A. Background.
1. A brief history of this matter is that a dispute pitting the parties herein was pursuant to an arbitration clause in the arbitral agreement dated 8th May, 2013 referred to arbitration, whereby the Applicant herein was the Respondent, while the Respondent herein was the Claimant. The parties presented their respective cases before the sole arbitrator Dr. Wilfred Mutubwa who, on 15th February, 2024, rendered his award, concluding as follows:
i. The Respondent’s Counterclaim is hereby dismissed in its entirety.
ii. The Respondent is liable to pay the Claimant the amount of Ksh.344,594,952.49/-.
iii. The above principal sum shall attract simple interest at the rate of 14% per annum from the date of commencement of these arbitral proceedings until payment in full.
iv. The interest accrued on the principal sum as at the date of this award is Ksh.107,722.449.60/-. The principal sum of Ksh.344,594,592.49/- shall continue to attract interest at the rate of Ksh.132,174.78/- per day for every day the same remains unpaid.
v. The Respondent shall bear both the Claimant’s party and party costs. The costs are to be agreed upon within 14 days of this award, failing which the Claimant shall be at liberty to file its bill of costs for Taxation by the Tribunal.
vi. The Respondent shall reimburse the Claimant all costs paid on its behalf in this matter, in any event.
vii. All other prayers not specifically allowed by the Tribunal stand dismissed.
2. On 26th June, 2024, the Arbitrator made and published an additional award on quantum of costs as follows:
i. The total amount taxed and allowed is Ksh.23,030,746.56/-.
3. Following the delivery and publication of the award and additional award, the Applicant filed the application by motion on notice dated 26th June, 2024 which sought the following orders:
1. THAT….[Spent].
2. THAT….[Spent].
3. THAT the arbitral final award dated the 15th February, 2024 and the additional award on quantum of costs dated 26th June, 2024 by Dr. Wilfred Mutubwa OGW LL.D. C.Arb FCIArb, be set aside.
4. THAT costs of this application be provided for.
4. A response to the application dated 26th June, 2024 was filed by the Respondent.
5. The record of this court bears it that the Respondent filed the chamber summons application dated 30th September, 2024 in which the following orders were sought:
1. THAT….[Spent].
2. THAT….[Abandoned].
3. THAT….[Abandoned].
4. THAT….[Spent].
5. THAT the Honourable Court be and is hereby pleased to issue an order adopting and recognizing the subject arbitral award made and published on 15th February, 2024 and 26th June, 2024 as a judgement of the High Court of Kenya.
6. THAT the Honourable court be and is hereby pleased to award costs to the Applicant on a full indemnity basis.
6. Directions were issued that the two applications be canvassed by way of written submissions and my sister Shariff J. on 18th December, 2024, issued further directions that the parties highlight their respective submissions.
7. The parties complied with the directions to file their respective submissions and proceeded to highlight the same on 19th February, 2025.
8. Where a party files an application for the setting aside of an arbitral award and the opposing party files an application for the recognition of the same award, the proper route for the court to take is the one that I discussed in the case of County Government of Kisumu v Coretec Systems & Solutions Limited (Commercial Arbitration Cause E001 of 2023) [2025] KEHC 13909 (25 September 2025) (Ruling) in which I made the following observations:
“34. In a nutshell, the argument fronted by the Applicant is that, it is irregular for the court to hear an application for recognition and enforcement of an arbitral award before hearing and determining a pending application to set aside the same award and that if the court did so, that would contravene both the Arbitration Act and Article 50 of the Constitution, which provides for the right to a fair hearing.
35. While Section 36 of the Arbitration Act provides for recognition and enforcement of an arbitral award, Section 37 of the Act allows a party to apply for setting aside an arbitral award on specific grounds.
36. Notably, Section 36(2) provides that:
“An arbitral award shall be recognized as binding and enforced in accordance with the provisions of this section unless it is set aside or suspended by a court of competent jurisdiction.”
(Underlined emphasis).
37 . This, in my view, implies that recognition and enforcement can only proceed if the award is not subject to a pending setting aside application, or unless the court determines that such an application is unmeritorious.
38. Courts have generally held that applications for recognition and enforcement and applications to set aside should be considered together or that the setting aside application should be determined first. This, I think is meant to avoid a possibility of conflicting decisions and premature enforcement of an award that might be invalidated and to avoid undermining the right to challenge an award under Section 37.
39. In the case of Christ for All Nations v Apollo Insurance Co Ltd [2002] 2 EA 366 the Court of Appeal held that where an application to set aside an arbitral award has been filed, it is prudent for the court to defer enforcement proceedings until the setting aside application is heard and determined. The court stated that:
“It would be imprudent for the High Court to recognize and enforce an award that is under challenge.”
40. The correct approach would in my view therefore be for the court to either order for the consolidation of the two applications (for recognition/enforcement and for setting aside), or to hear them together or to determine the one seeking for the setting aside of the award first, then proceed with enforcement if the award survives.”
9. The foregoing being the position in law, I will proceed first to determine the Applicant’s application for setting aside the award dated 26th June, 2024 and the determination will then guide me on the one dated 30th September, 2024, as the former will have a direct bearing on the latter.
B. The notice of motion dated 26th June, 2024.
10. The grounds upon which the Applicant’s motion is premised are reproduced here below:
a. The arbitral final award conflicts with public policy and is inimical to the national interests of Kenya in that:
i. It is contrary to the evidence Act and rules of evidence by shifting the burden of proof of the Claim to the Applicant.
ii. It is contrary to the Evidence Act by diminishing the role and/or evidence of the Applicant’s expert witness.
iii. By determining issues that were outside the scope of the arbitration proceedings and/or not agreed upon and/or not raised by the parties during the hearing contrary to the Arbitration Act and Rules.
iv. By expanding the scope of the arbitration proceedings without the agreement of and/or notice to the parties.
v. The arbitral award in dismissing the Applicant’s counterclaim failed to consider the evidence in support of the same and thus exposed the Kenyan Government and taxpayer to loss of national funds.
b. The Arbitrator in issuing his final award and/or operative award exhibited open bias in that:
i. The Arbitrator shifted the burden of proof of the claim to the Applicant.
ii. The Arbitrator diminished the role and/or evidence of the Applicant’s expert witness.
iii. The Arbitrator determined issues that were outside the scope of the arbitration proceedings and/or not agreed upon and/or not raised by the parties during the hearing contrary to the Arbitration Act and Rules.
iv. The Arbitrator expanded the scope of the arbitration proceedings without the agreement of and/or notice to the parties.
c. The arbitral additional award on costs is contrary to the Advocates Remuneration Order and laid down principles of taxation of party and party bill of costs.
d. It is in the interest of justice that the court grants the orders sought.
