1.The appellant, Kibuwa Leasing and Management Limited, and the respondents, Jadala Investments Limited (the 1st respondent) and Ngong Lane Management Limited (the 2nd respondent) entered into four lease agreements dated 21st June 2013 and registered on 1st June 2014 in respect of office units No. 1 and 2 situate on the ground floor as well as units 3 and 4 situate on the 4th floor of the building known as Jadala Placebelonging to the 1st respondent and erected on LR No. 209/409/7, and located on Ngong Lane off Ngong Road within the city of Nairobi.
2.The leases aforesaid were for a term of 999 years commencing on 1st June 2014, and subject to express terms and conditions as to, inter alia, the rent payable, service charge and restrictions as to use. Clause 2.10 of the leases provided as follows:
3.Subsequently, the appellant took possession of the four units aforesaid and entered into a lease agreement with Dou Xiangju Kenya Limited (the tenant) for a term of six (6) years with effect from 18th November 2015 in respect of units 1 and 2 (the suit property) situate on the ground floor of the building aforesaid.
4.The tenant proposed to use the suit property to operate a supermarket with a mini-market, deli and café, the use of which the 2nd respondent (the then management company in charge of the premises) disallowed on the grounds that the proposed use offended the provisions of clause 2.10 of the lease. Failing amicable settlement between the appellant and the respondents, the appellant refunded the sum of KShs. 2,303,642 paid to it by the tenant on account of rent.
5.A dispute having arisen over and concerning alleged loss of rental income and breach of contract, the appellant referred its claim against the respondents to arbitration pursuant to clause 5.2 of the lease agreements, which required all disputes and questions touching on the lease to be referred to the decision of a single arbitrator to be appointed by the Chairman for the time being of the Law Society of Kenya. That clause reads:
6.Pursuant to the arbitration agreement aforesaid, Mr. Colins Namachanja was appointed on 2nd December 2015 as sole arbitrator in the reference.
7.In its statement of claim dated 21st March 2016, the appellant prayed for:
8.The appellant’s case was that the respondents acted in breach of the contract of lease; that the leases were clear in terms as to the permitted use of the leased premises; that its tenant was by no means in breach of the terms of the lease; that the kind of business the tenant wished to operate was permissible under the leases; that the appellant and its tenant were condemned for an anticipatory event that had not taken place; that the respondents were not justified in barring the appellant’s tenant from setting up their business; and that the respondents had deprived the appellant of its right to use the suit property for commercial gain thereby occasioning them loss and damage.
9.The respondents filed a joint statement of defence dated 15th April 2016 stating that the proposed use by the appellant’s tenant of the premises offended the provisions of the lease; and that the appellant acted in breach of the lease agreement by relinquishing possession of the suit property to a third party before first obtaining written consent from the 2nd respondent as required under clause 2.22. They denied liability for the loss and damage allegedly suffered by the appellant.
10.In his Award dated 14th December 2016, Mr. Collins Namachanja dismissed the appellant’s claim in its entirety with costs to the respondents having found that the proposed user was in breach of the terms of the lease; and that the respondents were entitled to withhold their consent to lease. According to the learned arbitrator, the appellant had failed to prove its claim, and was therefore not entitled to the relief sought.
11.Dissatisfied by the arbitral award dated 14th December 2016, the appellant moved to the High Court of Kenya at Nairobi in HC Misc. App. No. 227 of 2017 seeking to have the award set aside essentially on the grounds, inter alia: that the award was in conflict with the public policy of Kenya; that the award was an attempt to rewrite the contract between the parties; that the arbitrator adopted an inquisitorial approach in the reference in favour of the respondents and reached an award on matters that were neither pleaded nor canvassed by either party; that the award was grounded on a marketing brochure not constituting the contract; that the award was speculative and dealt with matters outside the scope of the arbitration; and that the award adopted the respondents’ submissions.
12.The appellant’s application was supported by the affidavit of John Muriuki Kibuchi, the appellant’s Managing Director, sworn on 15th May 2017 substantially deposing to the grounds on which the application was made.
