Mennonite Board in East Africa v Simon Saili Malonza & another (Miscellaneous Civil Application E312 of 2019) [2021] KEHC 92 (KLR) (Commercial and Tax) (23 September 2021) (Ruling)
Neutral citation number: [2021] KEHC 92 (KLR)
Republic of Kenya
Miscellaneous Civil Application No. E312 of 2019
WA Okwany, J
September 23, 2021
Between
Mennonite Board in East Africa
Applicant
and
Simon Saili Malonza
1st Respondent
Thomas & Piron Grands Lacs
2nd Respondent
Ruling
1.Through an earlier application dated 31st July 2019, the applicant herein sought, inter alia, orders for stay of further proceedings before the 1st respondent (the sole arbitrator) and the removal of the said arbitrator on grounds of bias. This court declined to grant the orders sought after considering the merits of the said application thus precipitating the filing of the application that is the subject of this ruling.
Application
2.This ruling is in respect to the application dated 29th March 2021 wherein the applicant (Mennonite Board in East Africa) seeks the following orders; -
3.The application is brought under section 39(3) and (4) of the Arbitration Act (hereinafter “the Act”) and is supported by the affidavit of Robert Darby. The application is premised on the following main grounds: -
4.The 2nd respondent, Thomas & Piron Grands Lacs, opposed the application through the replying affidavit sworn by its Chief Executive Officer Coralie Piron who avers that the applicant’s intention is to derail and delay the arbitral proceedings that are pending before the 1st respondent. He states that the application does not meet the requirements for an appeal as provided for under Section 39(3) of the Act. He adds that the application for stay of the proceedings before the arbitral tribunal is res judicata as it was dealt with and determined on in the earlier application dated 31st July 2019.
5.The application was canvassed by way of written submissions which I have considered. The applicant submitted that under Sections 13 to 15 of the Arbitration Act, the integrity of the arbitral process fundamental and that where there exists doubts in the impartiality and independence of the arbitrator, an application for his removal from office may be made.
6.The applicant also submitted on the principles governing the granting of orders for stay of proceedings and the centrality of the right of appeal as a fundamental right that underpins the right to fair trial under Article 50(1) of the Constitution.
7.The respondent, on the other hand, submitted that this court lacks the jurisdiction to entertain the application as no right of appeal exists against the court’s decision. It was submitted that Section 39(3) (a) of the Act limits the option of appeal to instances where parties have expressly agreed that an appeal shall lie prior to the delivery of the arbitral award or where the Court of Appeal grants leave to a party to institute an appeal before it on a point of law of general importance.
8.The respondent argued that leave to appeal can only be granted by the Court of Appeal after interrogating the substance of the intended appeal.
9.On the issue of stay of execution, the respondent submitted that the court became functus officio once it delivered the impugned ruling.
10.I have considered the pleadings filed herein, the parties’ rival arguments and the authorities that they cited. I find that the main issues for determination are whether the applicant should be granted leave to appeal the ruling dated 18th March 2021 and whether the Court should stay arbitral proceedings pending the intended appeal.
11.From the outset, it is worthy to point out that unlike ordinary civil proceedings that are generally governed by the rules in the Civil Procedure Act and Rules, arbitral proceedings are, except where it is expressly stated, governed by the Arbitration Act. This is to say that where parties choose to subject disputes arising from their agreement to arbitration, they must in the same vein be alive to the fact that, except where it is clearly stated, the Act removes such proceedings from the purview of the rules in the Civil Procedure Act.
12.The applicability of the provisions of the Civil Procedure Act to arbitral proceedings was discussed in Kamconsult Ltd v Telkom Kenya Ltd & Another [2016] eKLR, where the Court of Appeal referred to the case of Nyutu Agrovet Limited v Airtel Networks Limited [2015] eKLR and to Mwera JA’s statement that:
13.Section 39(3) of the Arbitration Act stipulates as follows: -39(3) Notwithstanding Sections 10 and 35 an appeal shall lie to the Court of Appeal against the decision of the High Court under subject (2) –
14.In Kenyatta International Convention Centre v Greenstar Systems Limited [2018] eKLR it was held: -
15.In the recent Supreme Court decision in Synergy Industrial Credit Limited vs Cape Holdings Limited [2019] eKLR, (the Synergy Industrial Appeal), it was held: -
16.In Micro-House Technologies Limited v Co-operative College of Kenya [2017] eKLR, the Court observed that an appellant has no right of appeal to this Court to challenge an arbitral award if leave is not obtained under Section 39(3)(b) of the Act.
17.In view of the foregoing decisions, I find that Section 39(3) of the Act permits leave to be granted if the parties have agreed that an appeal shall lie prior to the delivery of the arbitral award and when the Court of appeal is of the opinion that a point of law of general importance, the determination of which will substantially affect the rights of the parties, is involved.
18.In the instant case, it is clear that the arbitration agreement did not provide for the right of appeal against the decision of the High court. The Second test lies within the province of the Court of Appeal. I note that Section 39(3) of the Act does not confer the High Court with the jurisdiction to grant leave of appeal. Needless to say, jurisdiction is everything without which a court cannot act and must down its tools. (See Owners of Motor Vessel “Lillian S” versus Caltex Oil (Kenya) Ltd [1989] KLR I).
19.From the foregoing observations, I find that this court lacks jurisdiction to entertain the application for leave to appeal for want of jurisdiction. As regards the prayer for stay of the arbitral proceedings pending the intended appeal, the respondent argued that the prayer is res judicata in light of the decision in the impugned ruling dismissing a similar prayer. I however find that the res judicata doctrine is not exactly applicable to this application as the circumstances under which stay of proceedings was sought in the earlier application differs from the circumstances in the instant application. Be that as it may, having found that this court does not have the jurisdiction to grant leave to appeal against the impugned ruling, I in the same vein find that the prayer for stay of proceedings before the arbitrator pending the intended appeal falls on the wayside and cannot succeed as the two prayers are joined to the hip. This means that an order for stay of proceedings pending appeal was dependent on the outcome of the prayer for leave to appeal, in which case, this court cannot find that it lacks the jurisdiction to grant leave to appeal and at the same time grant stay of proceedings pending the intended appeal.
20.In a nutshell, I find that the instant application is not merited and I therefore dismiss it with costs to the respondents.
DATED, SIGNED AND DELIVERED VIA MICROSOFT TEAMS AT NAIROBI THIS 23RD DAY OF SEPTEMBER 2021 IN VIEW OF THE DECLARATION OF MEASURES RESTRICTING COURT OPERATIONS DUE TO COVID-19 PANDEMIC AND IN LIGHT OF THE DIRECTIONS ISSUED BY HIS LORDSHIP, THE CHIEF JUSTICE ON THE 17TH APRIL 2020.W. A. OKWANYJUDGEIn the presence of:Mr. Kamau Kuria Senior Counsel for Applicant.Mr. Dachi for 2nd Respondent.Court Assistant: Sylvia.