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Modern Holdings (EA) Ltd v Kenya Ports Authority (Petition 20 of 2017) [2020] KESC 53 (KLR) (7 February 2020) (Judgment)

Reported
Modern Holdings (EA) Ltd v Kenya Ports Authority (Petition 20 of 2017) [2020] KESC 53 (KLR) (7 February 2020) (Judgment)
Citation
Modern Holdings (EA) Ltd v Kenya Ports Authority [2020] KESC 53 (KLR)
Media Neutral Citation
[2020] KESC 53 (KLR)
Court
Supreme Court
Court station
Supreme Court of Kenya
Outcome
Allowed in part
Case number
Petition 20 of 2017
Alternative citations
Modern Holdings (EA) Limited v Kenya Ports Authority [2020] eKLR
Judges
DK Maraga, PM Mwilu, MK Ibrahim, SC Wanjala, N Ndungu
Judgment date
7 February 2020
Language
English
Type
Judgment
Original source file
Download DOCX (57.9 KB)
Collections
Date published
05 June 2024
Case action
Judgment
Filing county
Nairobi
Order
Flowing from our conclusions above, we make the following orders: (a) The petition of appeal dated 3rd November 2017 is hereby allowed to the extent only that we hereby declare that the High Court properly exercised its jurisdiction when it heard and determined the dispute between the parties herein. (b) The judgment of the Court of Appeal dated 29th September, 2016 is hereby set aside to the above extent only. (c) The appeal is hereby remitted to the Court of Appeal to determine the same on merit. (d) Each Party shall bear its costs of the appeal
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A. Introduction
1.This is an appeal brought under the provisions of article 163(4)(a) of the Constitution principally challenging the Court of Appeal’s decision on the constitutionality of section 62 of the Kenya Ports Authority Act (the KPA Act). The appellant argues that by purporting to oust the jurisdiction of the court to entertain claims against the Kenya Ports Authority (KPA) for damage suffered under sections 12, 14, 15 and 16 of the Kenya Ports Authority Act (KPA Act), the section fouls articles 10, 40, 48, 50, 159 and 165(3) of the Constitution and is therefore unconstitutional.
B. Background
2.On diverse dates in December 2007 and January 2008, the appellant, a limited liability company incorporated in the Republic of Tanzania, imported from the United Arab Emirates into the East African Region, through the Port of Mombasa, 21 x 40ft containers of assorted Masafi Products which included fruit juices and mineral water. Due to the 2007/2008 post-election violence in Kenya, it was claimed that the respondent was not able to clear as quickly as possible the consignments received and as a result, there was a huge pileup of cargo at the Port of Mombasa. To ease on that congestion, the respondent contracted Makupa Transit Shade Ltd to warehouse some of the cargo including that of the appellant.
3.When the situation at the Port normalized, only 6 out of the appellant’s said 21 containers were traced and cleared. Consequently, on April 29, 2009, the appellant filed Mombasa HCCC No 19 of 2009 and claimed a total of US$ 24,819,115 being the value of the cargo lost as well as consequential losses including loss of profits and business together with interest at court rates from the date of filing the suit and costs also with interest thereon from. After hearing the case, the High Court (Otieno J) awarded the appellant a sum of US$ 819,554 being the value of the lost consignment, loss of profits of US$ 8,296,536 and the cost of following up the consignment of US$ 71,000 totaling to US$ 9,187,090
4.On appeal, the Court of Appeal found that under section 62 of the Kenya Ports Authority Act, the learned trial Judge had no jurisdiction to entertain the appellant’s claim holding that though under article 165(3) of the Constitution the High Court has unlimited original jurisdiction in both civil and criminal matters, the same Constitution in article 159(2)(c) enjoins courts and tribunals to be guided by and to promote alternative forms of dispute resolution including arbitration. The Court of Appeal concluded that it was therefore “a misapprehension of the law to argue that” section 62 of the Act is unconstitutional for limiting the right of access to justice because it requires disputes arising from the respondent’s discharge of its statutory duties under sections 12, 14, 15 and 16 of the Act to be referred to arbitration. In this case, the Court of Appeal found that the High Court erred in entertaining the claim before the parties had attempted or exhausted the out of court settlement or arbitration procedure set out in section 62 of the KPA Act. In the circumstances, it allowed the appeal, set aside the High Court judgment and awarded the costs of the appeal to the respondent. This appeal is against that decision.
