in 2012, but balances remained outstanding despite satisfactory completion of the works by the Claimant as stipulated in the contract.
7. He maintained that part of the works included a project on the fire escape staircase at Utalii House, which was completed, and a handover meeting held on 12 March 2020. He asserted that the 1st Respondent’s representatives attended and signed minutes in that regard.
8. Mr. Situma asserted that since fees were still outstanding, reminders were sent to the 1st Respondent, who in turn invited the Applicant for meetings to negotiate on the said fees. He attached to the affidavit (“DS6), emails allegedly issued by the 1st Respondent to the Applicant.
9. It was further Mr. Situma’s position that after various meetings, including the one in 2022, where the Applicant agreed to extend a discount to the 1st Respondent, considering that it had other ongoing projects with it. The 1st Respondent, however, still did not honour the payments.
10. That given the 1st Respondent’s failure to honour the payments, the Applicant then declared a dispute and issued a demand in October 2023, which was not responded to by the 1st Respondent. On the 11th of December 2023, the Chartered Institute of Arbitrators appointed the 2nd Respondent to arbitrate on the above dispute. It is thereafter that the 1st Respondent filed a Preliminary Objection that the claim was time-barred.
11. According to Mr. Situma, the arbitral Tribunal erroneously upheld the 1st Respondent’s preliminary Objection that the claim was time-barred without clearly stating when the cause of action arose.
12. In particular, the Applicant took issue with the Tribunal’s statement at Paragraph 38 of the Ruling that …. “time having begun to run in 2012, naturally it would mean it lapsed in 2018. Did it? “. This, according to the Applicant, was a vague statement since it did not explain how the Tribunal arrived at its decision.
13. The 1st respondent maintained that the Tribunal erred by ignoring the minutes, memo and emails presented by the Applicant as evidence of the parties’ engagement, dismissing the minutes and memo as they were not signed, failing to appreciate that there were minutes by the 1st Respondent which were not disputed.
14. Mr. Situma asserted that the Tribunal delved into facts, contrary to the established principle of law that a preliminary objection is to be based purely on points of law. This, the Applicant asserted, went against public policy.
15. It was therefore the Applicant’s prayer that the ruling delivered on the 7th of June 2024 be set aside, parties directed to proceed for hearing on merits before another arbitrator, and the 2nd Respondent ordered to refund fees paid by the Applicant.
16. The Application was opposed by the 1st Respondent vide the Replying Affidavit of Norah Ratemo, the Respondent’s Director General, sworn on 7th October 2024. The 2nd Respondent (the Arbitrator) did not file any response to the application despite having been served.
17. The 1st Respondent’s position is that the Applicant’s application dated 19th July 2024 is malicious and premised on falsehood, with the intent to defraud the 1st Respondent corporation.
18. According to the 1st Respondent, while it is true that the parties entered into a consultancy agreement on 23rd March 2011, the project was to be implemented in two phases, with Phase I being the renovation of the 11th Floor of the 1st Respondent’s premises. The 1st Respondent avers that they fully paid for this phase.
19. Regarding Phase II of the project, Ms. Ratemo deponed that the 1st Respondent lacked the funds to proceed with the same, leading to the project stalling, and the contract being discontinued.
20. Ms. Ratemo maintained that the Applicants were not in communication from 2012 until 2020 when the Applicants reappeared and started hounding the 1st Respondent for payments for works allegedly done, a claim which Ms. Ratemo asserts they are strangers to.
21. The 1st Respondent supports the Ruling by the Tribunal that the Applicant’s Claim dated 18th March 2024, having been filed outside the statutory timeline of 6 years, was time-barred.
22. The matter was canvassed by way of written submissions. The Applicant’s submissions are dated 17th October 2022, whilst the 1st Respondent’s submissions are dated 29th October 2024. The submissions generally restate the parties’ positions as expressed in the affidavits as outlined above.
Analysis and Determination:-
23. It is trite law that the Court’s intervention in an arbitral process is limited. Section 10 of the Arbitration Act provides that:-
“Except as provided in this Act, no court shall intervene in matters governed by this Act.”
