' Introduction
1. Before me for determination are two applications:
i. The Chamber Summons dated 23rd July 2024 by the Hon Attorney General (Applicant) seeking to partially set aside the final award published on 24th April 2024 and the Additional Award published on 25th November 2025 for being in conflict with the public policy of Kenya.
ii. The Chamber Summons dated 7th February 2025 by Njuguna Builders Limited (the Respondent) seeking recognition and adoption of the Final Award of 24th April 2024 and the Additional Award of 25th November 2024 as judgment of this Court.
Background of the Dispute
2. On 7th July 1986, the Ministry of Works (on behalf of the Government of Kenya) entered into a contract with Njuguna Builders Limited (the Respondent) for the extension of the Government Press. The operative contract was the 1970 Edition Standard Form Contract published by the Ministry of Works, which did not expressly provide for accrual of interest on delayed or unpaid sums.
3. Disputes arose between the parties, leading to arbitration before a sole arbitrator, Ms. Njeri Kariuki. On 24th April 2024, the Tribunal published a Final Award (released to the parties on 10th July 2024), awarding various sums to the Respondent. The Applicant later sought clarification and correction of alleged arithmetic errors under section 34 of the Arbitration Act. On 25th November 2025, the Tribunal issued an Additional Award addressing those clarifications.
4. The Final Award included awards of compound interest (e.g., 12.12% on finance charges of Kshs. 65,919,880.83 from 2008 to 2024).
5. It also awarded 22% interest on several principal sums and, in summary, 22% compound interest on Kshs. 55,302,029.67 until payment in full.
6. In the Additional Award, the Tribunal revised the 22% compound interest to 22% simple interest, but left intact the 12.12% compound interest on finance charges.
7. The Attorney General (Applicant) seeks to partially set aside the awards, arguing that the arbitrator acted ultra vires by awarding interest not provided for in the contract; and that the awards of compound interest are punitive, irregular, and contrary to public policy.
8. The Respondent on the other hand opposes the application contending that Section 32C of the Arbitration Act empowers arbitrators to award compound interest, and that the awards were justified, compensatory, and within arbitral discretion. According to the Respondent, the Applicant’s challenge is a disguised appeal on factual matters, outside section 35 grounds.
9. The Respondent, separately, by his application of 7th February 2025 seeks the recognition and adoption of the Final and Additional Awards as judgment of the Court.
10. The parties have also filed written submissions in support of their respective positions which I have considered and will make relevant reference to in my analysis and determination below. Since the Application by the Attorney General calls for the setting aside of the Award, I shall first deal with it before considering the application by Respondent (Njuguna Builders Limited) for recognition and enforcement of the arbitral award, if at all.
Analysis and Determination
11. Having carefully considered the pleadings, the responses thereto, the submissions by the parties and the applicable law, I find the following as requiring determination:
i. Whether the Arbitrator exceeded the scope of the reference
ii. Whether the Arbitrator’s award of compound interest conflicts with the public policy of Kenya.
iii. Whether the arbitral award can be recognized and adopted as a judgment of the Court
12. The law on the setting aside of an arbitral award is circumscribed by section 35 of the Arbitration Act, which provides as follows:
“35. Application for setting aside arbitral award
(1) ……………………….
(2) An arbitral award may be set aside by the High Court only if—
(a) the party making the application furnishes proof— ……………………….
(iv) the arbitral award deals with a dispute not contemplated by or not falling within the terms of the reference to arbitration or contains decisions on matters beyond the scope of the reference to arbitration, provided that if the decisions on matters referred to arbitration can be separated from those not so referred, only that part of the arbitral award which contains decisions on matters not referred to arbitration may be set aside; or
(b) the High Court finds that—
(i) …………………
(ii) the award is in conflict with the public policy of Kenya.
13. In Synergy Industrial Credit Limited v Cape Holdings Limited [2019] KESC 12 (KLR), the Supreme Court stated as follows on the scope of Section 35 of the Arbitration Act:
“In The UNCITRAL Model Law in which our Arbitration Act is based also appreciates some of the difficulties which we are now confronted with. With regard to setting aside of an arbitral award, the Model Law provides that a party may approach the Court seeking to set aside an arbitral award on any of the specified grounds. That provision is similar to section 35 of the Kenyan Arbitration Act. The explanatory notes by the UNCITRAL Secretariat with regard to recourse to court for setting aside an award state that the purpose of the provision was to provide only one way of attacking an award and that is through an application for setting aside.”
