REPUBLIC OF KENYA
IN THE HIGH COURT OF KENYA AT NAIROBI
COMMERCIAL & TAX DIVISION
MISCELLANEOUS APPLICATION NO. E346 OF 2023
IN THE MATTER OF SECTIONS 13(3) AND 14(3) OF THE ARBITRATION ACT, NO. 4 OF 2015
BETWEEN
NAVIN PREMJI KERAI (As well as in his capacity as a Co-Administrator of the Estate of SAPNA KANJI PATEL (Deceased)
HERBAI PREMJI KERAI (in her capacity as a Co-Administrator of the Estate of SAPNA KANJI PATEL (Deceased) ………………..APPLICANTS
AND
VIRUNGA LIMITED …………………………………….1ST RESPONDENT
VIRUNGA APARTMENTS LIMITED…………………..2ND RESPONDENT
CALVIN NYACHOTI……………………………………..3RD RESPONDENT
RULING
1. This ruling is in respect to a Notice of Motion dated 4th May, 2023 filed by the applicants, brought under the provisions of Sections 13(3) and 14(3) of the Arbitration Act, No. 4 of 1995. The applicants seek the following orders-
(i) Spent;
(ii) That this Honourable Court be pleased to remove the 3rd respondent from being Arbitrator in the arbitration proceedings between the
applicants and the 1st and 2nd respondents; and
(iii) That costs be provided for.
2. The application is premised on the grounds in support of it and the affidavit of Navin Premji Kerai sworn on 4th May, 2023 and a supplementary affidavit sworn by the same deponent on 4th July, 2023. The 1st and 2nd respondents opposed the application vide a replying affidavit sworn by Dr. Wilfred Mutubwa on 16th June, 2023. The 3rd respondent did not file any response to the application.
3. The application was canvassed by way of written submissions. The applicants’ submissions were filed on 4th July, 2023 by the law firm of Namachanja & Mbugua Advocates. The 1st & 2nd respondents’ submissions were filed on 26th July, 2023 by Rachier & Amollo LLP.
4. The instant application arises from a ruling delivered by the 3rd respondent on 6th April, 2023 in which he declined to recuse himself as an Arbitrator in arbitral proceedings between the applicants and the 1st and 2nd respondents, wherein the latter are the claimants and the former parties are the respondents.
5. In the supporting affidavit, the applicants state that the application for recusal of the 3rd respondent is based on the fact that on 18th February, 2022 at his mother’s residence, he had a traditional wedding ceremony, which was personal and private in nature, where the guests attending were strictly by invitation only. That Dr. Wilfred Mutubwa, the 1st and 2nd respondents’ Counsel was an invited guest and he attended the ceremony.
6. The bone of contention as per the applicants is that the 3rd respondent had not made prior disclosure about his wedding and the fact that he had invited the 1st and 2nd respondents’ Counsel to the function. The applicants deposed that the Arbitrator in a Declaration and Order for Directions No. 2 dated 30th April, 2021, and in particular under paragraphs 2 and 3 made in furtherance to the Declaration of impartiality and independence made on 31st March, 2021 upon his appointment, the Arbitrator disclosed that his interactions with the 1st and 2nd respondents’ Counsel was on the professional side as colleagues who sit in the Chartered Institute of Arbitrators as members and that the two are members of the Law Society of Kenya. The 1st applicant stated that he was then comfortable with the disclosures made at that time and had confidence in the Tribunal.
7. The 1st applicant averred that he was however concerned upon learning that the 3rd respondent held a traditional wedding ceremony and invited the 1st and 2nd respondents’ Counsel without making any disclosure well in advance, as the Arbitrator was aware and alive to the obligation to make disclosure of any circumstances that would be reasonably perceived to affect his independence and impartiality.
8. The 1st applicant contended that given the personal and private nature of the wedding ceremony and the fact that guests attended upon invitation only, the obvious implication from a third party’s perception is that as between the 3rd respondent and the 1st and 2nd respondents’ Counsel there is a close personal friendship that goes beyond their simply being professional colleagues.
9. The 1st applicant deposed that the 3rd respondent at his appointment failed to make full disclosure about his relationship with Counsel for the 1st and 2nd respondents. He further deposed that the said failure leaves the applicants with no confidence in the Tribunal, and they are now doubtful that the 3rd respondent can sustain a clear level of impartiality and independence.
10. The 1st applicant averred that after raising the challenge application for the 3rd respondent to recuse himself from the arbitral proceedings, he delivered ruling No. 3 dated 6th April, 2023 in which he dismissed the applicants’ challenge application. The 1st applicant contended that he believes that the 3rd respondent was not correct in his final decision that they had not made out a case for recusal because even after they raised the issue of his relationship with Counsel for the 1st and 2nd respondents, the 3rd respondent never said a thing in the challenge application.
11. The 1st applicant deposed that in the said ruling at paragraph 110, the 3rd respondent confirmed that Counsel for the 1st and 2nd respondents attended his wedding but as a professional colleague and denied that there was a personal relationship.
12. The 1st applicant reiterated that there was no disclosure made by the 3rd respondent about having invited the Counsel for the 1st and 2nd respondents to his traditional wedding, because the said wedding was held in February 2022 and the directions by the 3rd respondent were issued in April 2021 and that the order for directions No. 1 did not deal with the issue of disclosures.
13. The 1st applicant stated that the position maintained by the applicants is that the wedding ceremony having been a private social event in a very specific private location, Counsel for the 1st and 2nd respondents could not have been in attendance on the basis that he was the 3rd respondent’s professional colleague as stated in the ruling.
14. The 1st applicant suggested that the 3rd respondent was swayed by matters that had no bearing on the core issue in the application challenge before him, as the issue in contention was the wedding ceremony and the conduct of the 3rd respondent.
15. The 1st applicant contested the holding by the 3rd respondent that the alleged lack of independence cannot be interpreted as conflict of interest. The applicants’ prayer is for this Court’s intervention in the belief that they have laid sufficient basis to demonstrate that there is just cause to remove the 3rd respondent from being an Arbitrator in the dispute between the parties herein. He deposed that the applicants should not be forced to engage in a process in which they have lost total confidence in the 3rd respondent as an impartial and independent Tribunal.
16. The applicants stated that the facts constituting their grievances are agreed by the 3rd respondent and that the mere failure to disclose at first, and then the continued failure to disclose even when the applicants raised issues subsequently, are a sufficient ground to have the 3rd respondent removed as an Arbitrator.
17. In the replying affidavit filed by Dr. Wilfred Mutubwa, the learned Counsel for the 1st and 2nd respondents averred that the 3rd respondent made all the necessary disclosure as regards his relationship with him, vide the Tribunal’s Order for Directions No. 2.
18. The deponent admitted that the 3rd respondent is known to him as a professional colleague, Advocate and Arbitrator, and he has served with the 3rd respondent at the Chartered Institute of Arbitrators Kenya Branch as Vice-Chairman, while the 3rd respondent was the Chairman of the said Institute.
19. He deposed that he and the 3rd respondent occasionally meet at CIArb’s events, trainings, board meetings and members’ welfare gatherings and it is therefore untrue that the Arbitrator and himself share a close personal relationship as they are merely professional colleagues and only interact in those circles.
20. He contended that the allegation that the invitation to the 3rd respondent’s wedding was based on a close personal friendship between them is misplaced and untrue as his attendance of the wedding was as a professional colleague and cannot be used to construe a relationship giving rise to a conflict of interest.
21. Counsel for the 1st and 2nd respondents deposed that the 3rd respondent having made the relevant disclosures as per the Order for Directions No. 2, it was not necessary to once again reiterate the same. He stated that it is not uncommon to be invited by a colleague in professional circles to their ceremonies. He also deposed that Courts have time and again recognized the said fact.
22. Counsel contended that mere perception or apprehension of bias leading to doubts on the Arbitrator’s impartiality by one party is not enough to call for recusal and that failure to disclose is not fatal.
23. Dr. Mutubwa averred that the test to be applied is strictly objective and both the Arbitrator and the Court have to satisfy themselves that there are circumstances that give rise to justifiable doubts as to impartiality and independence of the Arbitrator.
24. In the supplementary affidavit filed by the 1st applicant, he averred that in his simple understanding of the Arbitrator’s continued duty to make disclosure during the life of the arbitration proceedings, the Arbitrator and Counsel for the 1st and 2nd respondents should have come out clean in response to the letter dated 31st May, 2023, but the Arbitrator never responded to the said letter and that the Counsel for the 1st and 2nd respondents on his part raised a Preliminary Objection. That there was no admission that a wedding took place and that Counsel for the 1st and 2nd respondents invoked rules of evidence, arguing that he who alleges must prove.
25. That as a party before the Arbitrator, the concern the applicants have had throughout is why it was difficult for the Arbitrator to come clean and explain the events as they happened. That their other concern is as to why Counsel for the 1st and 2nd respondents was keen to bar discovery of the events of the wedding by raising a Preliminary Objection as a first response. He averred that the conduct of the 3rd respondent and Counsel for the 1st and 2nd respondents left him persuaded that the 3rd respondent is neither impartial nor independent as the 3rd respondent finally admitted to the facts of the wedding in his ruling at paragraph 110, and that Counsel for the 1st and 2nd respondents also finally admitted that he attended the wedding at paragraph 11 of the replying affidavit.