13.The respondents opposed the appellant’s application vide the replying affidavit of Isaac Muthere Macharia (the Chairman of the 1st respondent) sworn on 30th June 2017 and of Japheth Okoth Olende (the Chairman of the 2nd respondent) sworn on 11th July 2017. The respondents’ case was that the appellant did not specify what public policy had been abused by the award; that the marketing brochure was never an issue to be determined, and was never mentioned in the appellant’s statement of claim; that the arbitral tribunal addressed all the issues put to it; and that the dispute between the parties was the user of the retail space.
14.In addition to their reply to the appellant’s application, the respondents moved the court to enforce the award vide their application dated 11th September 2017 in the same cause – Nairobi HC Misc. App. No. 227 of 2017 – seeking: adoption of the arbitral award; judgment in their favour in terms of the award; and leave to enforce the consequential decree against the appellant.
15.The respondents’ Motion was supported by the affidavit of Antony Akelo Okulo, learned counsel for the respondents, sworn on 11th September 2017 generally deposing to the grounds on which the application was anchored, and setting out the steps taken in the appointment of the arbitrator; the arbitral process and the making of the impugned award; and the formal requirement for leave to have the arbitral award adopted as a judgment of the court
16.The appellant opposed the respondents’ application vide the replying affidavit of Aldrin Ojiambo, learned counsel for the appellant, sworn on 6th April 2018. According to Mr. Ojiambo, the respondents’ application was premature; that the appellant’s earlier application could not be heard as the parties had been exploring out of court settlement, but that they had not reached settlement; and that the application for leave to enforce the award should be dismissed with costs.
17.The parties filed written submissions whereupon the two applications were heard together and determined vide a ruling dated 1st November 2018 by which Ngetich, J. dismissed the appellant’s application with costs and allowed the respondents’ Motion as prayed. Accordingly, the arbitral award was adopted as a judgment and decree of the court with costs to the respondents.
18.Aggrieved by the ruling and orders of Ngetich, J., the appellant moved to this Court on appeal on 11 grounds set out in its memorandum of appeal dated 20th December 2018 faulting the learned Judge for, among other things: misconstruing the appellant’s application thereby reaching a wrong conclusion; failing to address the issues raised by the appellant; rubber-stamping and affirming the allegedly flawed arbitral award; upholding an award reached by a tribunal without jurisdiction and outside the scope of the reference; upholding the award based on a speculative selling point of a supermarket contained in a marketing brochure; and for disregarding the appellant’s submissions.
19.Learned counsel for the appellant, M/s. Ojiambo & Company, filed written submissions, list and bundle of authorities, all dated 3rd May 2023 citing 8 judicial authorities to which we will shortly address ourselves. In rebuttal, learned counsel for the respondents, M/s. Okulo & Company, filed written submissions and a list of authorities dated 8th May 2023 citing 4 judicial authorities, which we will shortly consider.
20.Having carefully considered the record of appeal, the grounds on which it is anchored, the impugned ruling and orders, the written and oral submissions of counsel for the appellant and counsel for the respondents, the cited judicial decisions and statute law, we form the view that the appeal before us stands or falls on our finding on four (4) broad issues, namely: whether the appellant has a right of appeal to this Court from the impugned ruling and orders of the High Court (Ngetich, J.); if the answer is in the affirmative, whether the learned Judge erred by upholding the award allegedly reached without jurisdiction and outside the scope of the reference; whether the learned Judge erred in holding that the award was not in conflict with the public policy of Kenya; and what orders ought we to make in determination of this appeal, including orders on costs.
21.On the 1st issue as to whether the appellant had a right of appeal to this Court, we wish to point out right at the outset that appeals against orders adopting an arbitration award as a judgment of the court (or dismissing an application to set aside the award, as the case may be) does not call for a merit review of the award by re-assessment or re-appraisal of points of law or fact, or re-evaluation of the evidence adduced in the arbitral proceedings leading to the award sought to be challenged. Put differently, rule 31(1) (a) of the Court of Appeal Rules does not apply to such appeals so as to mandate this Court to conduct a merit review of the award or undertake a retrial of the issues raised in the reference. Even though this is a first appeal, it must nonetheless pass the stringent test prescribed in sections 10, 35(2) and 39(3) of the Arbitration Act (Revised 2019), 1995 with regard to the constricted right of appeal.