24. It therefore follows that once an award is issued, as is the case herein, the Court’s role is limited only to the extent that is provided under Sections 35 and 37 of the Act. However, even under these sections of the law, the guiding principle should always be that of parties’ autonomy and the concept of finality of the arbitral process. The Court of Appeal in Nyutu Agrovet Limited v Airtel Networks Kenya Ltd [2024] KECA 523 (KLR) stated that:-
“…In resolving the issue at hand, we are alive to the fact that the Supreme Court underscored the general approach on the role and extent of court intervention in arbitration matters in Kenya as provided in Section 10 of the Act. In peremptory terms, Section 10 restricts the jurisdiction of the court to only those matters provided for by the Act. The section epitomizes the recognition of the policy of party autonomy, which underlies the arbitral process. The section articulates the need to restrict the court’s intervention in arbitration so as to give effect to that policy. The principle of party autonomy is recognized as a critical tenet for guaranteeing that parties are satisfied with results of arbitration. It also helps to achieve the key object of arbitration, that is, to deliver fair resolution of disputes between parties without unnecessary delay and expense.”
25. While the Court is required not to delve into the task of ascertaining the correctness of the decision of an arbitrator (since doing so would amount to sitting on an appeal over the decision), it is equally trite that the Court should not close its eyes on a decision that is an outright affront to justice and one that disregards the intention of the parties as set out in their contractual documents. See the case of Nanyuki Ranching Limited v Rockstocks Holding Limited (Miscellaneous Application E197 of 2024) [2024] KEHC 9220 (KLR) (Commercial and Tax) (31 July 2024) (Ruling) where Mabeya J stated that:-
“While the two principles set out above require that the High Court should not delve into the task of ascertaining the correctness of the decision of an arbitrator, since in doing so the court would be sitting an appeal over the decision, the court would however not close its eyes on a decision that is an outright affront to justice. A decision that disregards the intention of the parties as set out in their contractual documents would amount to being contrary to public policy.”
26. With the above principles in mind, I shall now proceed and consider the application filed herein. From the parties’ submissions, I note that the main issue for determination is whether the Applicant has met the threshold for setting aside the arbitral award as set out under section 35 of the Act.
27. Section 35 of the Act sets out the grounds for setting aside of an arbitral award as follows: -
“35. An arbitral award may be set aside by the High Court only if—
(a) the party making the application furnishes proof—
(i) that a party to the arbitration agreement was under some incapacity; or
(ii) the arbitration agreement is not valid under the law to which the parties have subjected it or, failing any indication of that law, the laws of Kenya; or
(iii) the party making the application was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present his case; or
(iv) the arbitral award deals 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; or
(v) the composition of the arbitral Tribunal or the arbitral procedure was not in accordance with the agreement of the parties, unless that agreement was in conflict with a provision of this Act from which the parties cannot derogate; or failing such agreement, was not in accordance with this Act; or
(vi) the making of the award was induced or affected by fraud, bribery, undue influence or corruption;
(b) the High Court finds that—
(i)the subject-matter of the dispute is not capable of settlement by arbitration under the law of Kenya; or
(ii)the award is in conflict with the public policy of Kenya.”
28. The instant application is principally based on the ground that the award was in conflict with public policy. That the arbitral Tribunal, in upholding the 1st Respondent’s preliminary Objection dated 4th April 2024, examined factual elements of the claim contrary to the established principles of law that a preliminary objection is to be confined to questions of law only.
29. In particular, the Applicant took the view that the Tribunal in finding that the claim was time-barred failed to take into account that this was a running contract and that there were several meetings, letters, and emails from the 1st Respondent as late as in the year 2020 discussing payments under the contract.
30. The Applicant asserted that the Tribunal, in arriving at its conclusion that the minutes were not signed, delved into factual issues, which are not within the province of preliminary objections. The Applicant maintained the question of whether or not the minutes emanated from a meeting between the parties herein could only be reasonably determined upon a full trial.
31. The 1st Respondent on the other hand, submitted that this court’s intervention on arbitration matters is limited only as provided under Section 10 of the Arbitration Act and confirmed by the Supreme Court in the case of Nyutu Agrovet Limited v Airtel Networks Limited & Another [2019] KESC 11(KLR). The 1st Respondent asserted that the parties, under Clause 7.3 of the Contract, agreed to refer any dispute arising therefrom to arbitration, and therefore, the role of the court should be limited.
32. The term “public policy” as used under Section 35 of the Arbitration Act has been the subject of various decisions. In the case of Christ for all Nations v Apollo Insurance Company limited [2002] EA 366, Ringera J (as he then was) held that:
“Public policy is a broad concept incapable of precise definition. An award can be set aside under Section 35 (2) (b) (ii) of the Arbitration Act as being inconsistent with the public policy of Kenya if it is shown that it was either (a) inconsistent with the Constitution or any other law of Kenya whether written or unwritten, or (b) inimical to the national interest of Kenya, or (c) contrary to justice and morality.”