26. The 1st applicant contended that the disclosures made by the 3rd respondent did not cover the Arbitrator’s close personal affairs and relationships as the disclosures limited themselves to professional affairs. The 1st applicant further contended that the Arbitrator owed the 1st and 2nd respondents a duty to disclose that he had invited Counsel for the 1st and 2nd respondents to his private wedding function, and that is more so, given the fact that a similar invitation was not made to the applicants’ Advocates then on record. The 1st applicant stated that it is within the said context and the nature of the wedding and where it was held, that he maintains that there is more than a professional relationship between the Arbitrator and Dr. Mutubwa, the Counsel for the 1st and 2nd respondents.
27. The 1st applicant maintained that the invitation to the wedding function was not on the basis that Dr. Mutubwa was the Arbitrator’s professional colleague, and if it was, even his Advocates on record then, who were professional colleagues of the 3rd respondent should have been invited, and noting that the 3rd respondent’s wedding was not held in a public place accessible to everyone, but in his mother’s residence with attendance by invitation only, the 1st applicant was convinced that the 3rd respondent and Counsel for the 1st and 2nd respondents are close friends.
28. The 1st applicant contended that what he has presented before this Court are not mere perceptions or apprehensions of bias, as his application is based on facts that have not been denied by the respondents, but what the 3rd respondent did was not simply failure to disclose, but it was a deliberate refusal to disclose, supported by Counsel for the 1st and 2nd respondents.
29. The 1st applicant asserted the 3rd respondent should be removed from the arbitral proceedings, as there exist justifiable doubts as to his impartiality and independence, and as there was misconduct on his part requiring his removal.
30. The 1st applicant stated that at the back of his mind, he keeps on asking what else there is between the 3rd respondent and the Counsel for the 1st and 2nd respondents that has not been disclosed, and that it would be an injustice for the applicants to be forced to go back before the 3rd respondent when all confidence in him has been lost.
31. The 1st applicant denied any malice on the part of the applicants and reiterated that they should not be forced to go through an arbitration with the 3rd respondent who has failed to discharge his statutory duties, and whose conduct is clearly of one who is unlikely to maintain his impartiality and independence. They prayed for the Arbitrator to be removed and opined that justice would be served if a neutral Arbitrator is appointed.
32. Mr. Namachanja, the applicants’ Counsel in his written submissions stated that as admitted by the 3rd respondent in his ruling under paragraph 112(ii), the obligation placed upon him to make disclosure is of a continuing nature, in keeping with Section 13 of the Arbitration Act, No. 4 of 1995 and it is not a one-off blanket kind of disclosure that is meant to cover all subsequent happenings in the course of the arbitration proceedings.
33. Counsel expressed the view that the act of the Arbitrator hosting Counsel for the 1st and 2nd respondents as an invited guest for his private traditional wedding fits the circumstances contemplated under Section 13(2) of the Arbitration Act that are likely to give rise to justifiable doubts as to his impartiality or independence. He stated that the argument by Counsel for the 1st and 2nd respondents’ in his affidavit that the Arbitrator ought not to have disclosed about inviting him to his traditional wedding because the disclosures made at the commencement of the arbitral proceedings were sufficient and there was no need for any further disclosures, runs counter to Section 13(2) of the Arbitration Act.
34. Counsel for the applicants pointed out that the disclosures made by the Arbitrator were a declaration of impartiality and independence dated 31st March, 2021 under Order for Directions No. 2 dated 30th April, 2021 and in particular, under Order No. 5, which were purely of a professional nature.
35. He contended that the wedding event was a private social event, restricted to those selected although the respondents have tried to advance the view that the wedding fitted the profile of an event organized by a professional colleague, but that is another attempt by the respondents to stretch the facts, to suit their position, as the facts surrounding the event militate against such a view. He further contended that a private wedding attended by invitation only connotes that those invited were very close to the 3rd respondent, hence the observation that a close personal friendship exists between the Arbitrator and Counsel for the 1st and 2nd respondents beyond the professional circles.
36. Mr. Namachanja submitted that within the context of the ongoing arbitration dispute, the 3rd respondent failed to appreciate that on the facts of the case as presented by the applicants and admitted by him, a third party not interested in the dispute would not fail to see that the relationship between the 3rd respondent and Counsel for the 1st and 2nd respondents crossed the professional bounds and entered the realm of personal friendship, a situation covered under paragraph 3 of the Arbitrator’s declaration of independence dated 31st March, 2021.
37. Counsel referred to General Standard No. 4(c) of the IBA Guidelines which provides that a person shall not serve as an Arbitrator when a conflict of interest, such as those exemplified in the Waivable Red List exists, nevertheless, such a person may accept appointment as an Arbitrator, or continue to act as an Arbitrator, if all parties, all Arbitrators and the arbitration institution, or other appointing authority (if any), have full knowledge of the conflict of interest, and if all parties expressly agree that such a person may serve as Arbitrator, despite the conflict of interest.
38. He stated that their submissions before the 3rd respondent were that the facts complained of in this application fall under the Waivable Red List category of the IBA Guidelines and possibly also under the Orange List. Counsel stated that under the Waivable Red List, the relevant part is clause 2.3 on the Arbitrator’s relationship with the parties or Counsel (Part II: Practical Application of the General Standards, page 21), and that Clause 2.3.8 provides for a situation where the Arbitrator has a close family relationship with one of the parties, or with a manager, director or member of the supervisory board, or any person having a controlling influence in one of the parties, or with a Counsel representing a party.
39. He stated that under the Orange List, the situation under consideration is covered under clause 3.3.6 which provides for where “a close personal friendship exists between an arbitrator and a counsel of a party”. He contended that in both the Orange List and the Waivable Red List, the Arbitrator must make disclosure, and that in this particular case, there was need for disclosure by the 3rd respondent to allow the applicants to judge whether they would have agreed with his evaluation and to explore the situation further. Counsel submitted that the 3rd respondent having agreed that the applicable list was the Orange List as per paragraph 112(ix) of the ruling, he had a duty to disclose in keeping with Clauses 2 and 3 of Part II: Practical Application of the General Standards of the IBA Guidelines.
40. Mr. Namachanja relied on the case of Sobeth Developers Limited v South Nyanza Sugar Co. Limited (supra), where the Arbitrator failed to disclose his close relationship with Counsel for one of the parties and the said Arbitrator was removed by the High Court, which observed that given the calibre of the Arbitrator, it was expected of him that he would strictly comply with the mandatory requirements of the law. Counsel also relied on the case of Mwambao Road Parklands & another v S&M Properties Limited [2021] eKLR, where the Arbitrator failed to disclose his relationship with the respondent’s Engineer therein, leading to the Arbitrator’s removal by the High Court.
41. Counsel reiterated that it is on the basis of the personal friendship between the 3rd respondent and Counsel for the 1st and 2nd respondents that led the 3rd respondent to invite the said Counsel to his traditional wedding, and it is the said closeness that leads the applicants towards the view that the 3rd respondent will be more than inclined to find in favour of the 1st and 2nd respondents. He stated that it is common knowledge that within the context of wedding settings, invited guests ordinarily carry wedding gifts, and if indeed Counsel for the 1st and 2nd respondents carried a gift for the 3rd respondent, it would be difficult for him to overlook such an act of kindness when it comes to making the final decision in the arbitral proceedings.
42. Counsel reiterated that if the applicants had known of the close relationship between the 3rd respondent and the Counsel for the 1st and 2nd respondents through full disclosure at the point when the 3rd respondent made his initial disclosures, the applicants would have raised objection, and that with the revelation of the wedding event and the lack of disclosure by the 3rd respondent, the applicants have lost confidence in him and are doubtful of his impartiality and independence going forward.
43. On his part, Dr. Arwa for the 1st and 2nd respondents stated that the applicants’ prayer is for the 3rd respondent to be removed from the Tribunal on the premise that he failed to disclose various facts. He further stated that the guiding law is Section 13(3) of the Arbitration Act, which provides that such a challenge can only be successful if there are justifiable doubts, and in this instance as to the impartiality and independence of the 3rd respondent.
44. Counsel submitted that on his part, the 3rd respondent did from the onset disclose the existence of a professional relationship with the 1st and 2nd respondents’ Counsel, which disclosure was accepted by the 1st applicant who now wishes to abandon the position in an effort to delay the arbitration proceedings between the parties.
45. Dr. Arwa contended that no justifiable grounds have been raised in the said application, and that any allegations thereto are baseless, devoid of merit and lacking in any evidentiary value. He termed the assertions as hearsay at best, which cannot be substantiated by this Court. He urged that this Court while assessing this matter should be guided by the cardinal principle that he who alleges must prove.