5.In its Petition of appeal, the appellant faults the Court of Appeal for finding that, pursuant to section 62 of the Act, the High Court had no jurisdiction to entertain the appellant’s claim in the first instance; for failing to find that sections 23 and 62 of the Act are unconstitutional; in failing to find that section 62 of the Act only kicks in after admission of liability by the respondent; and that by holding that the matter should have been referred to arbitration pursuant to section 62 of the Act, the Court of Appeal failed to be guided by the principle in article 159(2)(d) of the Constitution that“justice shall be administered without undue regard to procedural technicalities.”
6.The respondent sought to strike out the petitioner’s appeal on the ground that the petitioner did not have an automatic right to access this court. However, in its ruling of October 9, 2018, this courtdismissed the application holding that“as the constitutionality of section 62 of the Kenya Ports Act was challenged, we find that our jurisdiction under article 163(4)(a) was properly invoked.”
C. Appellant’s Submissions
7.Counsel for the appellant submitted that section 62 of the KPA Act denies parties access to justice and therefore fouls article 48 of the Constitution. Consequently, it also denies parties the right to a fair hearing under article 50 which in turn denies them the right to enforce their property rights under article 40. Counsel contended that any violation or threatened violation of any of these rights can only be litigated and determined before the High Court and not before an arbitrator.
8.On jurisdiction, counsel argued that, save for matters reserved for the Supreme Court and the specialized courts, article 165(3) of the Constitution confers on the High Court unlimited original jurisdiction in both civil and criminal matters. An arbitrator appointed under section 62 of the Act is not the High Court. He is also not a court or a tribunal. An arbitrator appointed under section 62 of the KPA Act is therefore not the court contemplated under article 159 (1) of the Constitution. Under article 159(2)(c), it is the court or tribunal that should promote alternative dispute resolution and not Parliament to direct that forum for resolution of disputes.
9.The appellant further argued that arbitrations under section 62 of the KPA Act cannot proceed under the Arbitration Act No 4 of 1995 since arbitrations under that Act are pursuant to arbitration agreements of parties which was not the case in this matter.
10.The appellant further argued that article 50(1) of the Constitution grants the non-derogable right under article 25(c) to have any dispute resolved in a fair and public hearing. In this regard, the appellant contended that arbitration proceedings are not public hearings. In its view, property rights under article 40 can only be taken away by a court and not by an arbitrator. In the circumstances, and on the authority of the High Court decisions in Multiserve Oasis Company Ltd v. Kenya Ports Authority,[2012] eKLR and Threeways Shipping Services (K) Ltd v. Kenya Ports Authority [2012] eKLR, counsel for the appellant argued that by purporting to oust the court’s jurisdiction to determine disputes between Kenya Ports Authority and third parties, section 62 of the Act denies parties access to justice and thus violates article 48 of the Constitution. He contended that it also violates the appellant’s rights under articles 10, 40, 50, 159 and 165(3). He further faulted the Court of Appeal for failing to appreciate that an arbitrator acting pursuant to section 62 of the KPA Act has no jurisdiction to adjudicate on the issues touching on the Bill of Rights. As such, it should be held unconstitutional or harmonized with the 2010 Constitution as required by section 7 of the 6th Schedule to the Constitution which provides that all existing law as at the effective date shall be construed with the alteration, adaptation, qualification and exception necessary to bring it into conformity with the Constitution.
11.Citing from the South African De Jure Law Journal by Professor Malan and the Privy Council decision in Endell Thomas v Attorney General of Trinidad & Tobago (1982) AC 113,  counsel further argued that the 2010 Constitution has rendered all ouster clauses in our law unconstitutional as no ouster clause can override provisions of a constitution.