33. The Applicant’s application is based on the ground that the decision by the arbitral tribunal is contrary to public policy on the basis that the tribunal, in dismissing its claim preliminarily, erroneously delved into factual and evidentiary matters contrary to the established principles of law that a preliminary objection must be based purely on points of law.
34. According to Black’s Law Dictionary, 11th Edition, a Preliminary Objection is an objection that, if upheld, would render further proceedings before the tribunal impossible or unnecessary. Courts have variously defined Preliminary objection as one that consists of a point which has been pleaded or which arises by clear implication out of pleadings and which, if argued as a Preliminary point, may dispose of the suit.
35. In the celebrated case of Mukisa Biscuits Manufacturing Co. Ltd v West End Distributors Limited (1969) EA. 696 Lord Charles Newbold P. held that a proper preliminary objection constitutes a pure point of law. The Learned Judge then held that: -
“The first matter relates to the increasing practice of raising points, which should be argued in the normal manner, quite improperly by way of Preliminary objection. A preliminary Objection is in the nature of what used to be a demurer it raises a pure point of law which is argued on the assumption that all the facts pleaded by the other side are correct. It cannot be raised if any fact has to be ascertained or if what is sought in the exercise of judicial discretion. The improper raising of points by way of Preliminary objection does nothing but unnecessarily increase costs and, on occasion, confuse the issue. The improper practice should stop.”
36. The Preliminary objection in this matter is based on the ground that the claim offended the provisions of Section 4 of the Limitation of Actions Act since the same was brought beyond the six years permitted in law. Section 4(1)(a) of the Limitation of Action Act provides as follows:
“(1) The following actions may not be brought after the end of six years from the date on which the cause of action accrued—
a. actions founded on contract.”
37. Limitation of actions is a concept founded on public policy and is principally aimed at barring stale suits and protecting Defendants from unreasonable claims. See the case of Alba Petroleum Limited v Total Marketing Kenya Limited (2019) eKLR, where the court held;
“The law of limitation of actions is intended to protect defendants against unreasonable delay in the bringing of suits against them. The statute expects the intending plaintiff to exercise reasonable diligence and to take reasonable steps in his own interest.”
38. In the present case, it is not in dispute that the parties entered into a consultancy agreement dated 23rd March 2011. What is in dispute is when the cause of action arose. While the Respondent in its preliminary Objection dated 4th April 2024 took the position that the case of action arose in 2012 and therefore the Claim was statute barred, the Applicant herein argued that the cause of action arose after 22nd March 2022, after the Respondent failed to honour payment negotiations between the parties.
39. I have carefully considered the documents and submissions filed by the parties herein, including the Tribunal’s decision of 7th June 2024. I note that the Applicant/Claimant, in support of its claim that the cause of action arose in 2022, referred the Tribunal to, among others, a memo from the Head of Procurement to the Managing Director of the Respondent, which the Applicant argued was evidence of acknowledgment of the debt on the part of the Respondent. The Tribunal however rejected the documents and upheld the Respondent’s argument by stating at Paragraph 44 of the Ruling that:
“The Tribunal has looked at the memo from the Head of Procurement to the Managing Director, minutes, and email presented before it by the Claimant. The said memo and minutes are not signed by the Respondent or its agent.”[emphasis added]
40. From the above, it is evident that while the Tribunal clearly stated that it rejected “[T]he said memo and minutes” on the basis that they were not signed, the Tribunal did not however state, or rather explain, the basis of its rejection of the emails presented by the Applicant in support of its assertion that the cause of action arose in 2022 and not 2012 as had been alleged by the Respondent in the preliminary objection. It is not clear from the Ruling whether the emails were equally rejected for not having been signed or for some other reason.
41. In Telkom Kenya Limited vs Kenya Railways Corporation [2018] eKLR, the Court held that a cause of action is revived where there is an acknowledgement in writing. In the instant case, the Tribunal needed to interrogate the authenticity of the emails in question to establish whether there was any subsequent acknowledgment of the debt as was alleged by the Applicant. Dismissing the Applicant’s evidence summarily without interrogating the same was, in the opinion of this court, against the right to a fair hearing as enshrined under Article 50 of the Constitution.
42. The 1st Respondent objected to the reliance on the subject email communication on the basis, among others, that the same constituted unverified electronic evidence which does not meet the threshold set under Section 78A of the Evidence Act and was, at best, fraudulent.
43. The question whether the email correspondence was fraudulent and did not emanate from the 1st Respondent’s said officer is, in my view, a question that can only be determined after calling evidence at a full trial, and not one which can be decided on a preliminary objection.