46. He submitted that the operative words under Section 13(3) of the Arbitration Act are circumstances that give rise to justifiable doubts. Counsel referred to the case of Chania Gardens Limited v Gilbi Construction Company Limited & another [2015] eKLR, where Gikonyo J, held that it is not enough to merely state that the Arbitrator is incapable of acting impartially in the arbitration, as cogent evidence is required to prove the misconduct, and the specific instances or matters constituting the misconduct must be tabled before Court.
47. Counsel expressed the view that the 3rd respondent made all the relevant disclosures that the relationship between himself and the 1st and 2nd respondents’ Counsel is professional, a disclosure contained in the declaration of impartiality and independence dated 31st March, 2021 and the Order for Directions No. 2 dated 30th April, 2021.
48. Dr. Arwa stated that it not possible to reasonably infer that professional colleagues cannot be invited to a private wedding, as to arrive at such a conclusion would mean that even officers of the Court would decline invitations to weddings of fellow Counsel on the assumption that accepting such invitation would result in a professional relationship automatically metamorphosing into a personal relationship. He contended that what the applicants were failng to take into account is that professional colleagues invite other colleagues to functions, and the applicants admit that other dignitaries attended the wedding ceremony, and it goes without saying that the 3rd respondent could have invited whomever he so wished whether a professional colleague or a childhood friend, and the shortlisting of the invitation list did not constitute a justifiable doubt to impartiality under Section 13(3) of the Arbitration Act.
49. Counsel stated that what the applicants allege is a perception of bias without any justifiable grounds to prove the bias. He stated that the said allegation does not meet the conditions as set down Chania Gardens Limited v Gilbi Construction Company Limited & another (supra) in regard to removal of an Arbitrator.
50. He submitted that no cogent proof of actual bias or prejudice has been provided by the applicants who have failed to meet the objective test that the 3rd respondent was indeed biased. He relied on the decisions in Zadock Furniture System Limited and Maridadi Building Construction Limited v Central Bank of Kenya (2015) eKLR, to buttress his arguments.
51. Counsel submitted that the photographs relied on by the applicants violate the provisions of Section 106B(4) of the Evidence Act, for not having been accompanied by a certificate of electronic evidence. To support his submission, he relied on the case of the County Assembly of Kisumu & 2 others v Kisumu County Assembly Service Board & 6 others [2015] eKLR. He also relied on the case of Republic vs Barisa Wayu Matuguda [2011] eKLR in that regard. Counsel contended that since there is no certificate of electronic evidence on record, the photographs are not admissible as evidence and urged this Court should strike them out.
52. In regard to the applicants’ Counsel’s submissions that the 3rd respondent in his ruling agreed that his relationship with the Counsel for the 1st and 2nd respondents falls under the Orange List under the IBA Guidelines on Conflicts of Interest in International Arbitration, 2014, Dr. Arwa stated that firstly, the said Guidelines apply to International Commercial Arbitration and Investment Arbitration, whereas the arbitration that is the subject matter of this challenge is a domestic arbitration arising from a lease agreement between the parties, and secondly, the Guidelines are not legal provisions, and do not override any applicable national law and that the said guidelines cannot reign over the test established under Section 13(3) of the Arbitration Act and the test set out by Kenyan Courts in the case of Chania Gardens Limited v Gilbi Construction Company Limited & another (supra). Counsel stated that the third reason is that even if this Court is to rely persuasively on the Guidelines, then the same ought to be applied without an unduly formalistic interpretation. Counsel urged this Court not to rely on the Guidelines in making its determination, as the said Guidelines were not designed for the kind of dispute in question, and cannot reign above national laws and Court precedents.
ANALYSIS AND DETERMINATION
53. The issue for determination is if the Arbitrator in the arbitral proceedings between the parties herein should be removed from the said proceedings. In so determining, this Court has considered the depositions by the parties, the submissions of their Counsel, the authorities relied on and the applicable law.
54. There are three issues that the Counsel for the 1st and 2nd respondents submitted on that I need to address from the outset. The first one is about the inadmissibility of the photographs that were relied on by the applicants in the application challenge before the 3rd respondent as evidence to prove that Dr. Mutubwa, the Counsel for the 1st and 2nd respondents attended the 3rd respondent’s traditional wedding when the arbitral proceedings between the parties herein were ongoing before the 3rd respondent. This Court’s observation in regard to the said issue is that the objection to reliance on the said photographs should have been raised at the first instance in the application challenge before the said Arbitrator. Under Section 20(3) of the Arbitration Act, the power of the Arbitral Tribunal under subsection (2) 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.
55. Having said so, I am in agreement with Counsel for the 1st and 2nd respondents that the said photographs should have been produced in evidence accompanied by a certificate in line with the provisions of Section 106B(4) of the Evidence Act. Noting that there was no such compliance, this Court’s finding is that the said photographs were inadmissible in evidence.
56. The 2nd issue raised by the Counsel for the 1st and 2nd respondents is the contention that the applicants moved to this Court late as they had fifteen (15) days to move to this Court after a decision on the application challenge was delivered. That is not the correct position of the law. Section 14 of the Arbitration Act provides as follows-
“1) Subject to subsection (3), the parties are free to agree on a procedure for challenging an arbitrator.
2. Failing an agreement under subsection (1), a party who intends to challenge an arbitrator shall, within 15 days after becoming aware of the composition of the arbitral tribunal or after becoming aware of any circumstances referred to in section 13(3), send a written statement of the reasons for the challenge to the arbitral tribunal, and unless the arbitrator who is being challenged withdraws from his office or the other party agrees to the challenge, the arbitral tribunal shall decide on the challenge.
3. If a challenge under agreed procedure or under subsection (2) is unsuccessful, the challenging party may, within 30 days after being notified of the decision to reject the challenge, apply to the High Court to determine the matter.
(4) On an application under subsection (3), the arbitrator who was challenged shall be entitled to appear and be heard before the High Court determines the application.
(5) The High Court may confirm the rejection of the challenge or may uphold the challenge and remove the arbitrator.
(6) The decision of the High Court on such an application shall be final and shall not be subject to appeal.
(7) Where an arbitrator is removed by the High Court under this section, the court may make such order as it thinks fit with respect to his entitlement (if any) to fees or expenses or the repayment of any fees or expenses already paid.
(8) ………………………………………………………...” (emphasis added).
59. The above provisions are very clear that a party aggrieved by a decision of the Arbitral Tribunal arising out of an application challenge has 30 days to move to the High Court so as to have the matter determined. The ruling to the application challenge was rendered on 6th April, 2023 and the instant application was filed on 4th May, 2023. The applicants therefore filed the instant application within the 30 days’ period stipulated in law.
60. The third issue that I need to address summarily is the one raised by the Counsel for the 1st and 2nd respondents on the failure by the applicants to file an affidavit from one Mr. Daniel Onyancha, who is said to have been the one who passed on information to the applicants about having sighted Dr. Mutubwa at the traditional wedding of the 3rd respondent. It was contended that the said information amounted to hearsay and should not be relied on. In this Court’s view, such an argument is neither here nor there as due to the information passed on by the said Mr. Onyancha, the 1st and 2nd respondents’ Counsel and the 3rd respondent were confronted with the said information in the application challenge by the applicants, and Dr. Mutubwa admitted to having attended the traditional wedding in issue, and the 3rd respondent in his ruling of 6th April, 2023, acknowledged having invited the Counsel for the 1st and 2nd respondents to the said event.
61. Given the said admissions, at this point in time, it would have been superfluous for Mr. Onyancha to file an affidavit to confirm what is already admitted on record by Counsel for the 1st and 2nd respondents in his affidavit and is acknowledged by the 3rd respondent in his ruling of 6th April, 2023. Since there is admission as to the presence of the 1st and 2nd respondents’ Counsel in the 3rd respondent’s traditional wedding, and noting that their contention is that the said Counsel attended the said wedding as a professional colleague of the 3rd respondent, whereas the applicants’ contention is that the said invite connotes a personal friendship, between the two, it is necessary to consider not only the applicable provisions of the law but also the perception that the 1st and 2nd respondents’ Counsel’s attendance of the 3rd respondent’s traditional wedding may have caused in the minds of third parties.
62. Section 13 of the Arbitration Act provides for grounds of challenge of an Arbitrator in the following words-
1) When a person is approached in connection with his possible appointment as an arbitrator, he shall disclose any circumstances likely to give rise to justifiable doubts as to his impartiality or independence.
2) From the time of his appointment and throughout the arbitral proceedings, an arbitrator shall without delay disclose any such circumstances to the parties unless the parties have already been informed of them by him.
3) An arbitrator may be challenged only if circumstances exist that give rise to justifiable doubts as to his impartiality and independence, or if he does not possess qualifications agreed to by the parties or if he is physically or mentally incapable of conducting the proceedings or there are justifiable doubts as to his capacity to do so.
4) A party may challenge an arbitrator appointed by him, or in whose appointment that party has participated, only for reasons of which he becomes aware after the appointment. (emphasis added).
63. In this matter the Arbitrator did make a disclosure in the Order for Directions No. 2 that he was a professional colleague of the Counsel for the 1st and 2nd respondents in both the Chartered Institute of Arbitrators and as an Advocate. The said Counsel denied having a close personal friendship with the Arbitrator.