22.The foregoing approach is founded on sound reason. The private, consensual and contractual nature of arbitral proceedings founded on the principle of party autonomy and the sanctity of the arbitral process necessarily narrow the grounds on which courts may intervene so as to disturb the outcome thereof. To hold otherwise would be tantamount to undermining the purposes of the Arbitration Act, which include limiting judicial involvement in the arbitral process and achieving consistency with international arbitration regimes. Accordingly, judicial interference by the High Court or by this Court, an appeal is guided by, among others, the provisions of sections 10 and 35(2) of the Arbitration Act, 2019 (the Act), which stipulate the grounds on which arbitral awards may be challenged or set aside on application to the High Court, whose decision is liable to appeal pursuant to section 39(3) of the Act.
23.Section 10 of the Act lays down the principle that guides the judicial process on the extent of intervention in proper cases. The section lends clarity to the limitation placed on domestic courts not to interfere with the arbitral process except, perhaps, in cases of procedural failures or defects. The section reads:
24.On the other hand, section 35(2) of the Act goes further and prescribes the grounds on which an arbitration award may be set aside on application by any party to the arbitral process. That section reads:
25.Turning to the decisive issue as to whether the appellant had the right of appeal to the Court of Appeal, the first port of call is section 39(3) of the Act, which limits the jurisdiction of this Court and narrows the scope of the Court’s intervention either with the agreement of the parties or with leave of the Court in special circumstances. Whatever the case, the appeal to this Court must be restricted to the matters contemplated in section 35(2) of the Act, namely the grounds on which an application may be made to set aside an arbitral award. Section 39(3) of the Act reads:
26.It is common ground that the parties had not reached any agreement with regard to appeal to this Court as contemplated in section 39(3) (a) of the Act pursuant to which the parties may, prior to the delivery of the arbitral award, agree that an appeal shall lie to this Court from a decision of the High Court in determination of an application under section 35(2). It is for this reason that the appellant sought and obtained leave to appeal pursuant to section 39(3) (b) of the Act. In conclusion, the appellant could not move this Court on appeal as of right but, rather, required leave that was duly granted.
27.We need not over-emphasise the fact that leave to appeal to this Court avails in the backdrop of sections 10, 35 and 39 of the Act, which substantially mirror the universal standards for safeguarding the sanctity of arbitral proceedings as enshrined in Article 5 of the UNCITRAL Model Law on International Commercial Arbitration, Revised 2006 (1985), which provides:
28.The explanatory note to this Article sheds more light on the circumstances in which court intervention may be permitted and reads:
29.Judicial intervention invoked pursuant to a litigant’s right of appeal from a decision of the High Court to uphold an arbitral award (or to dismiss an application to set aside an award) has for a long time been the subject of scholarly interrogation and judicial pronouncements by this Court and the Supreme Court. In the same vein, the learned author and scholar, Dr. Kariuki Muigua in his article titled “Arbitration Law and the Right of Appeal in Kenya” (A Paper Presented at the Law Society of Kenya Continuing Professional Development Webinar on Arbitration held at Nairobi on 13th November 2020) had this to say on the matter:
30.In recognition of the private, consensual and contractual nature of arbitral proceedings, which are designed to guarantee expedition in dispute resolution, the Supreme Court had this to say in Geo Chem Middle East vs. Kenya Bureau of Standards  eKLR:
31.Pronouncing itself on the residual jurisdiction of the Court of Appeal in the rarest of cases involving process failures, the Supreme Court in Nyutu Agrovet Limited vs. Airtel Networks Kenya Limited; Chartered Institute of Arbitrators-Kenya Branch (Interested Party)  eKLR took to mind (in what was essentially a comparative review of the position in other jurisdictions) the Singaporean case of AKN & another vs. ALC and others and other appeals  SGCA 18 with approval and held as follows:
32.In Synergy Industrial Credit Limited vs. Cape Holdings Limited  eKLR, the Supreme Court also held that:
33.Thus far, we have extensively explored the relentless attempt to safeguard the sanctity of the arbitral process by means of statute law and treaty instruments that firmly restrict court intervention except, perhaps, in support of arbitral proceedings and enforcement of arbitral awards. As we have already observed, section 35(2) of the Act stipulates the only grounds on which a litigant may move the High Court to set aside an arbitral award, and to do so without engaging in merit review thereof. Section 39(3) goes further and sets out the circumstances under which this Court may be moved on appeal from a decision of the High Court made pursuant to section 35(2) of the Act. Indeed, we are guided by those strict provisions in identifying the real issues that fall to be determined in this appeal.