44. Section 78A of the Evidence Act governs the admissibility of electronic messages and digital material in legal proceedings and provides that electronic messages and digital material are, subject to authentication, admissible as evidence and that the court shall not deny admissibility of evidence only on the ground that it is not in its original form.
45. The process of authentication of electronic and digital evidence is an elaborate one, which obviously is not one that can be undertaken by a court when dealing with a preliminary objection. In Republic v Mark Lloyd Steveson [2016] eKLR, the Court (Joel Ngugi J as he then was) stated as follows:
“41. For email print-outs (as well as other printed electronic messages), the most convenient authentication technique would be circumstantial. Elsewhere, this is defined as “evidence of its distinctive characteristics and the like - including appearance, contents, substance, internal patterns, or other distinctive characteristics, taken in conjunction with circumstances.” (US Federal Rule of Evidence 901(b)(4)).
42. For example, many email messages can be authenticated circumstantially by “distinctive characteristics” including information known only to the sender or the use of nicknames or internal patterns which taken in conjunction with other circumstances create sufficient evidence to support a finding that the email message in question is what its proponent claims it is. For example, in United States v Safavian 435 F. Supp. 2d (D.D.C. 2006), the US District Court for the District of Columbia remarked that “the emails in question have many distinctive characteristics, including the actual email addresses containing the “@” symbol, widely known to be part of an email address, and certainly a distinctive mark that identifies the document in question as an email. In addition, most of the email addresses themselves contain the name of the person connected to the address, such as abramofj@ftlaw.com....”
46. From the above, it is the view of this Court that in the circumstances of this case, the question of when the cause of action actually arose is not one that could be decided on a preliminary point in the manner that the arbitral Tribunal did.
47. From the evidence on record and taking into account that this was a running contract, the question of whether the cause of action arose either at the time of signing of the contract in 2011, or when the last payment under the contract was made in 2012, or 2022 when the parties engaged further on the payment under the contract, is one that requires elaborate factual examination that can only be determined at full trial after taking evidence of the parties.
48. Accordingly, I find that the arbitral Tribunal erred in law by upholding the 1st Respondent’s Preliminary Objection vide its Ruling dated 7th June, 2024.
49. As to whether the claim was actually time-barred, this court will deliberately refrain from making that determination at this point, since, as indicated above, the same can only be determined at a full hearing. Making such a determination at this point will amount to the court usurping the role of the Arbitrator.
50. Regarding the prayer by the Applicant to have the fees paid to the 2nd Respondent refunded, this court will say no more than to make reference to Section 16B of the Arbitration Act which shields an arbitrator from liability for anything done or omitted to be done in good faith in the discharge or purported discharge of his functions as an arbitrator. The prayer therefore runs afoul of the law and cannot be granted.
51. Accordingly, I order and direct that: -
a) The Ruling dated 7th June 2024 by the Hon. Arbitrator upholding the Respondent’s Preliminary Objection dated 4th April 2024 is hereby set aside and substituted with a Ruling of this Court dismissing the Preliminary Objection.
b) The Claimant's Statement of Claim herein dated 18th March 2024 is hereby reinstated.
c) That the dispute shall be heard and determined on its merits before a different Arbitral Tribunal to be appointed in accordance with the agreement between the parties.
d) The prayer for refund of fees by the arbitrator is hereby declined.
e) Costs in the cause.
52. It is so ordered.
SIGNED, DATED, and DELIVERED IN VIRTUAL COURT THIS
29TH DAY OF MAY, 2025
ADO MOSES
JUDGE
In the presence of:-
Moses – C/A
Njagi……………..for the Applicant
Kemunto……………for the Respondent
a) The Arbitral Tribunal erred in law by upholding the 1st Respondent’s Preliminary Objection based on facts vide its Ruling dated 7th June, 2024 in the matter of an Arbitration between Kenchuan Architects Limited and Kenya Development Corporation.
b) The Ruling given on the 7th of June 2024 be set aside/and or dismissed, and the Preliminary Objection dated 4th April 2024 in the matter of an Arbitration between Kenchuan Architects Limited and Kenya Development Corporation be dismissed.
c) The Claimant's Statement of Claim dated 18th March 2024 in the matter of Arbitration between Kenchuan Architects Limited and Kenya Development Corporation that was struck out on the 7th of June 2024, be reinstated and the dispute be heard and determined on its merits before a different Arbitral Tribunal.
d) That the fees paid to the Arbitral Tribunal be reimbursed to the parties.
e) Costs of this application be borne by the Respondents.