11. As I have stated before, the Respondent herein was the Claimant in the arbitration proceedings while the instant Applicant was the Respondent.
12. The application is supported by the affidavit sworn on 26th June, 2024 by Michael Okuk, who describes himself as the Applicant’s Deputy Director Legal Services.
13. In precis, the said deponent stated on oath that the parties herein entered into a form agreement on 8th May, 2013 which was duly executed by the parties, whereby the Respondent was to construction for the Applicant a mall at an initial agreed contract sum of Ksh.2,451, 035,643/-.
14. The deponent described in detail the history and/or genesis of the transaction between the parties, which, well after the handover of the mall by the Respondent to the Applicant, resulted in a dispute being declared by the Respondent, pursuant to which this matter was referred to arbitration in accordance to Clause 37.2 of the tender document that provided that all disputes between the parties under the contract be referred to arbitration.
15. In furtherance to the declaration of a dispute and the referral thereof to arbitration, the Chartered Institute of Arbitrators appointed Dr. Wilfred A. Mutubwa OGW LL.D. C.Arb FCI Arb as the sole arbitrator to determine any dispute or claim arising out of or relating to the contract. In its statement of claim, the Respondent prayed for the following reliefs:
i. A declaration that the Respondent has breached its contract with the Claimant.
ii. An order compelling the Respondent to take over the loan facility at Cooperative Bank of Ksh.2,500,000,000/- as contracted within 14 days of the award.
iii. In default of (b) above, the loan facility at the Cooperative Bank to automatically transfer to the Respondent within 30 days of recognition of the award by the High Court and the relevant forms to be executed by the Deputy Registrar of the High Court.
iv. An award of special damages of Ksh.645,992,862.91/- plus interest accrued since the date of the invoice Part Two B at 14% per annum until settlement in full.
v. General and exemplary damages.
vi. Costs plus interest thereof of the arbitration proceedings.
vii. Any other relief that this Honourable Tribunal may deem just and expedient.
16. The deponent stated in the supporting affidavit that the Applicant herein resisted the claim in the arbitration proceedings and to that end filed a statement of defence and counterclaim. The pleadings that the parties filed are annexed to the affidavit in support of the application. During the hearing of the dispute, the Respondent called Mr. Zeyun Yang as its witness while the Applicant called one Mr. Matengo as its witness. The arbitrator set out the following issues for determination:
i. Whether the variation of the contract/bid price was properly authorized.
ii. Which party is to blame for the non-establishment of the escrow account.
iii. Whether the Respondent should be directed to take over the Ksh.2,500,000,000/- bank facility at Cooperative Bank of Kenya.
iv. Whether the Claimant violated Clause 36 of the tender document by engaging in corrupt activities.
v. Whether the amounts sought under invoices Part 2B dated 4th May, 2018 is payable to the Claimant.
vi. Whether the Respondent’s counterclaim is merited.
vii. Who bears the costs of the arbitration.
17. The deponent stated that the arbitrator proceeded to hear and determine the claim and issued his final award dated 15th February, 2024, in the terms reproduced above. On 26th June, 2024, the arbitrator issues an additional award on the quantum of costs whereby he assessed party and party costs payable to the Respondent at Ksh.23,030,746.56/-.
18. The position taken by the Applicant, as expressed in the deponent’s supporting affidavit is that the award and additional award should be set aside on the ground that the arbitrator exhibited open bias for the following reasons (verbatim, as per the deponent’s depositions):
a. The Arbitrator in determining and awarding that the interest accrued from the KCB Bank facility failed to consider the totality of the evidence placed before him by failing to take into consideration the Expert Report by Matengo Githae & Associates (hereinafter the Matengo Report), which report was filed by the Authority, on grounds that the Matengo report was unsigned and undated and thus did not have evidentiary probative value: This is the despite the fact the author, Mr. Meshack Matengo, testified as RW-2 and produced the said report without any objection by the Respondent.
b. In furtherance to the foregoing the Arbitrator failed to consider that the purpose of the KCB Bank facilities was to finance Working Capital Requirements, which could be anything but the Construction of the Mall. A comparison between KCB Bank Letters of Offer dated 13th May, 2014 and 4th June, 2015 to the Co-operative Bank of Kenya letter of Offer on Pg 58, and 68 of Further List of Documents dated 21st July, 2022 and annexed herewith as WO-5 where the purpose of the facilities was for performing the Lake Basin Development Authority Contract.
c. I have further been advised by the Authority’s Advocates that the fact the report was unsigned and undated was not an issue brought up by the Respondent and/or the Tribunal during the hearing of the claim or it’s written submissions thus the actions of the Arbitrator in dismissing the said evidence is tantamount to open bias against the Authority.
d. In furtherance to the foregoing, the Arbitrator totally failed to consider that the Respondent having had sight of the Report by Mr. Meshack Matengo failed and/or neglected to file its own report to rebut the findings in the Matengo report. The Respondent’s witness when asked on whether they had filed a Financial Report having been served with the Matengo report, stated that it was not necessary. (Reference is made to page 51 of the Transcript annexed herewith as WO-18)
e. Further, the Arbitrator failed to take into consideration that Mr. Matengo in his testimony and report indicated that he had indeed scrutinized the bank statements concerning the facility and his findings were that the interest claimed by the Respondent should not be allowed.