34.On the authority of Geo Chem Middle East vs. Kenya Bureau of Standards, Nyutu Agrovet Limited vs. Airtel Networks Kenya Limited and Synergy Industrial Credit Limited vs. Cape Holdings Limited (supra), we form the view that, even though the appellant has made a case for appeal to this Court, its appeal stands or falls on our finding on only two main grounds, namely: whether the learned Judge erred in failing to find that the impugned award went beyond the scope of the reference; and whether the same was made in contravention of public policy. As for the remaining nine or so grounds advanced in support of the appeal, they constitute an invitation to engage in a merit review of the impugned ruling, which we cannot undertake. Accordingly, we shall confine ourselves to those grounds contemplated in section 35(2) read with section 39(3) of the Act pursuant to which we identify the 2nd and 3rd issues set out above as deserving of our consideration.
35.We reach this conclusive decision guided by the Supreme Court’s decision In Nyutu Agrovet Limited vs. Airtel Networks Kenya Limited (supra) citing the Singaporean case of AKN & another vs. ALC and others (supra) where the Court of Appeal in Singapore held thus (at paragraphs 38 and 39):
36.Turning to the 2nd issue as to whether the learned Judge erred by upholding the award allegedly reached without jurisdiction and outside the scope of the reference, learned counsel for the appellant submitted that the Judge erroneously took an inquisitorial approach that led to findings that are speculative and extraneous, and that these speculative findings were made on matters not present in the Arbitral award; that, further, the Judge dwelt on matters not submitted by the parties; that the Judge proceeded unhinged to quote and misconstrue clause 2.10 in the lease agreement on rental spaces 1 and 2; and that, ultimately, the Judge assumed an appellate position when she analysed in depth the correctness of the Arbitral Award.
37.To buttress his submissions, counsel cited the Supreme Court decision in Geo Chem Middle East vs. Kenya Bureau of Standards  eKLR in which the Court had this to say:
38.In rebuttal, counsel for the respondents submitted that the arbitral award was based on the issues agreed upon, and did not in any way address matters outside the scope of the reference to arbitration.
39.On the issue as to whether the learned Judge erred in failing to find that the award exceeded the scope of the reference, the appellant contended that the Arbitrator based his decision on what was stated in the brochure advertising Jadala Place. Closely connected with the alleged excess of jurisdiction, counsel for the appellant submitted further that “when a court or arbitrator determines issues not pleaded, they deny parties a fair hearing.”
40.In answer, counsel for the respondents submitted that the arbitrator dealt with all the issues agreed for determination. As the learned Judge correctly observed with regard to clause 2.10 of the lease and the alleged excess of jurisdiction on the part of the arbitrator:
41.We find nothing to fault the learned Judge for reaching that conclusion. Neither do we find anything to suggest that the award fell fowl[sic] of the principle enunciated in Teejay Estates Ltd vs. Vihar Construction Limited  eKLR so as to find fault in the impugned judgment. In that case, Mabeya, J. correctly observed:
42.We find nothing to fault the learned Judge for concluding that the appellant’s contention that the arbitrator exceeded his jurisdiction by considering the contents of the marketing brochure aforesaid was without basis. Neither is there anything to suggest that the appellant was not accorded a fair hearing on all issues agreed as falling to be determined in the arbitration. Moreover, the proposed use of the suit properties was not in contention, having been expressly pleaded in the appellant’s statement of claim in the arbitral process. On page 27 of the Award, the arbitrator makes reference to clauses 2.10, 2.12,2.26.2 and 2.26.3 on the basis of which he concluded that the proposed use of the suit properties as a supermarket, deli and café would have resulted in breach of the lease.