12.Counsel further argued that in this case, the High Court addressed substantive justice. However, the Court of Appeal, contrary to article 159(2)(d) based its decision on a technicality of jurisdiction which was not even raised in the High Court. The appellant also cited several decisions of the European Court of Justice and cited both the European Convention on Human Rights and the Universal Declaration of Human Rights in support of its contention that section 62 of the KPA Act denies a party access to justice contrary to article 48 of the Constitution.
13.In conclusion, the appellant argued that if the Court of Appeal’s decision is upheld, the appellant will be left with no remedy as its claim will be statute barred. Consequently, the appellant urged us to allow this appeal with costs.
D. Respondent’s Submission
14.In response to those submissions, the respondent started by arguing that the parties were aware of the fact that their contract or engagement would be governed by the KPA Act. In the circumstances, the respondent urged us to dismiss the appellant’s challenge of the constitutionality of section 23 for limiting the amount recoverable to KES 200 as against it for any loss or mis-delivery of, damage to, or delay in the delivery of any goods unless expressly stated at the time of depositing the goods, that the value exceeds KES. 200/=, as offending article 40(b) of the Constitution.
15.The respondent also dismissed the appellant’s argument that the court’s jurisdiction under section 62 of the Act cannot be raised for the first time on appeal as was done in this matter. He submitted that the issue of jurisdiction is fundamental and can be raised at any stage of the proceedings and cited the Court of Appeal decision in Adero & Another v Ulinzi Sacco Society Limited [2002] 1 KLR 577 in support of that argument. He dismissed the appellant’s claim that the section 62 of the Act is an ouster clause and is therefore unconstitutional.
16.The respondent argued that resolution of disputes through arbitration is anchored in article 159(2)(c) of the Constitution. He said that section 62 of the KPA Act only limits the right to court action until resolution, where negotiations or arbitration will have failed. This is because the High Court retains supervisory jurisdiction under article 165(6) and (7) to ensure that the arbitral proceedings under that section are in conformity with fair administration of justice. It therefore follows that if any statutory arbitral proceedings, including those founded on section 62 of the KPA Act, are conducted irregularly or illegally, the High Court, under its said supervisory jurisdiction, can intervene and remedy any irregularity or illegality.
17.The respondent urged that section 62 is therefore in perfect harmony with articles 159(2)(c) and 165(6) and (7) of the Constitution. In support of this argument, the respondent cited the Court of Appeal decisions in Kenya Ports Authority v. Kunston (Kenya) Limited (Unreported), Civil Appeal No. 315 of 2005 and Kenya Ports Authority v. Africanline Transport Company Limited [2014] eKLR and the High Court decision in Safmarine Container NV of Antwerp v Kenya Ports Authority [2012] eKLR in which suits instituted contrary to section 62 of the KPA Act were struck out. The respondent contended that the High Court decisions in Multiserve Oasis Company Limited v. Kenya Ports Authority Civil Suit No 252 of 2010; [2012] eKLR and Three Way Shipping Services Limited v. Kenya Ports Authority [2012] eKLR which took a contrary view are accordingly bad law.
18.From comparative jurisdiction, it cited the commentaries by Halsbury’s Laws of England that;114th Edition Volume 10 paragraph 719 at pages 11 – 12 of the Respondent’s Bundle of Authorities“An agreement purporting to oust jurisdiction of the court entirely is illegal and void on the grounds of public policy. On the other hand, an agreement that no right of action can be brought in the courts unless and until the parties’ differences have been settled in some other way for example by arbitration is valid and enforceable.”
19.The respondent also dismissed the appellant’s submission that section 62 of the Act fouls article 48 of the Constitution. To the contrary, the respondent argued, the section is congruent with the promotion of alternative dispute resolution by arbitration as required by article 159(2)(c) of the Constitution.