f. In furtherance to the foregoing, the Arbitrator failed to consider that in support of its claim for interest resulting from the borrowing and/or drawdown from the loan facilities accorded to it by Development Bank, KCB Bank and Cooperative Bank, the Respondent only provided bank statements in support of the same. A perusal of the Bank statements provided, showed there is no indication and/or any entry in relation to the construction of the mall, in fact, there are various transaction details/entries which are in no way related to the construction of the mall, (We make reference to pages 98-574 of the Respondent’s Further List of Documents dated 1st August, 2022 annexed herewith as WO-5).
g. In further demonstration of bias, the Applicant having raised the above highlighted entries as having no nexus to the construction of the Mall, the Respondent did not in any way, either by way, of evidence and/or written submissions, rebutting the facts that the statements of accounts provided showed had no entries evidencing payments towards the construction of the Mall.
h. In awarding interest accrued from KCB Bank, the Arbitrator failed to consider the expert testimony of Mr Matengo who in his report noted, that following the execution of the Form of Agreement, the Authority made a downpayment of Kshs 335,000,000.00, the Arbitrator completely ignored that from the bank statements provided and adduced, the KCB Bank account began running in August 2014 even before the Form of Agreement was varied, and during this period the total expenditure of the project up to May 2015 was adequately covered by the Co-operative Bank Loan that secured a sum of Kshs 2,500,000,000.00 this can be confirmed from the first six project’s architects' certificates totaling to Kshs 2,100,000,000.00 (We make reference to pages 98-574 of the Respondent’s Further List of Documents dated 1st August, 2022 annexed herewith as WO-5)
i. The Arbitrator in awarding the Respondent was biased by stating that the Authority supported the borrowing by Kenya Commercial Bank and further provided two properties as securities for the facility. This is not the case as the Respondent did not adduce any evidence in support of this and no property was provided by the Authority as security for the borrowing.
j. In furtherance to the foregoing, the Respondent’s Witness My Yang Zeyun in his testimony did confirm that the Authority did not sanction the Borrowing from the KCB Bank. (We make reference to pages 53-54 of the transcript annexed herewith as WO-18)
k. In further demonstration of open bias, the Arbitrator proceeded to dismiss the Authority’s Counterclaim without due consideration of the Authority’s claims as averred in the foregoing paragraphs and the same being contrary to public policy and inimical to national interests as captured in Paragraph 27b of this Supporting Affidavit.
19. The second ground upon which the Applicant sought for the setting aside of the award and additional award was that the same are against public policy as public funds are involved. On that ground, the deponent stated as follows in his affidavit:
a. The Award as issued contravenes Section 47(5) of Public Finance Management Act No. 18 of 2012, which provides that funds received in the form of grants or donations ought to be spent only in accordance with Articles 221 and 223 of the Constitution of Kenya 2010 and the Authority having fully paid the contract sum in terms of the Final Certificate issued by the Project’s Architect’s.
b. Further, the Respondent has received the sum of Kshs 4,509 551,168.30 from the Exchequer and Co-operative Bank of Kenya for the construction of the Mall, which sum is excessively beyond the contract sum, of Kshs 3, 860,000,000.00 and/or the Final Account Certificate submitted by the Quantity Surveyor being Kshs 4,138, 895, 104.89.
c. The foregoing fact was not disputed by the Respondent’s director during the hearing of the claim and therefore awarding the Respondent an additional sum of Kshs 344, 494, 952.49 to be paid out by the taxpayer is against public policy and is inconsistent with Article 201 of the Constitution of Kenya which requires that public money shall be used prudently and responsibly.
d. In support of the borrowings of the KCB Bank, Development Bank and Co-operative Bank the Respondent provided Bank statements and I have been advised by my advocates that if the Arbitrator had perused the said Bank Statements, he would have noted that there are no indication and/or any entries in relation to the construction of the Mall.
e. The Final Award is inimical to the national interest as the Respondent should not have been awarded the Kshs. 344, 594,952.49 together with interest Kshs 107,722,499.60 as it results in unjust enrichment of the Respondent and is contrary to public policy as it promotes unfair and unconscionable commercial practices.
f. The Additional Award is inimical to the National interest as the assessed costs are exorbitant and is contrary to the Advocate Remuneration Order and laid down principles of taxation of party and party bill of costs.
20. Further citing the ground of the award being inimical to the national interests of Kenya and in conflict with public policy, the deponent stated as follows in his affidavit:
a. The Award is biased and impartial against the Authority and in favour of the Respondent as it failed to consider the evidence on record, selectively considering evidence and shifting the burden of proof to the Authority thus being in total contravention of the well-settled principle; “he who alleges must prove” and to Section 23(3) of the Arbitration Act which states that a tribunal has “the power to determine the admissibility, relevance, materiality and weight of any evidence and to determine at what point an argument or submission in respect of any matter has been fairly and adequately put or made”.
b. In furtherance to the foregoing, I am advised by the Authority’s Advocates, which advise I verily believe to be true that the Arbitrator shifted the burden of proof to the authority to show that the borrowing and/or drawdowns by the Respondent from KCB Bank facility, had not been applied to the construction of the Mall, and not the Respondent to prove the same. The onus was on the Respondent to show the nexus of the borrowing and/or drawdown to the construction of the Mall. For instance, no payment vouchers, Local Purchase orders, subcontractors and/or receipts were produced as evidence as proof that then said borrowing and/or drawdown was pursuant to a component of the construction of the Mall.
21. On the basis of the foregoing grounds, the Applicant sought that the final and additional awards be set aside.
22. In response to the application, the Respondent’s Managing Director Zeyun Yang filed a replying affidavit that he swore on 30th September, 2024.
23. The said deponent took issue with the grounds that the Applicant proffered as the basis for setting aside the arbitral award, urging that in setting aside an arbitral award under Section 35 of the Arbitration Act the court is only required to address itself to process failures and not to the merits of the arbitral award itself, is in tandem with the principle of party autonomy, guaranteeing that parties are satisfied with results of arbitration. He took the position that the application is an invitation to the court to consider the merits and/or value considerations of the awards published on 15th February, 2024 and 26th June 2024 and is in effect it is an impermissible appeal guised as an application to set aside.