2. The grounds of the application are that the Arbitral Tribunal in its Ruling of 7th June 2024 erred in its finding that the Applicant’s claim against the Respondent was time-barred, having been brought outside the 6-year timeline allowed under Section 4 of the Limitation of Actions Act.
3. The Applicant also averred that the Arbitral Tribunal, in upholding the Respondent’s preliminary objection, delved into matters of fact, contrary to the laid down principles of law that a preliminary objection must be limited only to questions of law.
4. The Application is supported by two affidavits, both sworn by David Situma, the Applicant’s Managing Director, on 19th July 2024 and 17th October 2024, respectively.
5. In the affidavits, Mr. Situma, gave the background of the dispute and stated that the disputed arose from a consultancy contract entered into in 2011 between the Claimant and the Kenya Tourist Development Corporation (KTDC), which later rebranded as Tourism Finance Corporation (TFC), and then to Development Corporation (KDC) in 2021.
6. According to Mr. Situma, while the contract was entered into in 2011, initial partial payments under the contract were made in 2012, but balances remained outstanding despite satisfactory completion of the works by the Claimant as stipulated in the contract.
7. He maintained that part of the works included a project on the fire escape staircase at Utalii House, which was completed, and a handover meeting held on 12 March 2020. He asserted that the 1st Respondent’s representatives attended and signed minutes in that regard.
8. Mr. Situma asserted that since fees were still outstanding, reminders were sent to the 1st Respondent, who in turn invited the Applicant for meetings to negotiate on the said fees. He attached to the affidavit (“DS6), emails allegedly issued by the 1st Respondent to the Applicant.
9. It was further Mr. Situma’s position that after various meetings, including the one in 2022, where the Applicant agreed to extend a discount to the 1st Respondent, considering that it had other ongoing projects with it. The 1st Respondent, however, still did not honour the payments.
10. That given the 1st Respondent’s failure to honour the payments, the Applicant then declared a dispute and issued a demand in October 2023, which was not responded to by the 1st Respondent. On the 11th of December 2023, the Chartered Institute of Arbitrators appointed the 2nd Respondent to arbitrate on the above dispute. It is thereafter that the 1st Respondent filed a Preliminary Objection that the claim was time-barred.
11. According to Mr. Situma, the arbitral Tribunal erroneously upheld the 1st Respondent’s preliminary Objection that the claim was time-barred without clearly stating when the cause of action arose.
12. In particular, the Applicant took issue with the Tribunal’s statement at Paragraph 38 of the Ruling that …. “time having begun to run in 2012, naturally it would mean it lapsed in 2018. Did it? “. This, according to the Applicant, was a vague statement since it did not explain how the Tribunal arrived at its decision.
13. The 1st respondent maintained that the Tribunal erred by ignoring the minutes, memo and emails presented by the Applicant as evidence of the parties’ engagement, dismissing the minutes and memo as they were not signed, failing to appreciate that there were minutes by the 1st Respondent which were not disputed.
14. Mr. Situma asserted that the Tribunal delved into facts, contrary to the established principle of law that a preliminary objection is to be based purely on points of law. This, the Applicant asserted, went against public policy.
15. It was therefore the Applicant’s prayer that the ruling delivered on the 7th of June 2024 be set aside, parties directed to proceed for hearing on merits before another arbitrator, and the 2nd Respondent ordered to refund fees paid by the Applicant.
16. The Application was opposed by the 1st Respondent vide the Replying Affidavit of Norah Ratemo, the Respondent’s Director General, sworn on 7th October 2024. The 2nd Respondent (the Arbitrator) did not file any response to the application despite having been served.
17. The 1st Respondent’s position is that the Applicant’s application dated 19th July 2024 is malicious and premised on falsehood, with the intent to defraud the 1st Respondent corporation.
18. According to the 1st Respondent, while it is true that the parties entered into a consultancy agreement on 23rd March 2011, the project was to be implemented in two phases, with Phase I being the renovation of the 11th Floor of the 1st Respondent’s premises. The 1st Respondent avers that they fully paid for this phase.
19. Regarding Phase II of the project, Ms. Ratemo deponed that the 1st Respondent lacked the funds to proceed with the same, leading to the project stalling, and the contract being discontinued.
20. Ms. Ratemo maintained that the Applicants were not in communication from 2012 until 2020 when the Applicants reappeared and started hounding the 1st Respondent for payments for works allegedly done, a claim which Ms. Ratemo asserts they are strangers to.
21. The 1st Respondent supports the Ruling by the Tribunal that the Applicant’s Claim dated 18th March 2024, having been filed outside the statutory timeline of 6 years, was time-barred.