Whether the Arbitrator exceeded the scope of the reference
14. In considering whether or not an arbitral award deals with matters not contemplated or falling within the terms of the reference to arbitration, this court is guided by what the Court of Appeal stated in Synergy Credit Limited v Cape Holdings Limited NRB CA Civil Appeal No. 71 of 2016 [2020] eKLR as follows: -
“In determining whether the arbitral tribunal has dealt with a dispute not contemplated or falling within the terms of the reference, or whether its award contains decisions on matters beyond the scope of the reference to arbitration, the arbitral clause or agreement is critical. Other relevant considerations, with-out in any way prescribing a closed catalogue, would include the subject matter, pleadings and submissions by the parties, as well as their conduct in the arbitration. Pleadings, however, must be considered with circumspection because, as the US Court of Appeals for the Ninth Circuit observed in Ministry of Defence of the Islamic Republic of Iran v. Gould, Inc. (supra), the real issue in such an inquiry is whether the award has exceeded the scope of the arbitration agreement, not whether it has exceeded the parties’ pleadings.”
15. The above principle has been applied in several cases of this Court, including Kenya Tea Development Agency Ltd & 7 others v Savings Tea Brokers Limited ML HC Misc. Application No. 129 of 2014 [2015] eKLR, where the Court stated that the jurisdiction of the arbitrator is tethered by the arbitration agreement, reference, and the law. In Dar Iman Limited v Clasico Builders (K) Limited [2021] eKLR - Miscellaneous Application E113 of 2021 (Consolidated with Arb. E007, Majanja J (as he then was) stated as follows on the issue:
“The express words used in the arbitration agreement or as interpreted with reference to the subject matter of the contract will determine whether the issues raised by an applicant are contemplated by the agreement or fall within the terms or scope of the reference to arbitration. Even where general, broad, generous and elastic words are used in an arbitration agreement or reference to arbitration, courts will still interpret them by reference to the subject matter of the contract. [emphasis added].
16. In this case, the Attorney General contends that the Arbitrator exceeded their jurisdiction by making an award on matters not contemplated by or falling outside the terms of the reference (the contract). According to the Attorney General, Hon. Arbitrator awarded interest where none was contractually provided. The Attorney General asserted that the operative contract - the 1970 Edition Standard Form Contract published by the Ministry of Works, contained no clause providing for accrual of interest on delayed or unpaid sums.
17. The Applicant placed reliance on, among others, the case of Consolidated Bank of Kenya Ltd v Arch Kamau Njendu t/a Gitutho Associates (2015) eKLR and asserted that an Arbitrator must strictly operate within the "four corners rule" of the contract. The Applicant argues that by awarding interest on certain specified sums, the Arbitrator traveled outside the contract, thus acting without jurisdiction.
18. The Respondent, on the other hand, maintained that it was within the jurisdiction of the Hon. Arbitrator to award interest in the manner she did. The Respondent contended that Section 32C of the Arbitration Act empowers arbitral to award interest, as was done in the present case. The case of Kenyatta International Convention Centre (KICC) v Greenstar Systems Limited [2018] KEHC 8936 (KLR) which supports the Arbitrator’s jurisdiction to award specific sums and interest, was cited in support of this preposition.
19. Having carefully considered and weighed the rival submissions and the applicable law, I find that while the operative contract did not expressly provide for accrual of interest on delayed or unpaid sums, the scope of reference to arbitration in this case was not confined to the four corners of the contract alone. Parties submitted their disputes to arbitration under the Arbitration Act, 1995, which at section 32C expressly empowers an arbitral tribunal to award either simple or compound interest, unless otherwise agreed by the parties. The statutory framework, therefore, formed part of the reference.
20. From the record, it is not disputed that the Respondent pleaded finance charges and interest in its claim, and the Arbitrator addressed those prayers. The Additional Award further clarified the basis of the interest awarded. This demonstrates that the issue of interest was squarely before the Tribunal.
21. It is settled law that arbitrators derive their powers not only from the contract but also from the law (See Kenya Tea Development Agency Ltd & 7 others v Savings Tea Brokers Limited (supra). Section 32C of the Arbitration Act provides that:
“32C. Interest
Unless otherwise agreed by the parties, to the extent that the rules of law applicable to the substance of the dispute permit, an arbitral award may include provision for the payment of simple or compound interest calculated from such date, at such rate and with such rests as may be specified in the award.”