24. On the ground of failing to follow the rules of evidence, while reiterating that the same amounted to a merit decision that was not subject to setting aside proceedings, the Respondent stated that under Section 20(3), Arbitration Act, the power of the arbitral tribunal under subsection (2) (on determination of rules of procedure) includes the power to determine the admissibility, relevance, materiality and weight of any evidence and to determine at what point an argument or submission in respect of any matter has been fairly and adequately put or made.
25. The deponent to the replying affidavit stated that that the allegations that the Applicant’s evidence was not considered; that the Arbitrator shifted the burden of proof to the Applicant; that the Arbitrator exceeded the scope of the arbitration and considered issues not submitted to arbitration; that the assessment of costs was contrary to the Advocates Remuneration Order; were all groundless as the material presented in support thereof was merit considerations that the Arbitrator addressed.
26. With regard to the additional award on quantum of costs, the deponent to the replying affidavit stated that the Arbitrator considered the applicable law being Rule 10(2) of the Arbitration Rules, 1997 as read with Schedule 6 of the Advocates Remuneration Order, 2014 vis-à-vis various decided cases on taxation of costs, before arrival at the additional award.
27. On the ground’s presented by the Applicant that the Arbitrator contravened public policy and national interest and exhibited open bias against the Applicant, the deponent stated that the Applicant failed to demonstrate such contravention of public policy and national interest, or open bias against the Respondent.
28. He stated that during the arbitration proceedings, both parties made their submissions, had a chance to examine and cross examine the respective witnesses and produce their bundle of documents with evidence supporting their respective cases.
29. The deponent further stated that each party was granted an equal opportunity to present their cases and evidence before the Arbitrator unrestrained and that moreover, the Arbitrator gave the parties 7 days after the arbitration proceeding transcripts were ready to raise any issues therein, which allowed parties to ensure the correct information was recorded to prevent any misrepresentations which could be prejudicial to the parties and that the Applicant never raised any issue and/or concern(s), as to the substance of what had been admitted and/or was submitted before the Arbitrator for determination.
30. The deponent further noted, in respect of the Applicant’s allegation that the Arbitrator went beyond the scope of the reference, that no particulars or specifics have been identified, pleaded or tendered as proof of any such matter, issue or dispute which the arbitrator admitted and determined which was not part of the reference to the arbitration.
31. The deponent noted that the Applicant had, without dispute, reproduced the issues that the Arbitrator set down for determination, which the Applicant did not dispute were within the reference and whose determinations the Applicant did not demonstrate, went outside such scope. He stated that in any event, had the Applicant properly identified that part of the awards that contained decisions on matters not referred to in the reference, the court, under Section 35(2)(iv) of the Arbitration Act had the power to sever and set aside only that impugned part of the arbitral award.
C. Submissions on the application dated 26th June, 2024.
32. The parties canvassed the application dated 26th June, 2024 by way of written submissions and were allowed to highlight the same. Parties also filed their respective lists of authorities. I have had the opportunity of perusing and considering the submissions.
33. Mr. Ogejo, learned Counsel for the Applicant stated that the Arbitrator shifted the burden to the Applicant to prove the existence of a loan facility and that in so doing, he went against the rule of evidence that requires that the alleging party provides evidence to prove its case. He further stated that the Arbitrator thus failed to treat the parties equally, effectively contravening Sections 19 and 20(4) of the Arbitration Act and Rule 50 of the Arbitration Rules.
34. Mr. Ogejo further submitted that the finding of the Arbitrator that the Matengo Report, was unsigned and undated and thus did not have evidentiary probative value exhibited bias on the part of the Arbitrator for the reason that none of the parties raised the issue of the report being unsigned during the arbitration proceedings. Counsel pointed out to the court that the finding was made despite Mr. Meshack Matengo, having testified as RW-2 and having produced the said report without any objection by the Respondent.
35. Counsel thus proffered the view that the Arbitrator violated the rules of evidence by shifting the burden of proof to the Applicant and by making findings on the Matengo report that were adverse to the Applicant, which violation in his view resulted to an award that was contrary to public policy, in that the law of evidence was allegedly not followed.
36. In conclusion, Counsel submitted that the application for setting aside the award be allowed and consequently, that for recognition and adoption be dismissed.
37. In response. Mr. Lusi, learned Counsel for the Respondent stated that the application for recognition and adoption of the arbitral award should be allowed as there were no tenable grounds placed before the court warranting the setting aside of the award.
38. Counsel for the Respondent, stated that the grounds based on allegations of failure to abide by the rules of evidence and of bias as presented by the Applicant are alien to Section 35 of the Arbitration Act, as that provision specifically focuses on the grounds of procedural fairness, jurisdictional limits, integrity and public policy. He stated that Section 35 does not include general dissatisfaction with evidence, misapplication of law or disagreement with the merits of the award or perceived bias. In Counsel’s opinion, the Applicant, vide the application seeking to set aside the arbitral award and additional award is now inviting this court to irregularly sit on appeal by asking the court to relook at and reevaluate the evidence that was placed before the Arbitrator.
39. Mr. Lusi stated that the parties were treated with equality during the arbitration proceedings and were each party shall, given a fair and reasonable opportunity to present their respective cases in line with Section 19 and 20 of the Act.
40. Counsel further stated that the Applicant had all along failed to cooperate and had the intention of frustrating the proceedings and pointed out instances which included the Applicant’s failure to participate in the appointment of the Arbitrator, failure to pay the Respondent’s and the Arbitrator’s costs, despite orders having been made to that effect.
D. Issues for Determination.
41. Having carefully considered the notice of motion dated 26th June, 2024, the affidavits filed in support and in opposition thereto, the written and oral submissions by learned counsel for the parties, the authorities cited and the applicable law, the court is of the view that the determination of the Applicant’s application for setting aside the arbitral award turns on the following issues.
42. The first issue for determination is whether the Applicant has established any of the statutory grounds for setting aside an arbitral award as contemplated under Section 35 of the Arbitration Act, and in particular, whether the impugned arbitral award dated 15th February, 2024 and the additional award on costs dated 26th June, 2024 fall within the limited and well-defined circumstances under which the court may intervene in arbitral proceedings.