64. In the case of the Attorney-General v. Anyang’ Nyong’o & others “reasonable apprehension for bias” [2007]1E.A. 12, the Court set the test for bias as follows-
“The objective test of ‘reasonable apprehension of bias’ is good law. The test is stated variously, but amounts to this: do the circumstances give rise to a reasonable apprehension, in the view of a reasonable, fair-minded and informed member of the public that a Judge did not (will not) apply his mind to the case impartially ["] Needless to say, a litigant who seeks [the] disqualification of a Judge comes to Court because of his own perception that there is appearance of bias on the part of the Judge. The Court, however, has to envisage what would be the perception of a member of the public who is not only reasonable but also fair-minded and informed about all the circumstances of the case...” (emphasis added).
65. The Supreme Court of Canada expounded on the test in the following terms in R Vs S (R.D) [1977] 3 SCR 484.
“The apprehension of bias must be a reasonable one held by reasonable and right-minded persons, applying themselves to the question and obtaining thereon the required information. The test is what would an informed person, viewing the matter realistically and practically – and having thought the matter through – conclude. This test contains a two-fold objective element: the person considering the alleged bias must be reasonable and the apprehension of bias itself must also be reasonable in the circumstances of the case. Further the reasonable person must be an informed person, with knowledge of all the relevant circumstances, including the traditions of integrity and impartiality that from a part of the background and apprised also of the fact that impartiality is one of the duties the Judges swear to uphold. The reasonable person should also be taken to be aware of the social reality that forms the background to a particular case, such as societal awareness and acknowledgment of the prevalence of racism or gender bias in a particular community. The jurisprudence indicates that a real likelihood or probability of bias must be demonstrated and that a mere suspicion is not enough. The existence of a reasonable apprehension of bias depends entirely on the facts. The threshold for such a finding is high and the onus of demonstrating bias lies with the person who is alleging its existence.” (emphasis added).
66. Having considered the above decisions and the circumstances of this case, this Court is of the same view as the applicants’ Counsel that the duty of disclosure by the Arbitrator was not constricted only to the initial stages of the arbitral proceedings. This Court holds that an Arbitrator’s duty of disclosure is a continuous one and that duty calls for utmost accountability and transparency in making disclosures in regard to how parties have related in the past or at present or even planned future events, that would have a bearing to the outcome of the proceedings. It is therefore my finding that the Arbitrator should have disclosed to the applicants and their Counsel that he had invited the 1st and 2nd respondents’ Counsel to his traditional weeding and sought their views on the said issue.
67. In making his submissions, Counsel for the 1st and 2nd respondents contended that the IBA Guidelines on Conflicts of Interest in International Arbitration, 2014, are not applicable to the matter before this Court as they apply to international arbitration. This Court’s take on the said submissions is that nothing bars the Chartered Institute of Arbitrators, Kenya Chapter from being guided by the best practices which are internationally recognized and to adopt and apply the same in arbitral proceedings in Kenya. A corollary to the above scenario can be drawn from the manner in which Courts in Kenya and in some other jurisdictions have for a long time been guided by the Bangalore principles of judicial conduct, from which the Judiciary of Kenya borrowed heavily in the development of the Kenyan Judicial Service (Code of Conduct and Ethics) Regulations, 2020, for Judges, Judicial Officers and Judicial Staff.
68. A case in point in regard to application of the best practices from other countries is Republic v Independent Electoral & Boundaries Commission & another Exparte Coalition For Reforms and Democracy (CORD) [2017] eKLR, where the Court referred to the Bangalore Principles on Judicial Conduct on the definition of bias and prejudice-
“Bias or prejudice has been defined as a leaning, inclination, bent or predisposition towards one side or another or a particular result. In its application to judicial proceedings, it represents a predisposition to decide an issue or cause in a certain way which does not leave the judicial mind perfectly open to conviction. Bias is a condition or state of mind, an attitude or point of view, which sways or colours judgement and renders a judge unable to exercise his or her functions impartially in a particular case. However, this cannot be stated without taking into account the exact nature of the bias.” (emphasis added).
69. This case rests not on the issue of actual bias but on perception of bias as there is no allegation of an incident where in the course of the arbitral proceedings when the Arbitrator has exhibited actual bias against the applicants herein. A case of perception of bias rests on the apprehension that a reasonable, objective and informed person would have, based on the facts of a particular case. In President of the Republic of South Africa and others v South Africa Rugby Football Union and others (CCT16/98) 2000 (1) SA 1, the Court articulated the proper approach as follows:-
“…The question is whether a reasonable, objective and informed person would on the correct facts reasonably apprehend that the Judge has not or will not bring an impartial mind to bear on the adjudication of the case, that is a mind open to persuasion by the evidence and the submissions of counsel. The reasonableness of the apprehension must be assessed in the light of the oath of office taken by Judges to administer justice without fear or favour; and their ability to carry out the oath by reason of their training and experience. It must be assumed that they can disabuse their minds of any irrelevant personal beliefs or predispositions. They must take into account the fact that they have a duty to sit in any case in which they are not obliged to recuse themselves. At the same time, it must never be forgotten that an impartial Judge is a fundamental prerequisite for a fair trial and a judicial officer should not hesitate to recuse herself or himself if there are reasonable grounds on the part of the litigant for apprehending that the judicial officer, for whatever reasons, was not or will not be impartial.” (emphasis added).
70. In this matter the 3rd respondent declined to recuse himself on the basis that the relationship between him and the Counsel for the 1st and 2nd respondents was a professional one. This Court however takes judicial notice of the fact that in the Kenyan context, invitations of colleagues to weddings is extended to those that one considers close and such invites are not extended to all and sundry. Had that been the case, then the 3rd respondent could have as well extended the invite to the Counsel for the applicants who is an Advocate, just like him. Given the said circumstances, this Court arrives at the inevitable conclusion that apart from being professional colleagues, the 3rd respondent and the Counsel for the 1st and 2nd respondents are friends, and that is the perception that any reasonable, objective, informed member of the society would reach based on the circumstances of this case.
71. As Counsel for the applicants stated, it is common knowledge that there is the custom for invited guests to give gifts at a wedding. In this case, apart from the 3rd respondent and the Counsel for the 1st and 2nd respondents, the applicants and their Counsel will never know if the Counsel for the 1st and 2nd respondents was a gift bearing guest at the traditional wedding or not. It however boils down to failure by the 3rd respondent to disclose to the applicants and their Counsel that he intended to invite the Counsel for the 1st and 2nd respondents to his traditional wedding and seek their views on the same. Bearing in mind the final nature of Arbitral Awards which can only be set aside upon a litigant satisfying the conditions stipulated under Section 35 of the Arbitration Act, the need for disclosure becomes even more critical.
72. In S v Roberts 1999 (4) SA 915 (SCA) the Court stated that the apprehension be that of the reasonable person in the position of the litigant and that it be based on reasonable grounds. Cory J., stated as follows in the above case-
“Regardless of the precise words used to describe the test, the object of the different formulations is to emphasize that the threshold for a finding of real or perceived bias is high. It is a finding that must be carefully considered since it calls into question an element of judicial integrity.” (emphasis added).
73. The Counsel for the 1st and 2nd respondents has stated that since he and the 3rd respondent are Arbitrators who have served at the Chartered Institute of Arbitrators, Kenya Branch, as Chairman and Vice-Chairman of the Institute respectively, during the same tenure, they were bound to interact or have interacted in the Chartered Institute of Arbitrators events, trainings, board meetings and member’s welfare gatherings while discharging their professional mandate. I do agree that the above events are professional in nature, however, weddings are personal events where families, friends and close colleagues are invited. The lack of disclosure by the 3rd respondent that he had invited the Counsel for the 1st and 2nd respondents to his traditional wedding is the one that leads to the perception of bias.
74. Due to the failure to so disclose on the part of the 3rd respondent, it has led to an erosion of the confidence that applicants have, that he will be neutral when it comes to the hearing and determination of the arbitral proceedings before him involving the parties herein.
75. In conclusion, this Court holds that there was lack of transparency on the part of the 3rd respondent and he should have done the honourable thing when he was requested through an application challenge to recuse himself from the arbitral proceedings in issue. This Court finds that justifiable doubts have arisen as to 3rd respondent’s impartiality and independence and the same have been proved by the applicants. In line with the provisions of Section 14(5) of the Arbitration Act, I uphold the application challenge raised by the applicants in the arbitral proceedings in issue and I hereby remove the 3rd respondent from the said proceedings.
76. The applicants are awarded the costs of the application dated 4th May, 2023 and the application challenge dated 31st May, 2022.
DELIVERED, DATED and SIGNED at NAIROBI on this 1st of December, 2023. Ruling delivered through Microsoft Teams Online Platform.
NJOKI MWANGI
JUDGE
In the presence of:
Mr. Gachunga h/b for Mr. Namachanja for the applicants
No appearance for the respondents
Ms. B. Wokabi – Court Assistant.
