1. Before the arbitrator was a claim by the Applicant in the sum of USD 412,847 on account alleged loss suffered by the applicant in the hands of the Respondent when the respondent negligently damaged the applicant’s equipment described as Terax Crane, model AC 2001, Chasis No. WMG531 2HX92000272.
2. After conducting a full arbitral proceeding, the arbitrator entered a final award in favour of the applicant in various sums including; USD 242,367.75 for costs of the repairs, USD 82,916 being accrued interests up to the date of the final award, the costs of arbitration of Kshs. 4,530,523.20, Kshs.1,186,124.20 being party and party costs and reimbursement of the sum of Kshs.1,853,160 being the portion of arbitration costs paid by the claimant. The court computes in the total sum to be USD326,592.25 and Kshs.7,569,806.40.
3. Having earned the award the applicant brought the chamber summons dated 29/9/2022 and prayed that the court be pleased to recognise and enforce the final award dated 9/2/2022 issued by J Mwai Mathenge, sole arbitrator, as a decree of the court.
4. The application was opposed by the Respondent on the grounds that there was never jurisdiction on the arbitrator to entertain the reference on the basis that stare decisis ordained in Kenya Ports Authority Vs Three Ways Shipping Services (K)Ltd (2019) eKLR and Gama Villa Ltd – vs Kenya Ports Authority Msa H C Misc App No 207 of 2021 where the courts held that claims based on negligence are not suitable for arbitration and should be determined by the High Court. The Respondent asserts that jurisdiction cannot be conferred by parties if none exists at the beginning of a matter. It was stressed that where there lacks jurisdiction, the same cannot be conferred by consent, waiver or acquiescence. In addition, the respondent submits that the right to question jurisdiction is non-negotiable and that a decision reached without jurisdiction is a nullity imposing no duty on a litigant to seek to set it aside for the law is that an invalid award is not enforceable.
5. In resisting that opposition, the claimant asserts and submits that a party who has waived his rights under section 17 cannot purport to do so on the same grounds in an application under section 35 of the Act. The claimant added that section 62 must be read to accommodate section 12 of Kenya Ports Authority Act.
6. Having read the application, the response filed thereto, the submissions by parties and their respective address while highlighting the submissions, the court discerns the following issues to arise for its determination;
a) Whether or not arbitral tribunal was clothed with jurisdiction in the matter?
b) Whether one who chooses not to seek the setting aside of an arbitral award can resist the application for adoption and enforcement?
c) Whether the final award is due for adoption and enforcement?
d) Who should bear the costs of the application?
7. Jurisdiction is everything. All important to court proceedings hence anything done bereft of jurisdiction is nullity. Being all important, whenever raised, the court must deal with it beforehand and in priority to all else. In this matter therefore, it is an obligation upon the court to first establish whether the arbitrator was seized of jurisdiction before court can consider the merits of the application.
8. Section 62 of the Kenya Ports Authority Act provides that the authority in executing its mandate under section 12, 14, 15 and 16 shall do as little damages as possible and where any person suffered any damage, no suit has for such damages shall lie, but the injured may approach and agree with the authority on compensation and in default, the dispute may be resolved and determined by a single arbitrator appointed by the Registrar, Nairobi Centre for International Arbitration.
9. In its plain meaning, the statute divests the court system of jurisdiction to entertain any claim for compensation for any wrong done by the Respondent when it executes its mandate under the four provisions of the Act, save for causes of action grounded on the tort of negligence. The mandate for which the authority is shielded from court actions are its core mandate which include stevedore, wharfinger and lighterman secures.
10. In arguing that the arbitrator lacked jurisdiction in the matter, the respondents put reliance in several decision of the superior courts of Kenya for its position that jurisdiction is everything; must exist at the time the matter commences and cannot be conferred by acquiescence, waiver or consent and that an award made without jurisdiction in a nullity and incapable of enforcement for being contrary to public policy.
11. In particular, the Respondent cites the decision in Kenya Ports Authority – vs – Three Ways Shipping Services Ltd [2019] eKLR in which the court of appeal agreed with the High Court that it had the jurisdiction to entertain a cause founded on the tort of negligence.
12. In that decision, the Court of Appeal did interpret the subject provision creating the right to Arbitration as the preferred mode of dispute resolution to exclude cause of action founded on the tort of negligence. That interpretation and opinion of the Court of Appeal binds upon this court. The court finds and holds that the cause of action here having been founded on the tort of negligence, it was not due for the statutory arbitration mandated under the statute.
13. It thus follows that the arbitrator tribunal entertained the matter without the requisite foundation with the consequence that its decision was a nullity from inception.
14. With a null and void award, it would be against the law of the land and thus against public policy to seek its enforcement by this court. It matters not that the preliminary objection raised before the arbitrator was withdrawn without being canvassed. If there was no jurisdiction in the tribunal when the dispute was referred, it accords no benefit to the claimant that there was consent, waiver or acquiescence by the respondent. No action or inaction by parties or the tribunal could vest upon the tribunal what the constitution of statute does not vest.
15. With the determination that the tribunal lacked the jurisdiction to handle the dispute, it is not necessary to go into the other issues isolated by the court for determination.