43. Flowing from the foregoing, the second issue for determination is whether the Applicant has demonstrated that the Arbitrator e
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1. A brief history of this matter is that a dispute pitting the parties herein was pursuant to an arbitration clause in the arbitral agreement dated 8th May, 2013 referred to arbitration, whereby the Applicant herein was the Respondent, while the Respondent herein was the Claimant. The parties presented their respective cases before the sole arbitrator Dr. Wilfred Mutubwa who, on 15th February, 2024, rendered his award, concluding as follows:
i. The Respondent’s Counterclaim is hereby dismissed in its entirety.
ii. The Respondent is liable to pay the Claimant the amount of Ksh.344,594,952.49/-.
iii. The above principal sum shall attract simple interest at the rate of 14% per annum from the date of commencement of these arbitral proceedings until payment in full.
iv. The interest accrued on the principal sum as at the date of this award is Ksh.107,722.449.60/-. The principal sum of Ksh.344,594,592.49/- shall continue to attract interest at the rate of Ksh.132,174.78/- per day for every day the same remains unpaid.
v. The Respondent shall bear both the Claimant’s party and party costs. The costs are to be agreed upon within 14 days of this award, failing which the Claimant shall be at liberty to file its bill of costs for Taxation by the Tribunal.
vi. The Respondent shall reimburse the Claimant all costs paid on its behalf in this matter, in any event.
vii. All other prayers not specifically allowed by the Tribunal stand dismissed.
2. On 26th June, 2024, the Arbitrator made and published an additional award on quantum of costs as follows:
i. The total amount taxed and allowed is Ksh.23,030,746.56/-.
3. Following the delivery and publication of the award and additional award, the Applicant filed the application by motion on notice dated 26th June, 2024 which sought the following orders:
1. THAT….[Spent].
2. THAT….[Spent].
3. THAT the arbitral final award dated the 15th February, 2024 and the additional award on quantum of costs dated 26th June, 2024 by Dr. Wilfred Mutubwa OGW LL.D. C.Arb FCIArb, be set aside.
4. THAT costs of this application be provided for.
4. A response to the application dated 26th June, 2024 was filed by the Respondent.
5. The record of this court bears it that the Respondent filed the chamber summons application dated 30th September, 2024 in which the following orders were sought:
1. THAT….[Spent].
2. THAT….[Abandoned].
3. THAT….[Abandoned].
4. THAT….[Spent].
5. THAT the Honourable Court be and is hereby pleased to issue an order adopting and recognizing the subject arbitral award made and published on 15th February, 2024 and 26th June, 2024 as a judgement of the High Court of Kenya.
6. THAT the Honourable court be and is hereby pleased to award costs to the Applicant on a full indemnity basis.
6. Directions were issued that the two applications be canvassed by way of written submissions and my sister Shariff J. on 18th December, 2024, issued further directions that the parties highlight their respective submissions.
7. The parties complied with the directions to file their respective submissions and proceeded to highlight the same on 19th February, 2025.
8. Where a party files an application for the setting aside of an arbitral award and the opposing party files an application for the recognition of the same award, the proper route for the court to take is the one that I discussed in the case of County Government of Kisumu v Coretec Systems & Solutions Limited (Commercial Arbitration Cause E001 of 2023) [2025] KEHC 13909 (25 September 2025) (Ruling) in which I made the following observations:
“34. In a nutshell, the argument fronted by the Applicant is that, it is irregular for the court to hear an application for recognition and enforcement of an arbitral award before hearing and determining a pending application to set aside the same award and that if the court did so, that would contravene both the Arbitration Act and Article 50 of the Constitution, which provides for the right to a fair hearing.
35. While Section 36 of the Arbitration Act provides for recognition and enforcement of an arbitral award, Section 37 of the Act allows a party to apply for setting aside an arbitral award on specific grounds.
36. Notably, Section 36(2) provides that:
“An arbitral award shall be recognized as binding and enforced in accordance with the provisions of this section unless it is set aside or suspended by a court of competent jurisdiction.”
(Underlined emphasis).
37 . This, in my view, implies that recognition and enforcement can only proceed if the award is not subject to a pending setting aside application, or unless the court determines that such an application is unmeritorious.
38. Courts have generally held that applications for recognition and enforcement and applications to set aside should be considered together or that the setting aside application should be determined first. This, I think is meant to avoid a possibility of conflicting decisions and premature enforcement of an award that might be invalidated and to avoid undermining the right to challenge an award under Section 37.
39. In the case of Christ for All Nations v Apollo Insurance Co Ltd [2002] 2 EA 366 the Court of Appeal held that where an application to set aside an arbitral award has been filed, it is prudent for the court to defer enforcement proceedings until the setting aside application is heard and determined. The court stated that:
“It would be imprudent for the High Court to recognize and enforce an award that is under challenge.”
40. The correct approach would in my view therefore be for the court to either order for the consolidation of the two applications (for recognition/enforcement and for setting aside), or to hear them together or to determine the one seeking for the setting aside of the award first, then proceed with enforcement if the award survives.”
9. The foregoing being the position in law, I will proceed first to determine the Applicant’s application for setting aside the award dated 26th June, 2024 and the determination will then guide me on the one dated 30th September, 2024, as the former will have a direct bearing on the latter.
B. The notice of motion dated 26th June, 2024.
10. The grounds upon which the Applicant’s motion is premised are reproduced here below:
a. The arbitral final award conflicts with public policy and is inimical to the national interests of Kenya in that:
i. It is contrary to the evidence Act and rules of evidence by shifting the burden of proof of the Claim to the Applicant.
ii. It is contrary to the Evidence Act by diminishing the role and/or evidence of the Applicant’s expert witness.
iii. By determining issues that were outside the scope of the arbitration proceedings and/or not agreed upon and/or not raised by the parties during the hearing contrary to the Arbitration Act and Rules.
iv. By expanding the scope of the arbitration proceedings without the agreement of and/or notice to the parties.
v. The arbitral award in dismissing the Applicant’s counterclaim failed to consider the evidence in support of the same and thus exposed the Kenyan Government and taxpayer to loss of national funds.
b. The Arbitrator in issuing his final award and/or operative award exhibited open bias in that:
i. The Arbitrator shifted the burden of proof of the claim to the Applicant.
ii. The Arbitrator diminished the role and/or evidence of the Applicant’s expert witness.
iii. The Arbitrator determined issues that were outside the scope of the arbitration proceedings and/or not agreed upon and/or not raised by the parties during the hearing contrary to the Arbitration Act and Rules.
iv. The Arbitrator expanded the scope of the arbitration proceedings without the agreement of and/or notice to the parties.
c. The arbitral additional award on costs is contrary to the Advocates Remuneration Order and laid down principles of taxation of party and party bill of costs.
d. It is in the interest of justice that the court grants the orders sought.