22. In KICC v Greenstar Systems Ltd [2018] KEHC 8936, Kenyatta International Convention Centre (KICC) v Greenstar Systems Limited [2018] KEHC 8936 (KLR) the Court (OA Sewe J) while holding that matters of interest fall within arbitral discretion as provided for under Section 32C of the Arbitration Act, stated that:
“40. It would therefore be idle for the Applicant to argue that VAT was not payable; just as it would be idle for the Applicant to contend that interest was not within the purview of the Arbitral Tribunal, yet Section 32C of the Arbitration Act is explicit that:
"Unless otherwise agreed by the parties, to the extent that the rules of law applicable to the substance of the dispute permit, an arbitral award may include provision for the payment of simple or compound interest.” calculated from such date, at such rate and with such rests as may be specified in the award."
[41] In any event, matters to do with the propriety or otherwise of the Arbitrator awarding a specific sum, or interest or costs are matters over which only the Arbitrator had jurisdiction to deal; and which this Court would have no mandate to interfere…”
23. In the present case, it is clear from the foregoing discussion and evidence on record that the Arbitrator did not travel outside the scope of reference. The award of interest was made pursuant to statutory authority under Section 32C of the Arbitration Act and in response to pleaded claims. It was therefore within the scope of reference.
Whether the Arbitrator’s award of compound interest conflicts with the public policy of Kenya.
24. The other ground for impugning the Award is on the ground that it violates the public policy of Kenya. It is settled that under section 35(2)(b)(ii) of the Arbitration Act, an award can be set aside if it is contrary to public policy. It is common ground that the phrase “public policy” was well enunciated by the court (Ringera J) in Christ for All Nations v Apollo Insurance Co Ltd [2002] 2 EA 366, where the Learned Judge explained it as a ground for setting aside an arbitral award as follows: -
“I take the view that although public policy is a most broad concept incapable of precise definition, … an award will be set aside under section 35(2) (b) (ii) of the Arbitration Act as being inconsistent with the Public Policy of Kenya if it was shown that it was either (a) inconsistent with the Constitution or other Laws of Kenya, whether written or unwritten; or (b) inimical to the national interest of Kenya; or (c) contrary to justice and morality……”
25. Further, the court in Mall Developers Limited v Postal Corporation of Kenya ML Misc. No. 26 of 2013 [2014] eKLR also stated as follows concerning public policy as applied within the realm of Section 35 of the Arbitration Act:-
“Public policy must have a connotation of national interest. It cannot mean fairness and justice as was submitted by the parties herein as it was only the Claimant and the Respondent who were individuals entitled to be affected by the decision of the Arbitrator. They did not both demonstrate to this court how the decision by the Arbitrator would negatively affect, impact or infringe the rights of third parties and thus offend public policy.”
26. In the present case, the Applicant urged this Court to partially set aside the arbitral awards of 24th April 2024 and 25th November 2025 on the ground that the awards of compound interest are contrary to public policy. It is argued that compound interest is punitive, not compensatory, and amounts to unjust enrichment, thereby injuring public finances. Reliance was placed on among others the case of Premier Bag & Cordage Ltd v National Irrigation Board [2014] eKLR, where compound interest was set aside because it was excessive and punitive.
27. The Respondent, on the other hand, contended that section 32C of the Arbitration Act expressly empowers an arbitral tribunal to award either simple or compound interest. According to the Respondent, the Arbitrator justified the award of compound interest on finance charges by noting that the Respondent had to borrow funds at compound rates due to the Applicant’s delayed payments. The Respondent further contends that the rate of 12.12% was reasonable and below prevailing commercial rates, and that post-award interest is a compliance mechanism rather than compounding interest. Reliance was placed on among others, the case of KICC v Greenstar Systems Ltd [2018] KEHC 8936, where the Court upheld interest awards as within arbitral discretion.
28. The law is settled that public policy is a narrow ground for setting aside arbitral awards. See Christ for All Nations v Apollo Insurance Co Ltd (supra) where the Court observed that an award may be set aside if it is inconsistent with the Constitution or laws of Kenya, inimical to national interest, or contrary to justice and morality. Further, the Court of Appeal in Kenya Shell Ltd v Kobil Petroleum Ltd [2006] KECA 389 emphasized that public policy must be confined to prevailing ideas necessary for the welfare of the country.