20.Moving on to the issue of fair hearing, the respondent argued that article 50 in its ordinary meaning provides for a fair and public hearing before a court. However, where appropriate, a hearing can be conducted by a subordinate court or another independent and impartial tribunal or body established by article 169(2). From this and the fact that arbitrations are subject to the supervisory jurisdiction of the High Court under article 165(6) and (7), the respondent concluded, section 62 of the KPA Act cannot be said to be an ouster clause denying a party access to justice. The respondent therefore dismissed the appellant’s invocation of both the European Convention on Human Rights and the Universal Declaration of Human Rights as a basis for is contention that section 62 of the KPA Act denies a party access to justice.
21.Relying on the Court of Appeal’s decision in the case of Kenindia Assurance Company Limited v. James Otiende Civil Appeal No. 103 of 1989, [1989] 2 KAR 162 , the respondent concluded that jurisdiction cannot be conferred even by the consent of the parties and urged us to dismiss this appeal with costs.
E. Analysis
22.From these submissions, three issues emerge for our determination:(i)whether section 62 of the KPA Act is an ouster clause; and(ii)whether section 62 of the KPA Act is unconstitutional for fouling articles 10, 40, 48, 50(1), 159(2)(d) and/or 165(3) of the Constitution.(iii)If the answer to (ii) above is in the negative, what remedy is available.
(i) Whether section 62 of the KPA Act is an ouster clause
23.The appellant contended that section 62 of the KPA Act is an ouster clause and is therefore unconstitutional. This is because the 2010 Constitution has rendered all ouster clauses in our law unconstitutional and no ouster clause can override provisions of a Constitution. What is an ouster clause?
24.In Judges & Magistrates Vetting Board & 2 others v Centre for Human Rights & Democracy & 11 others, S.C Petitions 13A of 2013 as consolidated with Petition 14 of 2013 and Petition 15 of 2013 [2014] eKLR, this Court had occasion to deal with the issue of an ouster clause. At paragraph [115], it observed that:“[115].... Ouster clauses are provisions in the Constitution or a statute that take away, or purport to take away the jurisdiction of a competent court of law. They deny the litigant any judicial assistance in the relevant matter, and at the same time deny the courts the scope for making any arbitral contribution with respect to the relevant matter. In short, ouster clauses curtail the jurisdiction of the court, as the relevant matter is rendered non-justiciable before the courts.”
25.In the light of this authority, an ouster clause is one which denies an aggrieved party the right to litigate his claim before a court of law “thus rendering [it] non-justiciable before the Courts.” This means that a person who suffers damage in a given matter has no legal remedy. Does section 62 of the KPA Act render disputes thereunder non-justiciable? The section provides that:“In the exercise of the powers conferred by sections 12, 14, 15 and 16, the Authority shall do as little damage as possible; and, where any person suffers damage, no action or suit shall lie but he shall be entitled to such compensation therefore as may be agreed between him and the Authority or, in default of agreement, as may be determined by a single arbitrator appointed by the Chief Justice.”
26.Far from disentitling an aggrieved party a remedy, as a matter of fact the section expressly entitles him compensation for any damage suffered. While it provides that “no action or suit shall lie”, it nonetheless authorizes any person suffering damage thereunder to negotiate with the Kenya Ports Authority a settlement through negotiation failing which then the matter should be referred to arbitration.
27.In the circumstances, section 62 of the KPA Act is not an ouster clause as the appellant contended.
(ii) Whether section 62 of the KPA Act is unconstitutional for fouling articles 10, 40, 48, 50(1), 159(2)(d) and/or 165(3) of the Constitution.
28.The second issue raised in this matter is whether section 62 of the KPA Act is unconstitutional for fouling articles 10, 40, 48, 50(1), 159(2)(d) and/or 165(3) of the Constitution. article 10 of the Constitution enumerates the national values and principles of good governance as:“patriotism, national unity, sharing and devolution of power, the rule of law, democracy and participation of the people; human dignity, equity, social justice, inclusiveness, equality, human rights, non-discrimination and protection of the marginalised; good governance, integrity, transparency and accountability; and sustainable development.”The article obliges "State organs, State officers, public officers, and all persons whenever any of them—applies or interprets this Constitution; enacts applies or interprets any law; or makes or implements public policy decisions”, to be governed by those principles.