22. The matter was canvassed by way of written submissions. The Applicant’s submissions are dated 17th October 2022, whilst the 1st Respondent’s submissions are dated 29th October 2024. The submissions generally restate the parties’ positions as expressed in the affidavits as outlined above.
Analysis and Determination:-
23. It is trite law that the Court’s intervention in an arbitral process is limited. Section 10 of the Arbitration Act provides that:-
“Except as provided in this Act, no court shall intervene in matters governed by this Act.”
24. It therefore follows that once an award is issued, as is the case herein, the Court’s role is limited only to the extent that is provided under Sections 35 and 37 of the Act. However, even under these sections of the law, the guiding principle should always be that of parties’ autonomy and the concept of finality of the arbitral process. The Court of Appeal in Nyutu Agrovet Limited v Airtel Networks Kenya Ltd [2024] KECA 523 (KLR) stated that:-
“…In resolving the issue at hand, we are alive to the fact that the Supreme Court underscored the general approach on the role and extent of court intervention in arbitration matters in Kenya as provided in Section 10 of the Act. In peremptory terms, Section 10 restricts the jurisdiction of the court to only those matters provided for by the Act. The section epitomizes the recognition of the policy of party autonomy, which underlies the arbitral process. The section articulates the need to restrict the court’s intervention in arbitration so as to give effect to that policy. The principle of party autonomy is recognized as a critical tenet for guaranteeing that parties are satisfied with results of arbitration. It also helps to achieve the key object of arbitration, that is, to deliver fair resolution of disputes between parties without unnecessary delay and expense.”
25. While the Court is required not to delve into the task of ascertaining the correctness of the decision of an arbitrator (since doing so would amount to sitting on an appeal over the decision), it is equally trite that the Court should not close its eyes on a decision that is an outright affront to justice and one that disregards the intention of the parties as set out in their contractual documents. See the case of Nanyuki Ranching Limited v Rockstocks Holding Limited (Miscellaneous Application E197 of 2024) [2024] KEHC 9220 (KLR) (Commercial and Tax) (31 July 2024) (Ruling) where Mabeya J stated that:-
“While the two principles set out above require that the High Court should not delve into the task of ascertaining the correctness of the decision of an arbitrator, since in doing so the court would be sitting an appeal over the decision, the court would however not close its eyes on a decision that is an outright affront to justice. A decision that disregards the intention of the parties as set out in their contractual documents would amount to being contrary to public policy.”
26. With the above principles in mind, I shall now proceed and consider the application filed herein. From the parties’ submissions, I note that the main issue for determination is whether the Applicant has met the threshold for setting aside the arbitral award as set out under section 35 of the Act.
27. Section 35 of the Act sets out the grounds for setting aside of an arbitral award as follows: -
“35. An arbitral award may be set aside by the High Court only if—
(a) the party making the application furnishes proof—
(i) that a party to the arbitration agreement was under some incapacity; or
(ii) the arbitration agreement is not valid under the law to which the parties have subjected it or, failing any indication of that law, the laws of Kenya; or
(iii) the party making the application was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present his case; or
(iv) the arbitral award deals 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; or
(v) the composition of the arbitral Tribunal or the arbitral procedure was not in accordance with the agreement of the parties, unless that agreement was in conflict with a provision of this Act from which the parties cannot derogate; or failing such agreement, was not in accordance with this Act; or
(vi) the making of the award was induced or affected by fraud, bribery, undue influence or corruption;
(b) the High Court finds that—
(i)the subject-matter of the dispute is not capable of settlement by arbitration under the law of Kenya; or
(ii)the award is in conflict with the public policy of Kenya.”
28. The instant application is principally based on the ground that the award was in conflict with public policy. That the arbitral Tribunal, in upholding the 1st Respondent’s preliminary Objection dated 4th April 2024, examined factual elements of the claim contrary to the established principles of law that a preliminary objection is to be confined to questions of law only.
29. In particular, the Applicant took the view that the Tribunal in finding that the claim was time-barred failed to take into account that this was a running contract and that there were several meetings, letters, and emails from the 1st Respondent as late as in the year 2020 discussing payments under the contract.
30. The Applicant asserted that the Tribunal, in arriving at its conclusion that the minutes were not signed, delved into factual issues, which are not within the province of preliminary objections. The Applicant maintained the question of whether or not the minutes emanated from a meeting between the parties herein could only be reasonably determined upon a full trial.