29. Applying the above test to this case, I note that section 32C of the Arbitration Act expressly empowers arbitrators to award compound interest. The Arbitrator’s decision was therefore anchored in statute and in response to pleaded claims. The rate of 12.12% was not shown to be exorbitant or unconscionable. While the Applicant argues that compound interest is punitive, Kenyan jurisprudence demonstrates that the question is context-specific. In Premier Bag and Kiarigi Contractors, compound interest was set aside because it was excessive and punitive. In contrast, in KICC v Greenstar Systems Ltd, the Court upheld interest awards as within arbitral discretion.
30. In the present case, having carefully perused both the Final Award published on 24th April 2024 and the Additional Award published on 25th November 2025, I am convinced that the Hon. Arbitrator gave cogent reasons for awarding compound interest, namely that the Respondent had to borrow funds at compound rates due to delayed payments. This was obviously compensatory rather than punitive. Post-award interest, similarly, is a mechanism to compel compliance and does not amount to interest upon interest.
31. In the premises, I therefore find that the awards of compound and post-award interest do not offend the public policy of Kenya. They are consistent with the Arbitration Act, serve a compensatory purpose, and do not amount to unjust enrichment in the circumstances of this case.
32. Accordingly, the Applicant has not demonstrated that the impugned awards are inconsistent with the Constitution or laws of Kenya, inimical to national interest, or contrary to justice and morality. The application to set aside the award on this ground, therefore, fails.
Whether the arbitral award can be recognized and adopted as a judgment of the Court
33. Section 36 of the Arbitration Act sets out the legal parameters governing the enforcement and adoption of an arbitral award in the following terms:
“36. Recognition and enforcement of awards
(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 shall 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.
34. In Samura Engineering Limited vs Don-Wood Co Ltd [2014] eKLR it was held: -
“Of course, section 36(1) of the Act requires an application in writing for recognition and enforcement of an award to be made. But the application is subject to sections 36 and 37 of the Act, and I should add, to the Constitution. Section 36(3) of the Act makes it mandatory that the party applying for recognition and enforcement of the award should file: 1) the duly authenticated original award or a duly certified copy of it; and 2) the original arbitration agreement or a certified copy of it. Doubtless, the award must be filed…”
35. Recognition and enforcement may only be refused on the limited grounds set out under section 37 of the Act, which mirror the grounds for setting aside under section 35.
36. As already determined in the preceding analysis, the Arbitrator acted within the scope of the reference, and the awards of interest do not offend the public policy of Kenya. The Applicant (Attorney General) has therefore not demonstrated any of the grounds that would justify refusal of recognition and enforcement, nor has the Court found any.
37. I agree with the holding in the case of Tanzania National Roads Agency v Kundan Singh Construction Ltd [2013] eKLR, cited by the Applicant, that where the Court held that recognition and enforcement of arbitral awards is automatic unless refused under Section 37.
38. In the present case, the Applicant’s challenge is essentially a merits appeal disguised as a public policy objection. This Court cannot re-open factual findings or recalculations of interest. The awards were made pursuant to statutory authority under section 32C and in response to pleaded claims. They are binding and enforceable.
39. Further, I note from the record that the Respondent has supplied all mandatory documents under Section 36(3), that is, a certified copy of the Award and the Additional Award, and a certified copy of the Arbitration Agreement.
40. Accordingly, I find and hold that the arbitral award dated 24th April 2024 and the Additional Award dated 25th November 2025 can be recognized and adopted as a judgment of this Court under section 36 of the Arbitration Act, 1995.
Final Orders
41. In light of the foregoing analysis, I find that the Applicant’s application dated 23rd July 2024 is devoid of merit and is hereby dismissed.
42. The Respondent’s Chamber Summons dated 7th February 2025 is hereby allowed, and the Final Award dated 24th April 2024 and the Additional Award dated 25th November 2024 are recognized and adopted as judgment of this Court.