11. As I have stated before, the Respondent herein was the Claimant in the arbitration proceedings while the instant Applicant was the Respondent.
12. The application is supported by the affidavit sworn on 26th June, 2024 by Michael Okuk, who describes himself as the Applicant’s Deputy Director Legal Services.
13. In precis, the said deponent stated on oath that the parties herein entered into a form agreement on 8th May, 2013 which was duly executed by the parties, whereby the Respondent was to construction for the Applicant a mall at an initial agreed contract sum of Ksh.2,451, 035,643/-.
14. The deponent described in detail the history and/or genesis of the transaction between the parties, which, well after the handover of the mall by the Respondent to the Applicant, resulted in a dispute being declared by the Respondent, pursuant to which this matter was referred to arbitration in accordance to Clause 37.2 of the tender document that provided that all disputes between the parties under the contract be referred to arbitration.
15. In furtherance to the declaration of a dispute and the referral thereof to arbitration, the Chartered Institute of Arbitrators appointed Dr. Wilfred A. Mutubwa OGW LL.D. C.Arb FCI Arb as the sole arbitrator to determine any dispute or claim arising out of or relating to the contract. In its statement of claim, the Respondent prayed for the following reliefs:
i. A declaration that the Respondent has breached its contract with the Claimant.
ii. An order compelling the Respondent to take over the loan facility at Cooperative Bank of Ksh.2,500,000,000/- as contracted within 14 days of the award.
iii. In default of (b) above, the loan facility at the Cooperative Bank to automatically transfer to the Respondent within 30 days of recognition of the award by the High Court and the relevant forms to be executed by the Deputy Registrar of the High Court.
iv. An award of special damages of Ksh.645,992,862.91/- plus interest accrued since the date of the invoice Part Two B at 14% per annum until settlement in full.
v. General and exemplary damages.
vi. Costs plus interest thereof of the arbitration proceedings.
vii. Any other relief that this Honourable Tribunal may deem just and expedient.
16. The deponent stated in the supporting affidavit that the Applicant herein resisted the claim in the arbitration proceedings and to that end filed a statement of defence and counterclaim. The pleadings that the parties filed are annexed to the affidavit in support of the application. During the hearing of the dispute, the Respondent called Mr. Zeyun Yang as its witness while the Applicant called one Mr. Matengo as its witness. The arbitrator set out the following issues for determination:
i. Whether the variation of the contract/bid price was properly authorized.
ii. Which party is to blame for the non-establishment of the escrow account.
iii. Whether the Respondent should be directed to take over the Ksh.2,500,000,000/- bank facility at Cooperative Bank of Kenya.
iv. Whether the Claimant violated Clause 36 of the tender document by engaging in corrupt activities.
v. Whether the amounts sought under invoices Part 2B dated 4th May, 2018 is payable to the Claimant.
vi. Whether the Respondent’s counterclaim is merited.
vii. Who bears the costs of the arbitration.
17. The deponent stated that the arbitrator proceeded to hear and determine the claim and issued his final award dated 15th February, 2024, in the terms reproduced above. On 26th June, 2024, the arbitrator issues an additional award on the quantum of costs whereby he assessed party and party costs payable to the Respondent at Ksh.23,030,746.56/-.
18. The position taken by the Applicant, as expressed in the deponent’s supporting affidavit is that the award and additional award should be set aside on the ground that the arbitrator exhibited open bias for the following reasons (verbatim, as per the deponent’s depositions):
a. The Arbitrator in determining and awarding that the interest accrued from the KCB Bank facility failed to consider the totality of the evidence placed before him by failing to take into consideration the Expert Report by Matengo Githae & Associates (hereinafter the Matengo Report), which report was filed by the Authority, on grounds that the Matengo report was unsigned and undated and thus did not have evidentiary probative value: This is the despite the fact the author, Mr. Meshack Matengo, testified as RW-2 and produced the said report without any objection by the Respondent.
b. In furtherance to the foregoing the Arbitrator failed to consider that the purpose of the KCB Bank facilities was to finance Working Capital Requirements, which could be anything but the Construction of the Mall. A comparison between KCB Bank Letters of Offer dated 13th May, 2014 and 4th June, 2015 to the Co-operative Bank of Kenya letter of Offer on Pg 58, and 68 of Further List of Documents dated 21st July, 2022 and annexed herewith as WO-5 where the purpose of the facilities was for performing the Lake Basin Development Authority Contract.
c. I have further been advised by the Authority’s Advocates that the fact the report was unsigned and undated was not an issue brought up by the Respondent and/or the Tribunal during the hearing of the claim or it’s written submissions thus the actions of the Arbitrator in dismissing the said evidence is tantamount to open bias against the Authority.
d. In furtherance to the foregoing, the Arbitrator totally failed to consider that the Respondent having had sight of the Report by Mr. Meshack Matengo failed and/or neglected to file its own report to rebut the findings in the Matengo report. The Respondent’s witness when asked on whether they had filed a Financial Report having been served with the Matengo report, stated that it was not necessary. (Reference is made to page 51 of the Transcript annexed herewith as WO-18)
e. Further, the Arbitrator failed to take into consideration that Mr. Matengo in his testimony and report indicated that he had indeed scrutinized the bank statements concerning the facility and his findings were that the interest claimed by the Respondent should not be allowed.