IN THE HIGH COURT OF KENYA AT NAIROBI
COMMERCIAL & TAX DIVISION
MISCELLANEOUS APPLICATION NO. E346 OF 2023
IN THE MATTER OF SECTIONS 13(3) AND 14(3) OF THE ARBITRATION ACT, NO. 4 OF 2015
BETWEEN
NAVIN PREMJI KERAI (As well as in his capacity as a Co-Administrator of the Estate of SAPNA KANJI PATEL (Deceased)
HERBAI PREMJI KERAI (in her capacity as a Co-Administrator of the Estate of SAPNA KANJI PATEL (Deceased) ………………..APPLICANTS
AND
VIRUNGA LIMITED …………………………………….1ST RESPONDENT
VIRUNGA APARTMENTS LIMITED…………………..2ND RESPONDENT
CALVIN NYACHOTI……………………………………..3RD RESPONDENT
RULING
1. This ruling is in respect to a Notice of Motion dated 4th May, 2023 filed by the applicants, brought under the provisions of Sections 13(3) and 14(3) of the Arbitration Act, No. 4 of 1995. The applicants seek the following orders-
(i) Spent;
(ii) That this Honourable Court be pleased to remove the 3rd respondent from being Arbitrator in the arbitration proceedings between the
applicants and the 1st and 2nd respondents; and
(iii) That costs be provided for.
2. The application is premised on the grounds in support of it and the affidavit of Navin Premji Kerai sworn on 4th May, 2023 and a supplementary affidavit sworn by the same deponent on 4th July, 2023. The 1st and 2nd respondents opposed the application vide a replying affidavit sworn by Dr. Wilfred Mutubwa on 16th June, 2023. The 3rd respondent did not file any response to the application.
3. The application was canvassed by way of written submissions. The applicants’ submissions were filed on 4th July, 2023 by the law firm of Namachanja & Mbugua Advocates. The 1st & 2nd respondents’ submissions were filed on 26th July, 2023 by Rachier & Amollo LLP.
4. The instant application arises from a ruling delivered by the 3rd respondent on 6th April, 2023 in which he declined to recuse himself as an Arbitrator in arbitral proceedings between the applicants and the 1st and 2nd respondents, wherein the latter are the claimants and the former parties are the respondents.
5. In the supporting affidavit, the applicants state that the application for recusal of the 3rd respondent is based on the fact that on 18th February, 2022 at his mother’s residence, he had a traditional wedding ceremony, which was personal and private in nature, where the guests attending were strictly by invitation only. That Dr. Wilfred Mutubwa, the 1st and 2nd respondents’ Counsel was an invited guest and he attended the ceremony.
6. The bone of contention as per the applicants is that the 3rd respondent had not made prior disclosure about his wedding and the fact that he had invited the 1st and 2nd respondents’ Counsel to the function. The applicants deposed that the Arbitrator in a Declaration and Order for Directions No. 2 dated 30th April, 2021, and in particular under paragraphs 2 and 3 made in furtherance to the Declaration of impartiality and independence made on 31st March, 2021 upon his appointment, the Arbitrator disclosed that his interactions with the 1st and 2nd respondents’ Counsel was on the professional side as colleagues who sit in the Chartered Institute of Arbitrators as members and that the two are members of the Law Society of Kenya. The 1st applicant stated that he was then comfortable with the disclosures made at that time and had confidence in the Tribunal.
7. The 1st applicant averred that he was however concerned upon learning that the 3rd respondent held a traditional wedding ceremony and invited the 1st and 2nd respondents’ Counsel without making any disclosure well in advance, as the Arbitrator was aware and alive to the obligation to make disclosure of any circumstances that would be reasonably perceived to affect his independence and impartiality.
8. The 1st applicant contended that given the personal and private nature of the wedding ceremony and the fact that guests attended upon invitation only, the obvious implication from a third party’s perception is that as between the 3rd respondent and the 1st and 2nd respondents’ Counsel there is a close personal friendship that goes beyond their simply being professional colleagues.
9. The 1st applicant deposed that the 3rd respondent at his appointment failed to make full disclosure about his relationship with Counsel for the 1st and 2nd respondents. He further deposed that the said failure leaves the applicants with no confidence in the Tribunal, and they are now doubtful that the 3rd respondent can sustain a clear level of impartiality and independence.
10. The 1st applicant averred that after raising the challenge application for the 3rd respondent to recuse himself from the arbitral proceedings, he delivered ruling No. 3 dated 6th April, 2023 in which he dismissed the applicants’ challenge application. The 1st applicant contended that he believes that the 3rd respondent was not correct in his final decision that they had not made out a case for recusal because even after they raised the issue of his relationship with Counsel for the 1st and 2nd respondents, the 3rd respondent never said a thing in the challenge application.
11. The 1st applicant deposed that in the said ruling at paragraph 110, the 3rd respondent confirmed that Counsel for the 1st and 2nd respondents attended his wedding but as a professional colleague and denied that there was a personal relationship.
12. The 1st applicant reiterated that there was no disclosure made by the 3rd respondent about having invited the Counsel for the 1st and 2nd respondents to his traditional wedding, because the said wedding was held in February 2022 and the directions by the 3rd respondent were issued in April 2021 and that the order for directions No. 1 did not deal with the issue of disclosures.
13. The 1st applicant stated that the position maintained by the applicants is that the wedding ceremony having been a private social event in a very specific private location, Counsel for the 1st and 2nd respondents could not have been in attendance on the basis that he was the 3rd respondent’s professional colleague as stated in the ruling.
14. The 1st applicant suggested that the 3rd respondent was swayed by matters that had no bearing on the core issue in the application challenge before him, as the issue in contention was the wedding ceremony and the conduct of the 3rd respondent.
15. The 1st applicant contested the holding by the 3rd respondent that the alleged lack of independence cannot be interpreted as conflict of interest. The applicants’ prayer is for this Court’s intervention in the belief that they have laid sufficient basis to demonstrate that there is just cause to remove the 3rd respondent from being an Arbitrator in the dispute between the parties herein. He deposed that the applicants should not be forced to engage in a process in which they have lost total confidence in the 3rd respondent as an impartial and independent Tribunal.
16. The applicants stated that the facts constituting their grievances are agreed by the 3rd respondent and that the mere failure to disclose at first, and then the continued failure to disclose even when the applicants raised issues subsequently, are a sufficient ground to have the 3rd respondent removed as an Arbitrator.
17. In the replying affidavit filed by Dr. Wilfred Mutubwa, the learned Counsel for the 1st and 2nd respondents averred that the 3rd respondent made all the necessary disclosure as regards his relationship with him, vide the Tribunal’s Order for Directions No. 2.
18. The deponent admitted that the 3rd respondent is known to him as a professional colleague, Advocate and Arbitrator, and he has served with the 3rd respondent at the Chartered Institute of Arbitrators Kenya Branch as Vice-Chairman, while the 3rd respondent was the Chairman of the said Institute.
19. He deposed that he and the 3rd respondent occasionally meet at CIArb’s events, trainings, board meetings and members’ welfare gatherings and it is therefore untrue that the Arbitrator and himself share a close personal relationship as they are merely professional colleagues and only interact in those circles.
20. He contended that the allegation that the invitation to the 3rd respondent’s wedding was based on a close personal friendship between them is misplaced and untrue as his attendance of the wedding was as a professional colleague and cannot be used to construe a relationship giving rise to a conflict of interest.
21. Counsel for the 1st and 2nd respondents deposed that the 3rd respondent having made the relevant disclosures as per the Order for Directions No. 2, it was not necessary to once again reiterate the same. He stated that it is not uncommon to be invited by a colleague in professional circles to their ceremonies. He also deposed that Courts have time and again recognized the said fact.
22. Counsel contended that mere perception or apprehension of bias leading to doubts on the Arbitrator’s impartiality by one party is not enough to call for recusal and that failure to disclose is not fatal.
23. Dr. Mutubwa averred that the test to be applied is strictly objective and both the Arbitrator and the Court have to satisfy themselves that there are circumstances that give rise to justifiable doubts as to impartiality and independence of the Arbitrator.
24. In the supplementary affidavit filed by the 1st applicant, he averred that in his simple understanding of the Arbitrator’s continued duty to make disclosure during the life of the arbitration proceedings, the Arbitrator and Counsel for the 1st and 2nd respondents should have come out clean in response to the letter dated 31st May, 2023, but the Arbitrator never responded to the said letter and that the Counsel for the 1st and 2nd respondents on his part raised a Preliminary Objection. That there was no admission that a wedding took place and that Counsel for the 1st and 2nd respondents invoked rules of evidence, arguing that he who alleges must prove.
25. That as a party before the Arbitrator, the concern the applicants have had throughout is why it was difficult for the Arbitrator to come clean and explain the events as they happened. That their other concern is as to why Counsel for the 1st and 2nd respondents was keen to bar discovery of the events of the wedding by raising a Preliminary Objection as a first response. He averred that the conduct of the 3rd respondent and Counsel for the 1st and 2nd respondents left him persuaded that the 3rd respondent is neither impartial nor independent as the 3rd respondent finally admitted to the facts of the wedding in his ruling at paragraph 110, and that Counsel for the 1st and 2nd respondents also finally admitted that he attended the wedding at paragraph 11 of the replying affidavit.