43. In view of the outcome, the Respondent shall have the costs of both applications
44. It is so ordered.
SIGNED, DATED, and DELIVERED IN VIRTUAL COURT THIS
27TH NOVEMBER 2025
ADO MOSES
JUDGE
In the presence of: -
C/A – Moses
Makhoha & Kiarari…. for the Applicant
Kiarie for the AG
'
1. Before me for determination are two applications:
i. The Chamber Summons dated 23rd July 2024 by the Hon Attorney General (Applicant) seeking to partially set aside the final award published on 24th April 2024 and the Additional Award published on 25th November 2025 for being in conflict with the public policy of Kenya.
ii. The Chamber Summons dated 7th February 2025 by Njuguna Builders Limited (the Respondent) seeking recognition and adoption of the Final Award of 24th April 2024 and the Additional Award of 25th November 2024 as judgment of this Court.
Background of the Dispute
2. On 7th July 1986, the Ministry of Works (on behalf of the Government of Kenya) entered into a contract with Njuguna Builders Limited (the Respondent) for the extension of the Government Press. The operative contract was the 1970 Edition Standard Form Contract published by the Ministry of Works, which did not expressly provide for accrual of interest on delayed or unpaid sums.
3. Disputes arose between the parties, leading to arbitration before a sole arbitrator, Ms. Njeri Kariuki. On 24th April 2024, the Tribunal published a Final Award (released to the parties on 10th July 2024), awarding various sums to the Respondent. The Applicant later sought clarification and correction of alleged arithmetic errors under section 34 of the Arbitration Act. On 25th November 2025, the Tribunal issued an Additional Award addressing those clarifications.
4. The Final Award included awards of compound interest (e.g., 12.12% on finance charges of Kshs. 65,919,880.83 from 2008 to 2024).
5. It also awarded 22% interest on several principal sums and, in summary, 22% compound interest on Kshs. 55,302,029.67 until payment in full.
6. In the Additional Award, the Tribunal revised the 22% compound interest to 22% simple interest, but left intact the 12.12% compound interest on finance charges.
7. The Attorney General (Applicant) seeks to partially set aside the awards, arguing that the arbitrator acted ultra vires by awarding interest not provided for in the contract; and that the awards of compound interest are punitive, irregular, and contrary to public policy.
8. The Respondent on the other hand opposes the application contending that Section 32C of the Arbitration Act empowers arbitrators to award compound interest, and that the awards were justified, compensatory, and within arbitral discretion. According to the Respondent, the Applicant’s challenge is a disguised appeal on factual matters, outside section 35 grounds.
9. The Respondent, separately, by his application of 7th February 2025 seeks the recognition and adoption of the Final and Additional Awards as judgment of the Court.
10. The parties have also filed written submissions in support of their respective positions which I have considered and will make relevant reference to in my analysis and determination below. Since the Application by the Attorney General calls for the setting aside of the Award, I shall first deal with it before considering the application by Respondent (Njuguna Builders Limited) for recognition and enforcement of the arbitral award, if at all.
Analysis and Determination
11. Having carefully considered the pleadings, the responses thereto, the submissions by the parties and the applicable law, I find the following as requiring determination:
i. Whether the Arbitrator exceeded the scope of the reference
ii. Whether the Arbitrator’s award of compound interest conflicts with the public policy of Kenya.
iii. Whether the arbitral award can be recognized and adopted as a judgment of the Court
12. The law on the setting aside of an arbitral award is circumscribed by section 35 of the Arbitration Act, which provides as follows:
“35. Application for setting aside arbitral award
(1) ……………………….
(2) An arbitral award may be set aside by the High Court only if—
(a) the party making the application furnishes proof— ……………………….
(iv) the arbitral award deals with a dispute not contemplated by or not falling within the terms of the reference to arbitration or contains decisions on matters beyond the scope of the reference to arbitration, provided that if the decisions on matters referred to arbitration can be separated from those not so referred, only that part of the arbitral award which contains decisions on matters not referred to arbitration may be set aside; or
(b) the High Court finds that—
(i) …………………
(ii) the award is in conflict with the public policy of Kenya.
13. In Synergy Industrial Credit Limited v Cape Holdings Limited [2019] KESC 12 (KLR), the Supreme Court stated as follows on the scope of Section 35 of the Arbitration Act:
“In The UNCITRAL Model Law in which our Arbitration Act is based also appreciates some of the difficulties which we are now confronted with. With regard to setting aside of an arbitral award, the Model Law provides that a party may approach the Court seeking to set aside an arbitral award on any of the specified grounds. That provision is similar to section 35 of the Kenyan Arbitration Act. The explanatory notes by the UNCITRAL Secretariat with regard to recourse to court for setting aside an award state that the purpose of the provision was to provide only one way of attacking an award and that is through an application for setting aside.”