29.The appellant has not demonstrated how section 62 of the KPA Act fouls any of these values or principles. In the circumstances, we find that section 62 of the KPA Act does not run counter to article 10 of the Constitution.
30.The appellant also contended that by outlawing court action to remedy any damage suffered under sections 12, 14, 15 or 16, section 62 of the KPA Act violates the appellant’s right to enforce its property rights under article 40 of the Constitution. That is not correct.
31.The section does not forbid or outlaw court action for relief. That section does not grant the Kenya Ports Authority immunity from all judicial intervention or dispute resolution processes. It simply provides for an alternative dispute resolution (ADR) mechanism by way of negotiations and arbitration in the settlement of any dispute arising under any of sections 12, 14, 15 or 16 of the KPA Act. Ogola, J underscored this point in Reddington (Uganda) Ltd v. Office of the Attorney-General & Another [2018] eKLR, where he observed that:“…section 62 of the KPA Act does not infringe on the Petitioner’s right to property as entrenched under article 40 of the Constitution nor its right to access to justice under article 48 of the Constitution. section 62 of the KPA Act merely provides other modes of dispute resolution by which the Petitioner can access justice and in turn safeguard its right to property.”
32.In its judgment giving rise to this appeal, the Court of Appeal observed that section 62 of the Act does not at all oust the jurisdiction of the court but merely limits and postpones it in the first instance. By article 165(3)(e) and (6) of the Constitution, the High Court does, not only retain both appellate and supervisory jurisdiction but has also the final adjudicatory powers over the matters referred to arbitration. The promulgation of the 2010 Constitution neither affected section 62 of the Act nor does section 62 override article 165(3)(a) which expressly grants "unlimited“original jurisdiction in Criminal and Civil matters”. Similarly, article 159(2)(c) which encourages alternative forms of dispute resolution including arbitration on which section 62 aforesaid is anchored, merely creates an alternative but concurrent jurisdiction in resolving disputes.
33.With increased globalization of commerce, arbitration has  become one of the preferred ADR mechanisms for settling international disputes.  It is, in particular, the major ADR process appropriate for resolution of complex commercial disputes especially those involving technical issues. In his book, Law, Practice and Procedure of Arbitration, (Second Edition), Prof. Sandra Rajoo underscored this point in his observation that:“…arbitration is now a generally accepted method of resolving disputes in a variety of commercial transactions, in particular those in specialised or technical industries such as shipping, construction, energy and financial services sector.” 22Datuk Professor Sandra Rajoo, Law, Practice and Procedure of Arbitration (Second Edition), LexisNexis Malaysia Sdn Bhd (Co. No. 7625-H), at p 6. In the 2013 Survey by PWC, Corporate Choice in International Arbitration, 2013 PWC, a majority of the respondents stated that arbitration was the preferred mode of resolution of their disputes.
34.The issue giving rise to this appeal is loss of the appellant’s cargo while in the hands of the respondent in its business as stevedore, wharfinger and/or warehousemen. Determination of the value of such cargo invariably require expertise. As stated above, arbitration is only one of the methods of expeditiously resolving such disputes and that explains the efficacy of section 62 of the KPA Act. So far from denying the appellant the right to enforce its property rights, the section is in fact meant to enable claimants to expeditiously and more efficiently enforce their property rights.
35.Besides speed, one of the advantages arbitration has over ordinary litigation is finality. In their article, ‘The finality of Arbitral Awards in Public International Law,’ Ivan Cisár and Slavomír Halla observed that;“The ultimate aim of the international arbitration is to end the dispute absolutely. Therefore, the arbitral award should be [a] final determination of the rights and obligations of the disputants.”33Ivan Cisár, Slavomír Halla, ‘The finality of Arbitral Awards in the Public International Law’ Conference Právní Rozpravy, Grant Journal, 2012, pp. 1
36.section 32A of the Kenyan Arbitration Act succinctly speaks to that also:“Except as otherwise agreed by the parties, an arbitral award is final and binding upon the parties to it, and no recourse is available against the award otherwise than in the manner provided by this Act.”