26. The 1st applicant contended that the disclosures made by the 3rd respondent did not cover the Arbitrator’s close personal affairs and relationships as the disclosures limited themselves to professional affairs. The 1st applicant further contended that the Arbitrator owed the 1st and 2nd respondents a duty to disclose that he had invited Counsel for the 1st and 2nd respondents to his private wedding function, and that is more so, given the fact that a similar invitation was not made to the applicants’ Advocates then on record. The 1st applicant stated that it is within the said context and the nature of the wedding and where it was held, that he maintains that there is more than a professional relationship between the Arbitrator and Dr. Mutubwa, the Counsel for the 1st and 2nd respondents.
27. The 1st applicant maintained that the invitation to the wedding function was not on the basis that Dr. Mutubwa was the Arbitrator’s professional colleague, and if it was, even his Advocates on record then, who were professional colleagues of the 3rd respondent should have been invited, and noting that the 3rd respondent’s wedding was not held in a public place accessible to everyone, but in his mother’s residence with attendance by invitation only, the 1st applicant was convinced that the 3rd respondent and Counsel for the 1st and 2nd respondents are close friends.
28. The 1st applicant contended that what he has presented before this Court are not mere perceptions or apprehensions of bias, as his application is based on facts that have not been denied by the respondents, but what the 3rd respondent did was not simply failure to disclose, but it was a deliberate refusal to disclose, supported by Counsel for the 1st and 2nd respondents.
29. The 1st applicant asserted the 3rd respondent should be removed from the arbitral proceedings, as there exist justifiable doubts as to his impartiality and independence, and as there was misconduct on his part requiring his removal.
30. The 1st applicant stated that at the back of his mind, he keeps on asking what else there is between the 3rd respondent and the Counsel for the 1st and 2nd respondents that has not been disclosed, and that it would be an injustice for the applicants to be forced to go back before the 3rd respondent when all confidence in him has been lost.
31. The 1st applicant denied any malice on the part of the applicants and reiterated that they should not be forced to go through an arbitration with the 3rd respondent who has failed to discharge his statutory duties, and whose conduct is clearly of one who is unlikely to maintain his impartiality and independence. They prayed for the Arbitrator to be removed and opined that justice would be served if a neutral Arbitrator is appointed.
32. Mr. Namachanja, the applicants’ Counsel in his written submissions stated that as admitted by the 3rd respondent in his ruling under paragraph 112(ii), the obligation placed upon him to make disclosure is of a continuing nature, in keeping with Section 13 of the Arbitration Act, No. 4 of 1995 and it is not a one-off blanket kind of disclosure that is meant to cover all subsequent happenings in the course of the arbitration proceedings.
33. Counsel expressed the view that the act of the Arbitrator hosting Counsel for the 1st and 2nd respondents as an invited guest for his private traditional wedding fits the circumstances contemplated under Section 13(2) of the Arbitration Act that are likely to give rise to justifiable doubts as to his impartiality or independence. He stated that the argument by Counsel for the 1st and 2nd respondents’ in his affidavit that the Arbitrator ought not to have disclosed about inviting him to his traditional wedding because the disclosures made at the commencement of the arbitral proceedings were sufficient and there was no need for any further disclosures, runs counter to Section 13(2) of the Arbitration Act.
34. Counsel for the applicants pointed out that the disclosures made by the Arbitrator were a declaration of impartiality and independence dated 31st March, 2021 under Order for Directions No. 2 dated 30th April, 2021 and in particular, under Order No. 5, which were purely of a professional nature.
35. He contended that the wedding event was a private social event, restricted to those selected although the respondents have tried to advance the view that the wedding fitted the profile of an event organized by a professional colleague, but that is another attempt by the respondents to stretch the facts, to suit their position, as the facts surrounding the event militate against such a view. He further contended that a private wedding attended by invitation only connotes that those invited were very close to the 3rd respondent, hence the observation that a close personal friendship exists between the Arbitrator and Counsel for the 1st and 2nd respondents beyond the professional circles.
36. Mr. Namachanja submitted that within the context of the ongoing arbitration dispute, the 3rd respondent failed to appreciate that on the facts of the case as presented by the applicants and admitted by him, a third party not interested in the dispute would not fail to see that the relationship between the 3rd respondent and Counsel for the 1st and 2nd respondents crossed the professional bounds and entered the realm of personal friendship, a situation covered under paragraph 3 of the Arbitrator’s declaration of independence dated 31st March, 2021.
37. Counsel referred to General Standard No. 4(c) of the IBA Guidelines which provides that a person shall not serve as an Arbitrator when a conflict of interest, such as those exemplified in the Waivable Red List exists, nevertheless, such a person may accept appointment as an Arbitrator, or continue to act as an Arbitrator, if all parties, all Arbitrators and the arbitration institution, or other appointing authority (if any), have full knowledge of the conflict of interest, and if all parties expressly agree that such a person may serve as Arbitrator, despite the conflict of interest.
38. He stated that their submissions before the 3rd respondent were that the facts complained of in this application fall under the Waivable Red List category of the IBA Guidelines and possibly also under the Orange List. Counsel stated that under the Waivable Red List, the relevant part is clause 2.3 on the Arbitrator’s relationship with the parties or Counsel (Part II: Practical Application of the General Standards, page 21), and that Clause 2.3.8 provides for a situation where the Arbitrator has a close family relationship with one of the parties, or with a manager, director or member of the supervisory board, or any person having a controlling influence in one of the parties, or with a Counsel representing a party.
39. He stated that under the Orange List, the situation under consideration is covered under clause 3.3.6 which provides for where “a close personal friendship exists between an arbitrator and a counsel of a party”. He contended that in both the Orange List and the Waivable Red List, the Arbitrator must make disclosure, and that in this particular case, there was need for disclosure by the 3rd respondent to allow the applicants to judge whether they would have agreed with his evaluation and to explore the situation further. Counsel submitted that the 3rd respondent having agreed that the applicable list was the Orange List as per paragraph 112(ix) of the ruling, he had a duty to disclose in keeping with Clauses 2 and 3 of Part II: Practical Application of the General Standards of the IBA Guidelines.
40. Mr. Namachanja relied on the case of Sobeth Developers Limited v South Nyanza Sugar Co. Limited (supra), where the Arbitrator failed to disclose his close relationship with Counsel for one of the parties and the said Arbitrator was removed by the High Court, which observed that given the calibre of the Arbitrator, it was expected of him that he would strictly comply with the mandatory requirements of the law. Counsel also relied on the case of Mwambao Road Parklands & another v S&M Properties Limited [2021] eKLR, where the Arbitrator failed to disclose his relationship with the respondent’s Engineer therein, leading to the Arbitrator’s removal by the High Court.
41. Counsel reiterated that it is on the basis of the personal friendship between the 3rd respondent and Counsel for the 1st and 2nd respondents that led the 3rd respondent to invite the said Counsel to his traditional wedding, and it is the said closeness that leads the applicants towards the view that the 3rd respondent will be more than inclined to find in favour of the 1st and 2nd respondents. He stated that it is common knowledge that within the context of wedding settings, invited guests ordinarily carry wedding gifts, and if indeed Counsel for the 1st and 2nd respondents carried a gift for the 3rd respondent, it would be difficult for him to overlook such an act of kindness when it comes to making the final decision in the arbitral proceedings.
42. Counsel reiterated that if the applicants had known of the close relationship between the 3rd respondent and the Counsel for the 1st and 2nd respondents through full disclosure at the point when the 3rd respondent made his initial disclosures, the applicants would have raised objection, and that with the revelation of the wedding event and the lack of disclosure by the 3rd respondent, the applicants have lost confidence in him and are doubtful of his impartiality and independence going forward.
43. On his part, Dr. Arwa for the 1st and 2nd respondents stated that the applicants’ prayer is for the 3rd respondent to be removed from the Tribunal on the premise that he failed to disclose various facts. He further stated that the guiding law is Section 13(3) of the Arbitration Act, which provides that such a challenge can only be successful if there are justifiable doubts, and in this instance as to the impartiality and independence of the 3rd respondent.
44. Counsel submitted that on his part, the 3rd respondent did from the onset disclose the existence of a professional relationship with the 1st and 2nd respondents’ Counsel, which disclosure was accepted by the 1st applicant who now wishes to abandon the position in an effort to delay the arbitration proceedings between the parties.
45. Dr. Arwa contended that no justifiable grounds have been raised in the said application, and that any allegations thereto are baseless, devoid of merit and lacking in any evidentiary value. He termed the assertions as hearsay at best, which cannot be substantiated by this Court. He urged that this Court while assessing this matter should be guided by the cardinal principle that he who alleges must prove.