Whether the Arbitrator exceeded the scope of the reference
14. In considering whether or not an arbitral award deals with matters not contemplated or falling within the terms of the reference to arbitration, this court is guided by what the Court of Appeal stated in Synergy Credit Limited v Cape Holdings Limited NRB CA Civil Appeal No. 71 of 2016 [2020] eKLR as follows: -
“In determining whether the arbitral tribunal has dealt with a dispute not contemplated or falling within the terms of the reference, or whether its award contains decisions on matters beyond the scope of the reference to arbitration, the arbitral clause or agreement is critical. Other relevant considerations, with-out in any way prescribing a closed catalogue, would include the subject matter, pleadings and submissions by the parties, as well as their conduct in the arbitration. Pleadings, however, must be considered with circumspection because, as the US Court of Appeals for the Ninth Circuit observed in Ministry of Defence of the Islamic Republic of Iran v. Gould, Inc. (supra), the real issue in such an inquiry is whether the award has exceeded the scope of the arbitration agreement, not whether it has exceeded the parties’ pleadings.”
15. The above principle has been applied in several cases of this Court, including Kenya Tea Development Agency Ltd & 7 others v Savings Tea Brokers Limited ML HC Misc. Application No. 129 of 2014 [2015] eKLR, where the Court stated that the jurisdiction of the arbitrator is tethered by the arbitration agreement, reference, and the law. In Dar Iman Limited v Clasico Builders (K) Limited [2021] eKLR - Miscellaneous Application E113 of 2021 (Consolidated with Arb. E007, Majanja J (as he then was) stated as follows on the issue:
“The express words used in the arbitration agreement or as interpreted with reference to the subject matter of the contract will determine whether the issues raised by an applicant are contemplated by the agreement or fall within the terms or scope of the reference to arbitration. Even where general, broad, generous and elastic words are used in an arbitration agreement or reference to arbitration, courts will still interpret them by reference to the subject matter of the contract. [emphasis added].
16. In this case, the Attorney General contends that the Arbitrator exceeded their jurisdiction by making an award on matters not contemplated by or falling outside the terms of the reference (the contract). According to the Attorney General, Hon. Arbitrator awarded interest where none was contractually provided. The Attorney General asserted that the operative contract - the 1970 Edition Standard Form Contract published by the Ministry of Works, contained no clause providing for accrual of interest on delayed or unpaid sums.
17. The Applicant placed reliance on, among others, the case of Consolidated Bank of Kenya Ltd v Arch Kamau Njendu t/a Gitutho Associates (2015) eKLR and asserted that an Arbitrator must strictly operate within the "four corners rule" of the contract. The Applicant argues that by awarding interest on certain specified sums, the Arbitrator traveled outside the contract, thus acting without jurisdiction.
18. The Respondent, on the other hand, maintained that it was within the jurisdiction of the Hon. Arbitrator to award interest in the manner she did. The Respondent contended that Section 32C of the Arbitration Act empowers arbitral to award interest, as was done in the present case. The case of Kenyatta International Convention Centre (KICC) v Greenstar Systems Limited [2018] KEHC 8936 (KLR) which supports the Arbitrator’s jurisdiction to award specific sums and interest, was cited in support of this preposition.
19. Having carefully considered and weighed the rival submissions and the applicable law, I find that while the operative contract did not expressly provide for accrual of interest on delayed or unpaid sums, the scope of reference to arbitration in this case was not confined to the four corners of the contract alone. Parties submitted their disputes to arbitration under the Arbitration Act, 1995, which at section 32C expressly empowers an arbitral tribunal to award either simple or compound interest, unless otherwise agreed by the parties. The statutory framework, therefore, formed part of the reference.
20. From the record, it is not disputed that the Respondent pleaded finance charges and interest in its claim, and the Arbitrator addressed those prayers. The Additional Award further clarified the basis of the interest awarded. This demonstrates that the issue of interest was squarely before the Tribunal.
21. It is settled law that arbitrators derive their powers not only from the contract but also from the law (See Kenya Tea Development Agency Ltd & 7 others v Savings Tea Brokers Limited (supra). Section 32C of the Arbitration Act provides that:
“32C. Interest
Unless otherwise agreed by the parties, to the extent that the rules of law applicable to the substance of the dispute permit, an arbitral award may include provision for the payment of simple or compound interest calculated from such date, at such rate and with such rests as may be specified in the award.”