f. In furtherance to the foregoing, the Arbitrator failed to consider that in support of its claim for interest resulting from the borrowing and/or drawdown from the loan facilities accorded to it by Development Bank, KCB Bank and Cooperative Bank, the Respondent only provided bank statements in support of the same. A perusal of the Bank statements provided, showed there is no indication and/or any entry in relation to the construction of the mall, in fact, there are various transaction details/entries which are in no way related to the construction of the mall, (We make reference to pages 98-574 of the Respondent’s Further List of Documents dated 1st August, 2022 annexed herewith as WO-5).
g. In further demonstration of bias, the Applicant having raised the above highlighted entries as having no nexus to the construction of the Mall, the Respondent did not in any way, either by way, of evidence and/or written submissions, rebutting the facts that the statements of accounts provided showed had no entries evidencing payments towards the construction of the Mall.
h. In awarding interest accrued from KCB Bank, the Arbitrator failed to consider the expert testimony of Mr Matengo who in his report noted, that following the execution of the Form of Agreement, the Authority made a downpayment of Kshs 335,000,000.00, the Arbitrator completely ignored that from the bank statements provided and adduced, the KCB Bank account began running in August 2014 even before the Form of Agreement was varied, and during this period the total expenditure of the project up to May 2015 was adequately covered by the Co-operative Bank Loan that secured a sum of Kshs 2,500,000,000.00 this can be confirmed from the first six project’s architects' certificates totaling to Kshs 2,100,000,000.00 (We make reference to pages 98-574 of the Respondent’s Further List of Documents dated 1st August, 2022 annexed herewith as WO-5)
i. The Arbitrator in awarding the Respondent was biased by stating that the Authority supported the borrowing by Kenya Commercial Bank and further provided two properties as securities for the facility. This is not the case as the Respondent did not adduce any evidence in support of this and no property was provided by the Authority as security for the borrowing.
j. In furtherance to the foregoing, the Respondent’s Witness My Yang Zeyun in his testimony did confirm that the Authority did not sanction the Borrowing from the KCB Bank. (We make reference to pages 53-54 of the transcript annexed herewith as WO-18)
k. In further demonstration of open bias, the Arbitrator proceeded to dismiss the Authority’s Counterclaim without due consideration of the Authority’s claims as averred in the foregoing paragraphs and the same being contrary to public policy and inimical to national interests as captured in Paragraph 27b of this Supporting Affidavit.
19. The second ground upon which the Applicant sought for the setting aside of the award and additional award was that the same are against public policy as public funds are involved. On that ground, the deponent stated as follows in his affidavit:
a. The Award as issued contravenes Section 47(5) of Public Finance Management Act No. 18 of 2012, which provides that funds received in the form of grants or donations ought to be spent only in accordance with Articles 221 and 223 of the Constitution of Kenya 2010 and the Authority having fully paid the contract sum in terms of the Final Certificate issued by the Project’s Architect’s.
b. Further, the Respondent has received the sum of Kshs 4,509 551,168.30 from the Exchequer and Co-operative Bank of Kenya for the construction of the Mall, which sum is excessively beyond the contract sum, of Kshs 3, 860,000,000.00 and/or the Final Account Certificate submitted by the Quantity Surveyor being Kshs 4,138, 895, 104.89.
c. The foregoing fact was not disputed by the Respondent’s director during the hearing of the claim and therefore awarding the Respondent an additional sum of Kshs 344, 494, 952.49 to be paid out by the taxpayer is against public policy and is inconsistent with Article 201 of the Constitution of Kenya which requires that public money shall be used prudently and responsibly.
d. In support of the borrowings of the KCB Bank, Development Bank and Co-operative Bank the Respondent provided Bank statements and I have been advised by my advocates that if the Arbitrator had perused the said Bank Statements, he would have noted that there are no indication and/or any entries in relation to the construction of the Mall.
e. The Final Award is inimical to the national interest as the Respondent should not have been awarded the Kshs. 344, 594,952.49 together with interest Kshs 107,722,499.60 as it results in unjust enrichment of the Respondent and is contrary to public policy as it promotes unfair and unconscionable commercial practices.
f. The Additional Award is inimical to the National interest as the assessed costs are exorbitant and is contrary to the Advocate Remuneration Order and laid down principles of taxation of party and party bill of costs.
20. Further citing the ground of the award being inimical to the national interests of Kenya and in conflict with public policy, the deponent stated as follows in his affidavit:
a. The Award is biased and impartial against the Authority and in favour of the Respondent as it failed to consider the evidence on record, selectively considering evidence and shifting the burden of proof to the Authority thus being in total contravention of the well-settled principle; “he who alleges must prove” and to Section 23(3) of the Arbitration Act which states that a tribunal has “the power to determine the admissibility, relevance, materiality and weight of any evidence and to determine at what point an argument or submission in respect of any matter has been fairly and adequately put or made”.
b. In furtherance to the foregoing, I am advised by the Authority’s Advocates, which advise I verily believe to be true that the Arbitrator shifted the burden of proof to the authority to show that the borrowing and/or drawdowns by the Respondent from KCB Bank facility, had not been applied to the construction of the Mall, and not the Respondent to prove the same. The onus was on the Respondent to show the nexus of the borrowing and/or drawdown to the construction of the Mall. For instance, no payment vouchers, Local Purchase orders, subcontractors and/or receipts were produced as evidence as proof that then said borrowing and/or drawdown was pursuant to a component of the construction of the Mall.
21. On the basis of the foregoing grounds, the Applicant sought that the final and additional awards be set aside.
22. In response to the application, the Respondent’s Managing Director Zeyun Yang filed a replying affidavit that he swore on 30th September, 2024.
23. The said deponent took issue with the grounds that the Applicant proffered as the basis for setting aside the arbitral award, urging that in setting aside an arbitral award under Section 35 of the Arbitration Act the court is only required to address itself to process failures and not to the merits of the arbitral award itself, is in tandem with the principle of party autonomy, guaranteeing that parties are satisfied with results of arbitration. He took the position that the application is an invitation to the court to consider the merits and/or value considerations of the awards published on 15th February, 2024 and 26th June 2024 and is in effect it is an impermissible appeal guised as an application to set aside.