46. He submitted that the operative words under Section 13(3) of the Arbitration Act are circumstances that give rise to justifiable doubts. Counsel referred to the case of Chania Gardens Limited v Gilbi Construction Company Limited & another [2015] eKLR, where Gikonyo J, held that it is not enough to merely state that the Arbitrator is incapable of acting impartially in the arbitration, as cogent evidence is required to prove the misconduct, and the specific instances or matters constituting the misconduct must be tabled before Court.
47. Counsel expressed the view that the 3rd respondent made all the relevant disclosures that the relationship between himself and the 1st and 2nd respondents’ Counsel is professional, a disclosure contained in the declaration of impartiality and independence dated 31st March, 2021 and the Order for Directions No. 2 dated 30th April, 2021.
48. Dr. Arwa stated that it not possible to reasonably infer that professional colleagues cannot be invited to a private wedding, as to arrive at such a conclusion would mean that even officers of the Court would decline invitations to weddings of fellow Counsel on the assumption that accepting such invitation would result in a professional relationship automatically metamorphosing into a personal relationship. He contended that what the applicants were failng to take into account is that professional colleagues invite other colleagues to functions, and the applicants admit that other dignitaries attended the wedding ceremony, and it goes without saying that the 3rd respondent could have invited whomever he so wished whether a professional colleague or a childhood friend, and the shortlisting of the invitation list did not constitute a justifiable doubt to impartiality under Section 13(3) of the Arbitration Act.
49. Counsel stated that what the applicants allege is a perception of bias without any justifiable grounds to prove the bias. He stated that the said allegation does not meet the conditions as set down Chania Gardens Limited v Gilbi Construction Company Limited & another (supra) in regard to removal of an Arbitrator.
50. He submitted that no cogent proof of actual bias or prejudice has been provided by the applicants who have failed to meet the objective test that the 3rd respondent was indeed biased. He relied on the decisions in Zadock Furniture System Limited and Maridadi Building Construction Limited v Central Bank of Kenya (2015) eKLR, to buttress his arguments.
51. Counsel submitted that the photographs relied on by the applicants violate the provisions of Section 106B(4) of the Evidence Act, for not having been accompanied by a certificate of electronic evidence. To support his submission, he relied on the case of the County Assembly of Kisumu & 2 others v Kisumu County Assembly Service Board & 6 others [2015] eKLR. He also relied on the case of Republic vs Barisa Wayu Matuguda [2011] eKLR in that regard. Counsel contended that since there is no certificate of electronic evidence on record, the photographs are not admissible as evidence and urged this Court should strike them out.
52. In regard to the applicants’ Counsel’s submissions that the 3rd respondent in his ruling agreed that his relationship with the Counsel for the 1st and 2nd respondents falls under the Orange List under the IBA Guidelines on Conflicts of Interest in International Arbitration, 2014, Dr. Arwa stated that firstly, the said Guidelines apply to International Commercial Arbitration and Investment Arbitration, whereas the arbitration that is the subject matter of this challenge is a domestic arbitration arising from a lease agreement between the parties, and secondly, the Guidelines are not legal provisions, and do not override any applicable national law and that the said guidelines cannot reign over the test established under Section 13(3) of the Arbitration Act and the test set out by Kenyan Courts in the case of Chania Gardens Limited v Gilbi Construction Company Limited & another (supra). Counsel stated that the third reason is that even if this Court is to rely persuasively on the Guidelines, then the same ought to be applied without an unduly formalistic interpretation. Counsel urged this Court not to rely on the Guidelines in making its determination, as the said Guidelines were not designed for the kind of dispute in question, and cannot reign above national laws and Court precedents.
ANALYSIS AND DETERMINATION
53. The issue for determination is if the Arbitrator in the arbitral proceedings between the parties herein should be removed from the said proceedings. In so determining, this Court has considered the depositions by the parties, the submissions of their Counsel, the authorities relied on and the applicable law.
54. There are three issues that the Counsel for the 1st and 2nd respondents submitted on that I need to address from the outset. The first one is about the inadmissibility of the photographs that were relied on by the applicants in the application challenge before the 3rd respondent as evidence to prove that Dr. Mutubwa, the Counsel for the 1st and 2nd respondents attended the 3rd respondent’s traditional wedding when the arbitral proceedings between the parties herein were ongoing before the 3rd respondent. This Court’s observation in regard to the said issue is that the objection to reliance on the said photographs should have been raised at the first instance in the application challenge before the said Arbitrator. Under Section 20(3) of the Arbitration Act, the power of the Arbitral Tribunal under subsection (2) 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.
55. Having said so, I am in agreement with Counsel for the 1st and 2nd respondents that the said photographs should have been produced in evidence accompanied by a certificate in line with the provisions of Section 106B(4) of the Evidence Act. Noting that there was no such compliance, this Court’s finding is that the said photographs were inadmissible in evidence.
56. The 2nd issue raised by the Counsel for the 1st and 2nd respondents is the contention that the applicants moved to this Court late as they had fifteen (15) days to move to this Court after a decision on the application challenge was delivered. That is not the correct position of the law. Section 14 of the Arbitration Act provides as follows-
“1) Subject to subsection (3), the parties are free to agree on a procedure for challenging an arbitrator.
2. Failing an agreement under subsection (1), a party who intends to challenge an arbitrator shall, within 15 days after becoming aware of the composition of the arbitral tribunal or after becoming aware of any circumstances referred to in section 13(3), send a written statement of the reasons for the challenge to the arbitral tribunal, and unless the arbitrator who is being challenged withdraws from his office or the other party agrees to the challenge, the arbitral tribunal shall decide on the challenge.
3. If a challenge under agreed procedure or under subsection (2) is unsuccessful, the challenging party may, within 30 days after being notified of the decision to reject the challenge, apply to the High Court to determine the matter.
(4) On an application under subsection (3), the arbitrator who was challenged shall be entitled to appear and be heard before the High Court determines the application.
(5) The High Court may confirm the rejection of the challenge or may uphold the challenge and remove the arbitrator.
(6) The decision of the High Court on such an application shall be final and shall not be subject to appeal.
(7) Where an arbitrator is removed by the High Court under this section, the court may make such order as it thinks fit with respect to his entitlement (if any) to fees or expenses or the repayment of any fees or expenses already paid.
(8) ………………………………………………………...” (emphasis added).
59. The above provisions are very clear that a party aggrieved by a decision of the Arbitral Tribunal arising out of an application challenge has 30 days to move to the High Court so as to have the matter determined. The ruling to the application challenge was rendered on 6th April, 2023 and the instant application was filed on 4th May, 2023. The applicants therefore filed the instant application within the 30 days’ period stipulated in law.
60. The third issue that I need to address summarily is the one raised by the Counsel for the 1st and 2nd respondents on the failure by the applicants to file an affidavit from one Mr. Daniel Onyancha, who is said to have been the one who passed on information to the applicants about having sighted Dr. Mutubwa at the traditional wedding of the 3rd respondent. It was contended that the said information amounted to hearsay and should not be relied on. In this Court’s view, such an argument is neither here nor there as due to the information passed on by the said Mr. Onyancha, the 1st and 2nd respondents’ Counsel and the 3rd respondent were confronted with the said information in the application challenge by the applicants, and Dr. Mutubwa admitted to having attended the traditional wedding in issue, and the 3rd respondent in his ruling of 6th April, 2023, acknowledged having invited the Counsel for the 1st and 2nd respondents to the said event.
61. Given the said admissions, at this point in time, it would have been superfluous for Mr. Onyancha to file an affidavit to confirm what is already admitted on record by Counsel for the 1st and 2nd respondents in his affidavit and is acknowledged by the 3rd respondent in his ruling of 6th April, 2023. Since there is admission as to the presence of the 1st and 2nd respondents’ Counsel in the 3rd respondent’s traditional wedding, and noting that their contention is that the said Counsel attended the said wedding as a professional colleague of the 3rd respondent, whereas the applicants’ contention is that the said invite connotes a personal friendship, between the two, it is necessary to consider not only the applicable provisions of the law but also the perception that the 1st and 2nd respondents’ Counsel’s attendance of the 3rd respondent’s traditional wedding may have caused in the minds of third parties.
62. Section 13 of the Arbitration Act provides for grounds of challenge of an Arbitrator in the following words-
1) When a person is approached in connection with his possible appointment as an arbitrator, he shall disclose any circumstances likely to give rise to justifiable doubts as to his impartiality or independence.
2) From the time of his appointment and throughout the arbitral proceedings, an arbitrator shall without delay disclose any such circumstances to the parties unless the parties have already been informed of them by him.
3) An arbitrator may be challenged only if circumstances exist that give rise to justifiable doubts as to his impartiality and independence, or if he does not possess qualifications agreed to by the parties or if he is physically or mentally incapable of conducting the proceedings or there are justifiable doubts as to his capacity to do so.
4) A party may challenge an arbitrator appointed by him, or in whose appointment that party has participated, only for reasons of which he becomes aware after the appointment. (emphasis added).
63. In this matter the Arbitrator did make a disclosure in the Order for Directions No. 2 that he was a professional colleague of the Counsel for the 1st and 2nd respondents in both the Chartered Institute of Arbitrators and as an Advocate. The said Counsel denied having a close personal friendship with the Arbitrator.