22. In KICC v Greenstar Systems Ltd [2018] KEHC 8936, Kenyatta International Convention Centre (KICC) v Greenstar Systems Limited [2018] KEHC 8936 (KLR) the Court (OA Sewe J) while holding that matters of interest fall within arbitral discretion as provided for under Section 32C of the Arbitration Act, stated that:
“40. It would therefore be idle for the Applicant to argue that VAT was not payable; just as it would be idle for the Applicant to contend that interest was not within the purview of the Arbitral Tribunal, yet Section 32C of the Arbitration Act is explicit that:
"Unless otherwise agreed by the parties, to the extent that the rules of law applicable to the substance of the dispute permit, an arbitral award may include provision for the payment of simple or compound interest.” calculated from such date, at such rate and with such rests as may be specified in the award."
[41] In any event, matters to do with the propriety or otherwise of the Arbitrator awarding a specific sum, or interest or costs are matters over which only the Arbitrator had jurisdiction to deal; and which this Court would have no mandate to interfere…”
23. In the present case, it is clear from the foregoing discussion and evidence on record that the Arbitrator did not travel outside the scope of reference. The award of interest was made pursuant to statutory authority under Section 32C of the Arbitration Act and in response to pleaded claims. It was therefore within the scope of reference.
Whether the Arbitrator’s award of compound interest conflicts with the public policy of Kenya.
24. The other ground for impugning the Award is on the ground that it violates the public policy of Kenya. It is settled that under section 35(2)(b)(ii) of the Arbitration Act, an award can be set aside if it is contrary to public policy. It is common ground that the phrase “public policy” was well enunciated by the court (Ringera J) in Christ for All Nations v Apollo Insurance Co Ltd [2002] 2 EA 366, where the Learned Judge explained it as a ground for setting aside an arbitral award as follows: -
“I take the view that although public policy is a most broad concept incapable of precise definition, … an award will be set aside under section 35(2) (b) (ii) of the Arbitration Act as being inconsistent with the Public Policy of Kenya if it was shown that it was either (a) inconsistent with the Constitution or other Laws of Kenya, whether written or unwritten; or (b) inimical to the national interest of Kenya; or (c) contrary to justice and morality……”
25. Further, the court in Mall Developers Limited v Postal Corporation of Kenya ML Misc. No. 26 of 2013 [2014] eKLR also stated as follows concerning public policy as applied within the realm of Section 35 of the Arbitration Act:-
“Public policy must have a connotation of national interest. It cannot mean fairness and justice as was submitted by the parties herein as it was only the Claimant and the Respondent who were individuals entitled to be affected by the decision of the Arbitrator. They did not both demonstrate to this court how the decision by the Arbitrator would negatively affect, impact or infringe the rights of third parties and thus offend public policy.”
26. In the present case, the Applicant urged this Court to partially set aside the arbitral awards of 24th April 2024 and 25th November 2025 on the ground that the awards of compound interest are contrary to public policy. It is argued that compound interest is punitive, not compensatory, and amounts to unjust enrichment, thereby injuring public finances. Reliance was placed on among others the case of Premier Bag & Cordage Ltd v National Irrigation Board [2014] eKLR, where compound interest was set aside because it was excessive and punitive.
27. The Respondent, on the other hand, contended that section 32C of the Arbitration Act expressly empowers an arbitral tribunal to award either simple or compound interest. According to the Respondent, the Arbitrator justified the award of compound interest on finance charges by noting that the Respondent had to borrow funds at compound rates due to the Applicant’s delayed payments. The Respondent further contends that the rate of 12.12% was reasonable and below prevailing commercial rates, and that post-award interest is a compliance mechanism rather than compounding interest. Reliance was placed on among others, the case of KICC v Greenstar Systems Ltd [2018] KEHC 8936, where the Court upheld interest awards as within arbitral discretion.
28. The law is settled that public policy is a narrow ground for setting aside arbitral awards. See Christ for All Nations v Apollo Insurance Co Ltd (supra) where the Court observed that an award may be set aside if it is inconsistent with the Constitution or laws of Kenya, inimical to national interest, or contrary to justice and morality. Further, the Court of Appeal in Kenya Shell Ltd v Kobil Petroleum Ltd [2006] KECA 389 emphasized that public policy must be confined to prevailing ideas necessary for the welfare of the country.