24. On the ground of failing to follow the rules of evidence, while reiterating that the same amounted to a merit decision that was not subject to setting aside proceedings, the Respondent stated that under Section 20(3), Arbitration Act, the power of the arbitral tribunal under subsection (2) (on determination of rules of procedure) includes the power to determine the admissibility, relevance, materiality and weight of any evidence and to determine at what point an argument or submission in respect of any matter has been fairly and adequately put or made.
25. The deponent to the replying affidavit stated that that the allegations that the Applicant’s evidence was not considered; that the Arbitrator shifted the burden of proof to the Applicant; that the Arbitrator exceeded the scope of the arbitration and considered issues not submitted to arbitration; that the assessment of costs was contrary to the Advocates Remuneration Order; were all groundless as the material presented in support thereof was merit considerations that the Arbitrator addressed.
26. With regard to the additional award on quantum of costs, the deponent to the replying affidavit stated that the Arbitrator considered the applicable law being Rule 10(2) of the Arbitration Rules, 1997 as read with Schedule 6 of the Advocates Remuneration Order, 2014 vis-à-vis various decided cases on taxation of costs, before arrival at the additional award.
27. On the ground’s presented by the Applicant that the Arbitrator contravened public policy and national interest and exhibited open bias against the Applicant, the deponent stated that the Applicant failed to demonstrate such contravention of public policy and national interest, or open bias against the Respondent.
28. He stated that during the arbitration proceedings, both parties made their submissions, had a chance to examine and cross examine the respective witnesses and produce their bundle of documents with evidence supporting their respective cases.
29. The deponent further stated that each party was granted an equal opportunity to present their cases and evidence before the Arbitrator unrestrained and that moreover, the Arbitrator gave the parties 7 days after the arbitration proceeding transcripts were ready to raise any issues therein, which allowed parties to ensure the correct information was recorded to prevent any misrepresentations which could be prejudicial to the parties and that the Applicant never raised any issue and/or concern(s), as to the substance of what had been admitted and/or was submitted before the Arbitrator for determination.
30. The deponent further noted, in respect of the Applicant’s allegation that the Arbitrator went beyond the scope of the reference, that no particulars or specifics have been identified, pleaded or tendered as proof of any such matter, issue or dispute which the arbitrator admitted and determined which was not part of the reference to the arbitration.
31. The deponent noted that the Applicant had, without dispute, reproduced the issues that the Arbitrator set down for determination, which the Applicant did not dispute were within the reference and whose determinations the Applicant did not demonstrate, went outside such scope. He stated that in any event, had the Applicant properly identified that part of the awards that contained decisions on matters not referred to in the reference, the court, under Section 35(2)(iv) of the Arbitration Act had the power to sever and set aside only that impugned part of the arbitral award.
C. Submissions on the application dated 26th June, 2024.
32. The parties canvassed the application dated 26th June, 2024 by way of written submissions and were allowed to highlight the same. Parties also filed their respective lists of authorities. I have had the opportunity of perusing and considering the submissions.
33. Mr. Ogejo, learned Counsel for the Applicant stated that the Arbitrator shifted the burden to the Applicant to prove the existence of a loan facility and that in so doing, he went against the rule of evidence that requires that the alleging party provides evidence to prove its case. He further stated that the Arbitrator thus failed to treat the parties equally, effectively contravening Sections 19 and 20(4) of the Arbitration Act and Rule 50 of the Arbitration Rules.
34. Mr. Ogejo further submitted that the finding of the Arbitrator that the Matengo Report, was unsigned and undated and thus did not have evidentiary probative value exhibited bias on the part of the Arbitrator for the reason that none of the parties raised the issue of the report being unsigned during the arbitration proceedings. Counsel pointed out to the court that the finding was made despite Mr. Meshack Matengo, having testified as RW-2 and having produced the said report without any objection by the Respondent.
35. Counsel thus proffered the view that the Arbitrator violated the rules of evidence by shifting the burden of proof to the Applicant and by making findings on the Matengo report that were adverse to the Applicant, which violation in his view resulted to an award that was contrary to public policy, in that the law of evidence was allegedly not followed.
36. In conclusion, Counsel submitted that the application for setting aside the award be allowed and consequently, that for recognition and adoption be dismissed.
37. In response. Mr. Lusi, learned Counsel for the Respondent stated that the application for recognition and adoption of the arbitral award should be allowed as there were no tenable grounds placed before the court warranting the setting aside of the award.
38. Counsel for the Respondent, stated that the grounds based on allegations of failure to abide by the rules of evidence and of bias as presented by the Applicant are alien to Section 35 of the Arbitration Act, as that provision specifically focuses on the grounds of procedural fairness, jurisdictional limits, integrity and public policy. He stated that Section 35 does not include general dissatisfaction with evidence, misapplication of law or disagreement with the merits of the award or perceived bias. In Counsel’s opinion, the Applicant, vide the application seeking to set aside the arbitral award and additional award is now inviting this court to irregularly sit on appeal by asking the court to relook at and reevaluate the evidence that was placed before the Arbitrator.
39. Mr. Lusi stated that the parties were treated with equality during the arbitration proceedings and were each party shall, given a fair and reasonable opportunity to present their respective cases in line with Section 19 and 20 of the Act.
40. Counsel further stated that the Applicant had all along failed to cooperate and had the intention of frustrating the proceedings and pointed out instances which included the Applicant’s failure to participate in the appointment of the Arbitrator, failure to pay the Respondent’s and the Arbitrator’s costs, despite orders having been made to that effect.
D. Issues for Determination.
41. Having carefully considered the notice of motion dated 26th June, 2024, the affidavits filed in support and in opposition thereto, the written and oral submissions by learned counsel for the parties, the authorities cited and the applicable law, the court is of the view that the determination of the Applicant’s application for setting aside the arbitral award turns on the following issues.
42. The first issue for determination is whether the Applicant has established any of the statutory grounds for setting aside an arbitral award as contemplated under Section 35 of the Arbitration Act, and in particular, whether the impugned arbitral award dated 15th February, 2024 and the additional award on costs dated 26th June, 2024 fall within the limited and well-defined circumstances under which the court may intervene in arbitral proceedings.
43. Flowing from the foregoing, the second issue for determination is whether the Applicant has demonstrated that the Arbitrator e
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