THE EXTENT OF APPEAL IN ARBITRATION; THE EXTENT OF APPEAL IN ARBITRATION

 

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Recap on nyutu agrovet case  

A deliberation on whether an Appeal for an Arbitral Award should be final at the High Court or Court of Appeal.

  1. What is Arbitration?

Kariuki Muigua defines arbitration as one of the mechanisms that are commonly referred to as alternative dispute resolution mechanisms (ADR).[1] These mechanisms are set out under Article 33 of the United Nations Charter which provides that parties to a dispute shall first seek to resolve it through negotiation, inquiry, mediation, conciliation, arbitration, judicial settlement, resort to regional agencies or arrangements, or other peaceful means of their own choice.[2]

Arbitration itself is the procedure in which a dispute is submitted, by agreement of the parties to one or more arbitrators who make a binding decision on the dispute.[3]

Arbitration in Kenya is recognized mainly by the Constitution of Kenya, Civil Procedure Act, Arbitration Act of 1995, Arbitration Rules, and Civil Procedure Rules. The principles that stem from the constitution of Kenya provide that, in exercising judicial authority, the courts should be guided by certain tenets which include alternative forms of dispute resolution which include Arbitration.[4] The question as to which “courts” should be guided by these principles certainly came into play in the Nyutu Agrovet v. Airtel Networks Kenya Ltd case.

  1. How an Arbitral Award arises in Arbitration in Kenya

As provided under Section 32 of the Kenyan Arbitration Act, an arbitral award shall be made in writing and awarded by the arbitrator or arbitrators.[5] The arbitral award would have to state the reason upon which it is based unless the parties have agreed not to indicate so or if the parties agree to settle the dispute during arbitral proceedings.

The effect of the award as indicated under Article 32A is that it is supposed to be binding with no recourse unless provided by the act. Critics of the decision rendered in the Nyutu Agrovet v. Airtel Networks Case have argued that Section 10 of the Arbitration Act expressly indicated the nature of finality of an award at the High Court, something that was not agreed with in the below case.

  1. Conflict in Nyutu Agrovet v. Airtel Networks Kenya Ltd

In summary, the case at hand involved a dispute that arose from a distribution agreement between Nyutu and Airtel.[6] The agreement was terminated due to fraudulent orders placed by Nyutu's agent. An arbitrator was appointed, who awarded Nyutu a substantial amount. Airtel sought to set aside the award, and the High Court granted their application. Nyutu appealed to the Court of Appeal, but the appeal was struck out because there was no right of appeal from a decision made under Section 35 of the Arbitration Act. Nyutu then appealed to the Supreme Court, arguing that the Court of Appeal had erred in striking out the appeal and that the limitation on the right of appeal was unconstitutional.

The issues for determination in the case were as follows:

  1. Whether Sections 10 and 35 of the Arbitration Act contravened a party's right to access justice under Articles 48, 50(1), and 164(3) of the Constitution and were therefore unconstitutional.
  2. Whether there was a right of appeal to the Court of Appeal following a decision by the High Court under Section 35 of the Arbitration Act.

The court determined that Article 164(3) of the Constitution granted jurisdiction to the Court of Appeal to hear appeals from the High Court but did not confer an unfettered right of appeal to all parties. The court explained that a right of appeal could be conferred by the Constitution or by a statute, and in this case, the right of appeal had to be provided for in the law. The court concluded that Sections 10 and 35 of the Arbitration Act did not contravene a party's right to access justice and were not unconstitutional.

Regarding the right of appeal following a decision under Section 35, the court acknowledged that the Act and the UNCITRAL Model Law did not expressly prohibit appeals to the Court of Appeal. The court suggested that exceptional circuinstances might warrant an appeal, particularly to address process failures rather than the merits of the arbitral award. However, the court emphasized the need to strike a balance between the finality of arbitral awards and minimal court intervention. The court rejected Nyutu's argument that Section 10 was unconstitutional in limiting the Court of Appeal's jurisdiction and concluded that the Act did not provide a clear answer on whether an appeal may lie against a High Court decision made under Section 35.[7]

Overall, the court upheld the High Court's decision to strike out Nyutu's appeal and rejected the plea to declare Sections 10 and 35 of the Arbitration Act unconstitutional.

  1. What are the potential effects following this decision?

The Nyutu Agrovet V Airtel Networks Kenya Ltd case opened the door, in limited instances, to allow appeals of decisions to the Court of Appeal under Section 35 of the Arbitration Act. In my view, this is in the furtherance of justice as provided under Article 48 of the constitution.[8]

A party ought not to be bound by a decision of the High Court where instances of an injustice exist in the decision. As was the Majority view in the case, certain exceptions must be allowed to ensure equity, equality and justice under the law.

“For in the end arbitration must bow to the rule of law…” – Shalom Omondi

*Shalom Bright Omondi is a dedicated 4th-year Law student at JKUAT – Karen Campus. He is a passionate advocate for legal understanding and societal progress. As the President of the JKUAT – Karen Young Advocates Society (YAS), he leads with a commitment to fostering legal excellence and driving positive change within his student community. He is also the founder of AfricaLawHub where he has created a regional nexus for the convergence of legal insights and societal issues. Shalom’s vision is anchored in building awareness, promoting discussions, and catalyzing positive transformations within the legal and social realms.

 

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