31. The 1st Respondent on the other hand, submitted that this court’s intervention on arbitration matters is limited only as provided under Section 10 of the Arbitration Act and confirmed by the Supreme Court in the case of Nyutu Agrovet Limited v Airtel Networks Limited & Another [2019] KESC 11(KLR). The 1st Respondent asserted that the parties, under Clause 7.3 of the Contract, agreed to refer any dispute arising therefrom to arbitration, and therefore, the role of the court should be limited.
32. The term “public policy” as used under Section 35 of the Arbitration Act has been the subject of various decisions. In the case of Christ for all Nations v Apollo Insurance Company limited [2002] EA 366, Ringera J (as he then was) held that:
“Public policy is a broad concept incapable of precise definition. An award can be set aside under Section 35 (2) (b) (ii) of the Arbitration Act as being inconsistent with the public policy of Kenya if it is shown that it was either (a) inconsistent with the Constitution or any other law of Kenya whether written or unwritten, or (b) inimical to the national interest of Kenya, or (c) contrary to justice and morality.”
33. The Applicant’s application is based on the ground that the decision by the arbitral tribunal is contrary to public policy on the basis that the tribunal, in dismissing its claim preliminarily, erroneously delved into factual and evidentiary matters contrary to the established principles of law that a preliminary objection must be based purely on points of law.
34. According to Black’s Law Dictionary, 11th Edition, a Preliminary Objection is an objection that, if upheld, would render further proceedings before the tribunal impossible or unnecessary. Courts have variously defined Preliminary objection as one that consists of a point which has been pleaded or which arises by clear implication out of pleadings and which, if argued as a Preliminary point, may dispose of the suit.
35. In the celebrated case of Mukisa Biscuits Manufacturing Co. Ltd v West End Distributors Limited (1969) EA. 696 Lord Charles Newbold P. held that a proper preliminary objection constitutes a pure point of law. The Learned Judge then held that: -
“The first matter relates to the increasing practice of raising points, which should be argued in the normal manner, quite improperly by way of Preliminary objection. A preliminary Objection is in the nature of what used to be a demurer it raises a pure point of law which is argued on the assumption that all the facts pleaded by the other side are correct. It cannot be raised if any fact has to be ascertained or if what is sought in the exercise of judicial discretion. The improper raising of points by way of Preliminary objection does nothing but unnecessarily increase costs and, on occasion, confuse the issue. The improper practice should stop.”
36. The Preliminary objection in this matter is based on the ground that the claim offended the provisions of Section 4 of the Limitation of Actions Act since the same was brought beyond the six years permitted in law. Section 4(1)(a) of the Limitation of Action Act provides as follows:
“(1) The following actions may not be brought after the end of six years from the date on which the cause of action accrued—
a. actions founded on contract.”
37. Limitation of actions is a concept founded on public policy and is principally aimed at barring stale suits and protecting Defendants from unreasonable claims. See the case of Alba Petroleum Limited v Total Marketing Kenya Limited (2019) eKLR, where the court held;
“The law of limitation of actions is intended to protect defendants against unreasonable delay in the bringing of suits against them. The statute expects the intending plaintiff to exercise reasonable diligence and to take reasonable steps in his own interest.”
38. In the present case, it is not in dispute that the parties entered into a consultancy agreement dated 23rd March 2011. What is in dispute is when the cause of action arose. While the Respondent in its preliminary Objection dated 4th April 2024 took the position that the case of action arose in 2012 and therefore the Claim was statute barred, the Applicant herein argued that the cause of action arose after 22nd March 2022, after the Respondent failed to honour payment negotiations between the parties.
39. I have carefully considered the documents and submissions filed by the parties herein, including the Tribunal’s decision of 7th June 2024. I note that the Applicant/Claimant, in support of its claim that the cause of action arose in 2022, referred the Tribunal to, among others, a memo from the Head of Procurement to the Managing Director of the Respondent, which the Applicant argued was evidence of acknowledgment of the debt on the part of the Respondent. The Tribunal however rejected the documents and upheld the Respondent’s argument by stating at Paragraph 44 of the Ruling that:
“The Tribunal has looked at the memo from the Head of Procurement to the Managing Director, minutes, and email presented before it by the Claimant. The said memo and minutes are not signed by the Respondent or its agent.”[emphasis added]
40. From the above, it is evident that while the Tribunal clearly stated that it rejected “[T]he said memo and minutes” on the basis that they were not signed, the Tribunal did not however state, or rather explain, the basis of its rejection of the emails presented by the Applicant in support of its assertion that the cause of action arose in 2022 and not 2012 as had been alleged by the Respondent in the preliminary objection. It is not clear from the Ruling whether the emails were equally rejected for not having been signed or for some other reason.