16. The chamber summons dated 29/9/2024 is thus incapable of being allowed as prays but ought to be dismissed. It is hereby dismissed with costs.
Dated, signed and delivered, online, this 28th day of August, 2021
2. After conducting a full arbitral proceeding, the arbitrator entered a final award in favour of the applicant in various sums including; USD 242,367.75 for costs of the repairs, USD 82,916 being accrued interests up to the date of the final award, the costs of arbitration of Kshs. 4,530,523.20, Kshs.1,186,124.20 being party and party costs and reimbursement of the sum of Kshs.1,853,160 being the portion of arbitration costs paid by the claimant. The court computes in the total sum to be USD326,592.25 and Kshs.7,569,806.40.
3. Having earned the award the applicant brought the chamber summons dated 29/9/2022 and prayed that the court be pleased to recognise and enforce the final award dated 9/2/2022 issued by J Mwai Mathenge, sole arbitrator, as a decree of the court.
4. The application was opposed by the Respondent on the grounds that there was never jurisdiction on the arbitrator to entertain the reference on the basis that stare decisis ordained in Kenya Ports Authority Vs Three Ways Shipping Services (K)Ltd (2019) eKLR and Gama Villa Ltd – vs Kenya Ports Authority Msa H C Misc App No 207 of 2021 where the courts held that claims based on negligence are not suitable for arbitration and should be determined by the High Court. The Respondent asserts that jurisdiction cannot be conferred by parties if none exists at the beginning of a matter. It was stressed that where there lacks jurisdiction, the same cannot be conferred by consent, waiver or acquiescence. In addition, the respondent submits that the right to question jurisdiction is non-negotiable and that a decision reached without jurisdiction is a nullity imposing no duty on a litigant to seek to set it aside for the law is that an invalid award is not enforceable.
5. In resisting that opposition, the claimant asserts and submits that a party who has waived his rights under section 17 cannot purport to do so on the same grounds in an application under section 35 of the Act. The claimant added that section 62 must be read to accommodate section 12 of Kenya Ports Authority Act.
6. Having read the application, the response filed thereto, the submissions by parties and their respective address while highlighting the submissions, the court discerns the following issues to arise for its determination;
a) Whether or not arbitral tribunal was clothed with jurisdiction in the matter?
b) Whether one who chooses not to seek the setting aside of an arbitral award can resist the application for adoption and enforcement?
c) Whether the final award is due for adoption and enforcement?
d) Who should bear the costs of the application?
7. Jurisdiction is everything. All important to court proceedings hence anything done bereft of jurisdiction is nullity. Being all important, whenever raised, the court must deal with it beforehand and in priority to all else. In this matter therefore, it is an obligation upon the court to first establish whether the arbitrator was seized of jurisdiction before court can consider the merits of the application.
8. Section 62 of the Kenya Ports Authority Act provides that the authority in executing its mandate under section 12, 14, 15 and 16 shall do as little damages as possible and where any person suffered any damage, no suit has for such damages shall lie, but the injured may approach and agree with the authority on compensation and in default, the dispute may be resolved and determined by a single arbitrator appointed by the Registrar, Nairobi Centre for International Arbitration.
9. In its plain meaning, the statute divests the court system of jurisdiction to entertain any claim for compensation for any wrong done by the Respondent when it executes its mandate under the four provisions of the Act, save for causes of action grounded on the tort of negligence. The mandate for which the authority is shielded from court actions are its core mandate which include stevedore, wharfinger and lighterman secures.
10. In arguing that the arbitrator lacked jurisdiction in the matter, the respondents put reliance in several decision of the superior courts of Kenya for its position that jurisdiction is everything; must exist at the time the matter commences and cannot be conferred by acquiescence, waiver or consent and that an award made without jurisdiction in a nullity and incapable of enforcement for being contrary to public policy.
11. In particular, the Respondent cites the decision in Kenya Ports Authority – vs – Three Ways Shipping Services Ltd [2019] eKLR in which the court of appeal agreed with the High Court that it had the jurisdiction to entertain a cause founded on the tort of negligence.
12. In that decision, the Court of Appeal did interpret the subject provision creating the right to Arbitration as the preferred mode of dispute resolution to exclude cause of action founded on the tort of negligence. That interpretation and opinion of the Court of Appeal binds upon this court. The court finds and holds that the cause of action here having been founded on the tort of negligence, it was not due for the statutory arbitration mandated under the statute.
13. It thus follows that the arbitrator tribunal entertained the matter without the requisite foundation with the consequence that its decision was a nullity from inception.
14. With a null and void award, it would be against the law of the land and thus against public policy to seek its enforcement by this court. It matters not that the preliminary objection raised before the arbitrator was withdrawn without being canvassed. If there was no jurisdiction in the tribunal when the dispute was referred, it accords no benefit to the claimant that there was consent, waiver or acquiescence by the respondent. No action or inaction by parties or the tribunal could vest upon the tribunal what the constitution of statute does not vest.
15. With the determination that the tribunal lacked the jurisdiction to handle the dispute, it is not necessary to go into the other issues isolated by the court for determination.
16. The chamber summons dated 29/9/2024 is thus incapable of being allowed as prays but ought to be dismissed. It is hereby dismissed with costs.
Dated, signed and delivered, online, this 28th day of August, 2021