43.In our considered view, the learned Judge could not be faulted for upholding the Award on that score, and for dismissing the appellant’s claim that she failed to set aside the Award on the ground that it exceeded the scope of the reference allegedly on account of reference to the marketing brochure brought on record of the arbitral tribunal as part of the appellant’s own list and bundle of evidential documents dated 21st March 2016. Moreover, if the appellant did not wish to bring the contents of the brochure in issue to the arbitrator’s attention, nothing would have been easier than to exclude it from its bundle of evidential documents.
44.It is also noteworthy that the allegation of the arbitrator’s excess of jurisdiction was raised for the first time in the submissions of counsel for the appellant dated 3rd May 2023 in support of the appellant’s Motion to set aside the arbitral award. According to Mr. Ojiambo:
45.We reach the foregoing conclusion mindful of, and affirming, the High Court’s decision in Equity Bank Ltd vs. Adopt a Light Limited  eKLR where the court correctly held that –
46.But for the mention of the contents of the marketing brochure, we are not told what fell outside the scope of the reference in respect of which the learned Judge is said to have failed to fault the arbitrator for. Our examination of the arbitral proceedings, the arbitral award, the impugned judgment, and the rival submissions of the parties, does not reveal what might have led to the contention that the arbitrator acted in excess of jurisdiction, or that he failed to accord the appellant a fair hearing. If that were the case, the appellant was mandated to raise such a plea at the earliest opportunity during the arbitral proceedings. It did not.
47.Section 17(3) of the Act provides that
48.As the High Court at Nairobi in Joma Investments Limited vs. N. K. Brothers Limited  eKLR correctly observed when considering the effect of section 17(3) of the Act and the consequences of failure to raise an objection at the first instance:
49.In conclusion, we find that no jurisdictional issues or breach of the appellant’s right to fair hearing were ever raised before the arbitrator pursuant to section 17(3) of the Act, raising such issues before the learned Judge pursuant to section 35(2) of the Act was an afterthought in vain and against the grain of clear statutory edicts from which the superior court cannot stray. Accordingly, that ground of appeal also fails.
50.Turning to the 3rd issue as to whether the learned Judge erred in holding that the award was not in conflict with the public policy of Kenya, the appellant’s case is that:
51.In brief rebuttal, learned counsel for the respondents submitted that the Appellant did not state in clear and precise terms what type or nature of public policy had been violated by the award, or ignored in the Court's ruling.
52.In her ruling, the learned Judge took to mind the appellant’s contention that, “… by allowing the Respondent to keep the purchase price while denying the Applicant the right to use the premises, the award is manifestly unjust and against public policy of Kenya.” In her finding, “… it is evident that the Applicant has not been denied use of the space for activities indicated in the lease agreement.” She went on to conclude, as we hereby do, that the appellant had failed to demonstrate how the award was against public policy.
53.In Christ for All Nations vs. Apollo Insurance Co. Ltd  2 E.A 366, Ringera, J. (as he then was) had this to say on the nature of public policy:
54.In the same vein, the High Court at Mombasa in Glencore Grain Limited vs. TSS Grain Millers Limited (2002) 1 KLR 606 correctly observed at 626:
55.We hasten to observe that none of the eventualities highlighted by Ringera, J. in the afore-cited case of Christ for All Nations vs. Apollo Insurance Co. Ltd (supra) or in Glencore Grain Limited vs. TSS Grain Millers Limited (ibid) were shown to be present in the arbitral award in issue to suggest that the award in issue was contrary to public policy.
56.That said, the term “public policy” must not be narrowly construed so as to place limitations in cases deserving of judicial intervention pursuant to section 35(2) of the Act. In DST vs. National Oil Company (1987) 2 All ER 769, Sir Johnson Donaldson M. R. observed;
57.In conclusion. The appellant’s attack on the arbitral award and on the appeal before us on the ground that the learned Judge ought to have found that the award offended public policy is without basis. Having carefully examined the record of appeal, the rival submissions of learned counsel for the parties, the cited authorities and the law, we reach the reasoned conclusion that the appeal herein fails and is hereby dismissed with costs to the respondents.