29. Applying the above test to this case, I note that section 32C of the Arbitration Act expressly empowers arbitrators to award compound interest. The Arbitrator’s decision was therefore anchored in statute and in response to pleaded claims. The rate of 12.12% was not shown to be exorbitant or unconscionable. While the Applicant argues that compound interest is punitive, Kenyan jurisprudence demonstrates that the question is context-specific. In Premier Bag and Kiarigi Contractors, compound interest was set aside because it was excessive and punitive. In contrast, in KICC v Greenstar Systems Ltd, the Court upheld interest awards as within arbitral discretion.
30. In the present case, having carefully perused both the Final Award published on 24th April 2024 and the Additional Award published on 25th November 2025, I am convinced that the Hon. Arbitrator gave cogent reasons for awarding compound interest, namely that the Respondent had to borrow funds at compound rates due to delayed payments. This was obviously compensatory rather than punitive. Post-award interest, similarly, is a mechanism to compel compliance and does not amount to interest upon interest.
31. In the premises, I therefore find that the awards of compound and post-award interest do not offend the public policy of Kenya. They are consistent with the Arbitration Act, serve a compensatory purpose, and do not amount to unjust enrichment in the circumstances of this case.
32. Accordingly, the Applicant has not demonstrated that the impugned awards are inconsistent with the Constitution or laws of Kenya, inimical to national interest, or contrary to justice and morality. The application to set aside the award on this ground, therefore, fails.
Whether the arbitral award can be recognized and adopted as a judgment of the Court
33. Section 36 of the Arbitration Act sets out the legal parameters governing the enforcement and adoption of an arbitral award in the following terms:
“36. Recognition and enforcement of awards
(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 shall 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.
34. In Samura Engineering Limited vs Don-Wood Co Ltd [2014] eKLR it was held: -
“Of course, section 36(1) of the Act requires an application in writing for recognition and enforcement of an award to be made. But the application is subject to sections 36 and 37 of the Act, and I should add, to the Constitution. Section 36(3) of the Act makes it mandatory that the party applying for recognition and enforcement of the award should file: 1) the duly authenticated original award or a duly certified copy of it; and 2) the original arbitration agreement or a certified copy of it. Doubtless, the award must be filed…”
35. Recognition and enforcement may only be refused on the limited grounds set out under section 37 of the Act, which mirror the grounds for setting aside under section 35.
36. As already determined in the preceding analysis, the Arbitrator acted within the scope of the reference, and the awards of interest do not offend the public policy of Kenya. The Applicant (Attorney General) has therefore not demonstrated any of the grounds that would justify refusal of recognition and enforcement, nor has the Court found any.
37. I agree with the holding in the case of Tanzania National Roads Agency v Kundan Singh Construction Ltd [2013] eKLR, cited by the Applicant, that where the Court held that recognition and enforcement of arbitral awards is automatic unless refused under Section 37.
38. In the present case, the Applicant’s challenge is essentially a merits appeal disguised as a public policy objection. This Court cannot re-open factual findings or recalculations of interest. The awards were made pursuant to statutory authority under section 32C and in response to pleaded claims. They are binding and enforceable.
39. Further, I note from the record that the Respondent has supplied all mandatory documents under Section 36(3), that is, a certified copy of the Award and the Additional Award, and a certified copy of the Arbitration Agreement.
40. Accordingly, I find and hold that the arbitral award dated 24th April 2024 and the Additional Award dated 25th November 2025 can be recognized and adopted as a judgment of this Court under section 36 of the Arbitration Act, 1995.
Final Orders
41. In light of the foregoing analysis, I find that the Applicant’s application dated 23rd July 2024 is devoid of merit and is hereby dismissed.
42. The Respondent’s Chamber Summons dated 7th February 2025 is hereby allowed, and the Final Award dated 24th April 2024 and the Additional Award dated 25th November 2024 are recognized and adopted as judgment of this Court.
43. In view of the outcome, the Respondent shall have the costs of both applications
44. It is so ordered.
SIGNED, DATED, and DELIVERED IN VIRTUAL COURT THIS
27TH NOVEMBER 2025
ADO MOSES
JUDGE
In the presence of: -
C/A – Moses
Makhoha & Kiarari…. for the Applicant
Kiarie for the AG
'