Introduction and Background
1. The Plaintiff has filed an application dated 21st June 2019 seeking recognition and enforcement of the Award dated 6th March 2019 published by Mr. John M. Ohaga, the Sole Arbitrator, under section 36 of the Arbitration Act, 1995.
2. The application is supported by the Plaintiff’s affidavits sworn on 21st June 2019, 9th July 2019, 23rd December 2019, 24th March 2022 and 2nd September 2022. The Defendants have taken issue with the application through their responses contained in the Grounds of Opposition dated 4th July 2019 and the affidavits of Brian D’souza sworn on the same date, 10th March 2022 and the replying affidavit of Benson Ndungu sworn on 28th April 2022. The parties have also filed written submissions in support of their respective positions.
3. Before I consider the application, a background of the matter will suffice. “KPMG” is a global network of professional firms providing audit, tax and advisory services. The 1st Defendant is an association of KPMG Partnerships in Kenya, Uganda, Tanzania and Rwanda with the 2nd Defendant being one of the partnerships duly constituted under Kenyan law and carrying on the aforesaid business. The 1st Interested Party is a Swiss entity that serves as a coordinating entity for a network of independent firms operating under the ‘KPMG’ name with the 2nd Interested Party being a licensee of the 1st Interested Party and serves as the coordinating entity for independent firms operating under the ‘KPMG’ name in Africa.
4. For close to 18 years, the Plaintiff was at all material times a member of the 1st Defendant and equity partner in the 2nd Defendant and by virtue of the membership and partnership he was also, inter alia, a director in various KFMG affiliated companies in Kenya and East Africa.
5. The relationship between the Plaintiff and the Defendants was guided by, inter alia, a Partnership Agreement executed by the parties. This relationship deteriorated in 2016 when a complaint was lodged against the Plaintiff. It was ultimately severed by a resolution of the Defendants dated 13th January 2017 removing the Plaintiff as a member of the 1st Defendant and as a partner of the 2nd Defendant.
6. The Plaintiff was aggrieved by this resolution and formally declared a dispute under Clause 28 of the Partnership Agreement. The dispute was referred to arbitration. The Arbitrator heard the matter and granted the following reliefs in favour of the Plaintiff:
i. I find and hold that the removal of the Claimant from the 1st Respondent by the purported compulsory retirement was unlawful and was null and void;
ii. I find and hold that the Claimant has suffered loss and damage as a result of the conduct of the Respondents towards him since the commencement of investigations against him from 3rd October 2016 culminating in his purported compulsory retirement on 13th January 2017 and the announcement thereof;
iii. I order and direct that the Respondents shall jointly and severally pay to the Claimant the aggregate sum of USD 4,519,452.00 and Kshs.1,943,172.84 in special and general damages.
iv. I further order and direct that the Respondent shall jointly and severally effect the transfer the motor vehicle registration No. KBY 146Y to the Claimant at its net book value;
v. I further order and direct that the Respondents shall jointly and severally provide and account to the Claimant for the sums which should have been expended on his account in respect of club membership, personal and life insurance cover, medical cover, annual subscriptions and motor vehicle comprehensive insurance, running and maintenance costs for the period from the date of his purported compulsory retirement until the date of the Award and shall, at the Claimant’s election, pay the equivalent of such amounts to the Claimant or arrange to provide equivalent benefits to the Claimant for the period to the financial year ending 31st August 2019;
vi. The amounts awarded to the Claimant shall be paid within forty-five (45) days from the date the Award is taken up by either party failing which compound interest shall accrue thereon at the rate of 5% per annum on the Kenya Shillings amount until payment in full;
vii. The Respondent shall also pay to the Claimant’s costs of the reference and the Award to be agreed, and if not agreed within sixty (60) days, to be assessed by the Tribunal.
7. The Defendants were aggrieved by the Award and proffered an appeal to this court in accordance with section 39 of the Arbitration Act. By the judgment dated 22nd January 2021 in KPMG East Africa Association & another v Richard Boro Ndungu ML HCCA No. E007 of 2019 [2021] eKLR, Tuiyott J., allowed the appeal in part to the extent that the 3-year multiplier applied by the Arbitrator was reduced to 2 years, the award of USD 325,000.00 in respect to drawings on account of profit for the period 1st September 2015 to 31st August 2017 was set aside, special damages was reduced to Kshs. 661,430.00 and the award of aggravated damages of USD 25,000.00 set aside.