64. In the case of the Attorney-General v. Anyang’ Nyong’o & others “reasonable apprehension for bias” [2007]1E.A. 12, the Court set the test for bias as follows-
“The objective test of ‘reasonable apprehension of bias’ is good law. The test is stated variously, but amounts to this: do the circumstances give rise to a reasonable apprehension, in the view of a reasonable, fair-minded and informed member of the public that a Judge did not (will not) apply his mind to the case impartially ["] Needless to say, a litigant who seeks [the] disqualification of a Judge comes to Court because of his own perception that there is appearance of bias on the part of the Judge. The Court, however, has to envisage what would be the perception of a member of the public who is not only reasonable but also fair-minded and informed about all the circumstances of the case...” (emphasis added).
65. The Supreme Court of Canada expounded on the test in the following terms in R Vs S (R.D) [1977] 3 SCR 484.
“The apprehension of bias must be a reasonable one held by reasonable and right-minded persons, applying themselves to the question and obtaining thereon the required information. The test is what would an informed person, viewing the matter realistically and practically – and having thought the matter through – conclude. This test contains a two-fold objective element: the person considering the alleged bias must be reasonable and the apprehension of bias itself must also be reasonable in the circumstances of the case. Further the reasonable person must be an informed person, with knowledge of all the relevant circumstances, including the traditions of integrity and impartiality that from a part of the background and apprised also of the fact that impartiality is one of the duties the Judges swear to uphold. The reasonable person should also be taken to be aware of the social reality that forms the background to a particular case, such as societal awareness and acknowledgment of the prevalence of racism or gender bias in a particular community. The jurisprudence indicates that a real likelihood or probability of bias must be demonstrated and that a mere suspicion is not enough. The existence of a reasonable apprehension of bias depends entirely on the facts. The threshold for such a finding is high and the onus of demonstrating bias lies with the person who is alleging its existence.” (emphasis added).
66. Having considered the above decisions and the circumstances of this case, this Court is of the same view as the applicants’ Counsel that the duty of disclosure by the Arbitrator was not constricted only to the initial stages of the arbitral proceedings. This Court holds that an Arbitrator’s duty of disclosure is a continuous one and that duty calls for utmost accountability and transparency in making disclosures in regard to how parties have related in the past or at present or even planned future events, that would have a bearing to the outcome of the proceedings. It is therefore my finding that the Arbitrator should have disclosed to the applicants and their Counsel that he had invited the 1st and 2nd respondents’ Counsel to his traditional weeding and sought their views on the said issue.
67. In making his submissions, Counsel for the 1st and 2nd respondents contended that the IBA Guidelines on Conflicts of Interest in International Arbitration, 2014, are not applicable to the matter before this Court as they apply to international arbitration. This Court’s take on the said submissions is that nothing bars the Chartered Institute of Arbitrators, Kenya Chapter from being guided by the best practices which are internationally recognized and to adopt and apply the same in arbitral proceedings in Kenya. A corollary to the above scenario can be drawn from the manner in which Courts in Kenya and in some other jurisdictions have for a long time been guided by the Bangalore principles of judicial conduct, from which the Judiciary of Kenya borrowed heavily in the development of the Kenyan Judicial Service (Code of Conduct and Ethics) Regulations, 2020, for Judges, Judicial Officers and Judicial Staff.
68. A case in point in regard to application of the best practices from other countries is Republic v Independent Electoral & Boundaries Commission & another Exparte Coalition For Reforms and Democracy (CORD) [2017] eKLR, where the Court referred to the Bangalore Principles on Judicial Conduct on the definition of bias and prejudice-
“Bias or prejudice has been defined as a leaning, inclination, bent or predisposition towards one side or another or a particular result. In its application to judicial proceedings, it represents a predisposition to decide an issue or cause in a certain way which does not leave the judicial mind perfectly open to conviction. Bias is a condition or state of mind, an attitude or point of view, which sways or colours judgement and renders a judge unable to exercise his or her functions impartially in a particular case. However, this cannot be stated without taking into account the exact nature of the bias.” (emphasis added).
69. This case rests not on the issue of actual bias but on perception of bias as there is no allegation of an incident where in the course of the arbitral proceedings when the Arbitrator has exhibited actual bias against the applicants herein. A case of perception of bias rests on the apprehension that a reasonable, objective and informed person would have, based on the facts of a particular case. In President of the Republic of South Africa and others v South Africa Rugby Football Union and others (CCT16/98) 2000 (1) SA 1, the Court articulated the proper approach as follows:-
“…The question is whether a reasonable, objective and informed person would on the correct facts reasonably apprehend that the Judge has not or will not bring an impartial mind to bear on the adjudication of the case, that is a mind open to persuasion by the evidence and the submissions of counsel. The reasonableness of the apprehension must be assessed in the light of the oath of office taken by Judges to administer justice without fear or favour; and their ability to carry out the oath by reason of their training and experience. It must be assumed that they can disabuse their minds of any irrelevant personal beliefs or predispositions. They must take into account the fact that they have a duty to sit in any case in which they are not obliged to recuse themselves. At the same time, it must never be forgotten that an impartial Judge is a fundamental prerequisite for a fair trial and a judicial officer should not hesitate to recuse herself or himself if there are reasonable grounds on the part of the litigant for apprehending that the judicial officer, for whatever reasons, was not or will not be impartial.” (emphasis added).
70. In this matter the 3rd respondent declined to recuse himself on the basis that the relationship between him and the Counsel for the 1st and 2nd respondents was a professional one. This Court however takes judicial notice of the fact that in the Kenyan context, invitations of colleagues to weddings is extended to those that one considers close and such invites are not extended to all and sundry. Had that been the case, then the 3rd respondent could have as well extended the invite to the Counsel for the applicants who is an Advocate, just like him. Given the said circumstances, this Court arrives at the inevitable conclusion that apart from being professional colleagues, the 3rd respondent and the Counsel for the 1st and 2nd respondents are friends, and that is the perception that any reasonable, objective, informed member of the society would reach based on the circumstances of this case.
71. As Counsel for the applicants stated, it is common knowledge that there is the custom for invited guests to give gifts at a wedding. In this case, apart from the 3rd respondent and the Counsel for the 1st and 2nd respondents, the applicants and their Counsel will never know if the Counsel for the 1st and 2nd respondents was a gift bearing guest at the traditional wedding or not. It however boils down to failure by the 3rd respondent to disclose to the applicants and their Counsel that he intended to invite the Counsel for the 1st and 2nd respondents to his traditional wedding and seek their views on the same. Bearing in mind the final nature of Arbitral Awards which can only be set aside upon a litigant satisfying the conditions stipulated under Section 35 of the Arbitration Act, the need for disclosure becomes even more critical.
72. In S v Roberts 1999 (4) SA 915 (SCA) the Court stated that the apprehension be that of the reasonable person in the position of the litigant and that it be based on reasonable grounds. Cory J., stated as follows in the above case-
“Regardless of the precise words used to describe the test, the object of the different formulations is to emphasize that the threshold for a finding of real or perceived bias is high. It is a finding that must be carefully considered since it calls into question an element of judicial integrity.” (emphasis added).
73. The Counsel for the 1st and 2nd respondents has stated that since he and the 3rd respondent are Arbitrators who have served at the Chartered Institute of Arbitrators, Kenya Branch, as Chairman and Vice-Chairman of the Institute respectively, during the same tenure, they were bound to interact or have interacted in the Chartered Institute of Arbitrators events, trainings, board meetings and member’s welfare gatherings while discharging their professional mandate. I do agree that the above events are professional in nature, however, weddings are personal events where families, friends and close colleagues are invited. The lack of disclosure by the 3rd respondent that he had invited the Counsel for the 1st and 2nd respondents to his traditional wedding is the one that leads to the perception of bias.
74. Due to the failure to so disclose on the part of the 3rd respondent, it has led to an erosion of the confidence that applicants have, that he will be neutral when it comes to the hearing and determination of the arbitral proceedings before him involving the parties herein.
75. In conclusion, this Court holds that there was lack of transparency on the part of the 3rd respondent and he should have done the honourable thing when he was requested through an application challenge to recuse himself from the arbitral proceedings in issue. This Court finds that justifiable doubts have arisen as to 3rd respondent’s impartiality and independence and the same have been proved by the applicants. In line with the provisions of Section 14(5) of the Arbitration Act, I uphold the application challenge raised by the applicants in the arbitral proceedings in issue and I hereby remove the 3rd respondent from the said proceedings.
76. The applicants are awarded the costs of the application dated 4th May, 2023 and the application challenge dated 31st May, 2022.
DELIVERED, DATED and SIGNED at NAIROBI on this 1st of December, 2023. Ruling delivered through Microsoft Teams Online Platform.
NJOKI MWANGI
JUDGE
In the presence of:
Mr. Gachunga h/b for Mr. Namachanja for the applicants
No appearance for the respondents
Ms. B. Wokabi – Court Assistant.