41. In Telkom Kenya Limited vs Kenya Railways Corporation [2018] eKLR, the Court held that a cause of action is revived where there is an acknowledgement in writing. In the instant case, the Tribunal needed to interrogate the authenticity of the emails in question to establish whether there was any subsequent acknowledgment of the debt as was alleged by the Applicant. Dismissing the Applicant’s evidence summarily without interrogating the same was, in the opinion of this court, against the right to a fair hearing as enshrined under Article 50 of the Constitution.
42. The 1st Respondent objected to the reliance on the subject email communication on the basis, among others, that the same constituted unverified electronic evidence which does not meet the threshold set under Section 78A of the Evidence Act and was, at best, fraudulent.
43. The question whether the email correspondence was fraudulent and did not emanate from the 1st Respondent’s said officer is, in my view, a question that can only be determined after calling evidence at a full trial, and not one which can be decided on a preliminary objection.
44. Section 78A of the Evidence Act governs the admissibility of electronic messages and digital material in legal proceedings and provides that electronic messages and digital material are, subject to authentication, admissible as evidence and that the court shall not deny admissibility of evidence only on the ground that it is not in its original form.
45. The process of authentication of electronic and digital evidence is an elaborate one, which obviously is not one that can be undertaken by a court when dealing with a preliminary objection. In Republic v Mark Lloyd Steveson [2016] eKLR, the Court (Joel Ngugi J as he then was) stated as follows:
“41. For email print-outs (as well as other printed electronic messages), the most convenient authentication technique would be circumstantial. Elsewhere, this is defined as “evidence of its distinctive characteristics and the like - including appearance, contents, substance, internal patterns, or other distinctive characteristics, taken in conjunction with circumstances.” (US Federal Rule of Evidence 901(b)(4)).
42. For example, many email messages can be authenticated circumstantially by “distinctive characteristics” including information known only to the sender or the use of nicknames or internal patterns which taken in conjunction with other circumstances create sufficient evidence to support a finding that the email message in question is what its proponent claims it is. For example, in United States v Safavian 435 F. Supp. 2d (D.D.C. 2006), the US District Court for the District of Columbia remarked that “the emails in question have many distinctive characteristics, including the actual email addresses containing the “@” symbol, widely known to be part of an email address, and certainly a distinctive mark that identifies the document in question as an email. In addition, most of the email addresses themselves contain the name of the person connected to the address, such as abramofj@ftlaw.com....”
46. From the above, it is the view of this Court that in the circumstances of this case, the question of when the cause of action actually arose is not one that could be decided on a preliminary point in the manner that the arbitral Tribunal did.
47. From the evidence on record and taking into account that this was a running contract, the question of whether the cause of action arose either at the time of signing of the contract in 2011, or when the last payment under the contract was made in 2012, or 2022 when the parties engaged further on the payment under the contract, is one that requires elaborate factual examination that can only be determined at full trial after taking evidence of the parties.
48. Accordingly, I find that the arbitral Tribunal erred in law by upholding the 1st Respondent’s Preliminary Objection vide its Ruling dated 7th June, 2024.
49. As to whether the claim was actually time-barred, this court will deliberately refrain from making that determination at this point, since, as indicated above, the same can only be determined at a full hearing. Making such a determination at this point will amount to the court usurping the role of the Arbitrator.
50. Regarding the prayer by the Applicant to have the fees paid to the 2nd Respondent refunded, this court will say no more than to make reference to Section 16B of the Arbitration Act which shields an arbitrator from liability for anything done or omitted to be done in good faith in the discharge or purported discharge of his functions as an arbitrator. The prayer therefore runs afoul of the law and cannot be granted.
51. Accordingly, I order and direct that: -
a) The Ruling dated 7th June 2024 by the Hon. Arbitrator upholding the Respondent’s Preliminary Objection dated 4th April 2024 is hereby set aside and substituted with a Ruling of this Court dismissing the Preliminary Objection.
b) The Claimant's Statement of Claim herein dated 18th March 2024 is hereby reinstated.
c) That the dispute shall be heard and determined on its merits before a different Arbitral Tribunal to be appointed in accordance with the agreement between the parties.
d) The prayer for refund of fees by the arbitrator is hereby declined.
e) Costs in the cause.
52. It is so ordered.
SIGNED, DATED, and DELIVERED IN VIRTUAL COURT THIS
29TH DAY OF MAY, 2025
ADO MOSES
JUDGE
In the presence of:-
Moses – C/A
Njagi……………..for the Applicant
Kemunto……………for the Respondent