Analysis and Determination
8. It is not in dispute that under section 32(A) of the Arbitration Act, an arbitral award is final and binding upon the parties and no recourse is available against the award otherwise than in the manner provided by the Arbitration Act. The High Court, under section 36 of the Arbitration Act, has the power to recognise and enforce domestic arbitral awards in the following terms:
36 (1) A domestic arbitral award, shall be recognized as binding and, upon application in writing to the High Court, shall be enforced subject to this section and section 37
(2) …
(3) Unless the High Court otherwise orders, the party relying on an arbitral award or applying for its enforcement must furnish
(a) the original arbitral award or a duly certified copy of it; and
(b) the original arbitration agreement or a duly certified copy of it.
(4) ……
(5) ……
9. Section 37 of the Arbitration Act sets out the grounds upon which this court can decline to recognize or to enforce an arbitral award as follows:
37. Grounds for refusal of recognition or enforcement
(1) The recognition or enforcement of an arbitral award, irrespective of the state in which it was made, may be refused only—
(a) at the request of the party against whom it is invoked, if that party furnishes to the High Court proof that—
(i) 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, under the law of the state where the arbitral award was made;
(iii) the party against whom the arbitral award is invoked 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 it 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, that part of the arbitral award which contains decisions on matters referred to arbitration may be recognised and enforced; or
(v) the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties or, failing any agreement by the parties, was not in accordance with the law of the state where the arbitration took place; or
(vi) the arbitral award has not yet become binding on the parties or has been set aside or suspended by a court of the state in which, or under the law of which, that arbitral award was made; or
(vii) the making of the arbitral award was induced or affected by fraud, bribery, corruption or undue influence;
(b) if 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 recognition or enforcement of the arbitral award would be contrary to the public policy of Kenya.
(2) If an application for the setting aside or suspension of an arbitral award has been made to a court referred to in subsection (1)(a)(vi), the High Court may, if it considers it proper, adjourn its decision and may also, on the application of the party, claiming recognition or enforcement of the arbitral award, order the other party to provide appropriate security.
10. The Defendants had initially opposed the enforcement for reasons that there was an appeal against the Award, however, since the appeal has been determined, that argument is now moot. The Defendants do not necessarily oppose the enforcement on any of the grounds cited in section 37 above but urge the court to take into account the credit sums that have already been paid to the Plaintiff.
11. The Plaintiff does not deny that the outcome of the appeal changed a portion of the Award and that there has been partial payment of the Award. The Plaintiff thus states that at the present time what remains unsettled is payment of the USD component being USD 1,422,822.00.
12. The question as to what amount is pending to the Plaintiff after certain payments have been made to him is a mathematical exercise for the parties and is definitely not a valid ground for a court to refuse to enforce the Award. As this point and under section 36 of the Arbitration Act, the court concern is to recognize an award as issued by the arbitral tribunal. Unless an aspect of the award has been set aside or varied in the manner contemplated by the Act, the court cannot vary the contents of that award as it is final and binding. In any case, a decree is not a reflection of the monies already paid but a formal expression of the determination of the court or in this case, the arbitral tribunal. It is upon making the application for execution that the decree holder shall be required to disclose and give credit to the amounts already paid by the judgment debtor.
13. Since the Award is not being challenged as there is no pending application to set it aside, then what follows is its automatic recognition and enforcement. However, in enforcing and recognizing the Award, the court must take into account the judgment in KPMG East Africa Association & another v Richard Boro Ndungu ML HCCA No. E007 of 2019 [2021] eKLR.
Disposition
14. For the reasons I have set out above, I allow the Notice of Motion dated 21st June 2019 on the following terms:
(a) The Award dated 6th March 2019 issued by Mr. John M. Ohaga, the Sole Arbitrator, be and is hereby recognized and entered as a judgment of this court.
(b) The Plaintiff is granted leave to enforce the Award subject to the court’s decision in KPMG East Africa Association & another v Richard Boro Ndungu ML HCCA No. E007 of 2019 [2021] eKLR.
(c) The Plaintiff shall have costs of the application assessed at Kshs. 70,000.00 only.
DATED and DELIVERED at NAIROBI this 27th day of JANUARY 2023
D. S. MAJANJA
JUDGE