37.This is the essence of the principle of finality in arbitration: get a dispute heard expeditiously and a final award made, binding on all the parties to such proceedings. What better way is there of enforcing one’s property rights? We find the contention that section 62 fouls article 40 of the Constitution also untenable.
38.The appellant’s contention of denial of its right of access to justice under article 48 is linked to the alleged denial of its right to a fair hearing under article 50 of the Constitution. We shall therefore combine our determination of section 62’s alleged violation of those articles.
39.The appellant submitted that by outlawing court action (which contention we have shown is a misconception of section 62 of the KPA Act) section 62 violates its right to a public hearing. This is on the ground that arbitrations, which the section mandates, are private and not public proceedings as required by article 50(1) of the Constitution.
40.We agree with the appellant that arbitrations are private proceedings. As Dr. Kariuki Muigua has observed:“Unless parties agree otherwise in an Arbitration agreement … all the aspects of the case are confidential. … For parties who dread humiliation or condemnation or for those who simply do not want sensitive information to be disclosed, Arbitration allows settlement of disputes without exposure.”44Kariuki Muigua (Dr.), Constitutional Supremacy over Arbitration in Kenya, March, 2016, pp. 11Nothing, however, stops any arbitration from being turned into a public hearing if the parties so wish. In this case, the appellant was not forbidden from demanding that the arbitration of its dispute with the respondent under section 62 of the KPA Act be made public. As a matter of fact that arbitration was never attempted. It therefore follows that by providing for an ADR mechanism via arbitration, section 62 does not deny the appellant access to justice. To the contrary it promotes his access to justice.
41.At any rate what is the purpose of a public hearing required by article 50(1) of the Constitution? In our view, the operative word under article 50(1) is “fair.” The appellant has not claimed or shown that the arbitration of its dispute with the respondent in this matter was not going to be fair. We understand the demand for “a public hearing” under this provision to be a transparency and accountability requirement.
42.The appellant’s main ground in this appeal is its contention that by outlawing court action, (which contention we have debunked), section 62 of the KPA Act runs counter to articles 159(1), 159(2)(d) and 165(3)(a) of the Constitution. article 159(1) provides that "Judicial authority is derived from the people and vests in, and shall be exercised by the courts and tribunals established by or under this Constitution.” article 159(2)(d), on the other hand, states that "In exercising judicial authority, the courts and tribunals shall be guided by the principle—[that] … justice shall be administered without undue regard to procedural technicalities….” On its part, article 165(3)(a) directs that "Subject to clause (5), the High Court shall have—(a) unlimited original jurisdiction in criminal and civil matters.”
43.Clause (5) of article 165 of the Constitution excludes from the High Court’s jurisdiction determinations of petitions challenging the Presidential election; rendering advisory opinions under article 163(6) at the request of the national government, any State organ, or any county government with respect to any matter concerning [a] county government and….which matters are served for the exclusive jurisdiction of the Supreme Court. It also excludes “disputes relating to—employment and labour relations” which are reserved for the Employment and Labour Relations Court; and those relating to “the environment and the use and occupation of, and title to, land” which are reserved for the Environment and Land Court.
44.The appellant accuses the Court of Appeal of failing to be guided by the principle in article 159(2)(d) of the Constitution that “justice shall be administered without undue regard to procedural technicalities”, and basing its decision on the technicality of jurisdiction which was not even raised before the High Court. In so doing, the appellant submitted, the Court of Appeal gave section 62 of the KPA Act a narrow and a wrong interpretation. If, pursuant to section 7 of the 6th Schedule to the Constitution, the Court of Appeal had given section 62 of the KPA Act a proper interpretation, the appellant further argued, it would have adopted Lord Reid’s statement in the case of Anisminic Ltd v. Foreign Compensation Commission that:“It is a well-established principle that a provision ousting the ordinary jurisdiction of the Court must be construed strictly - meaning, I think, that, if such a provision is reasonably capable of having two meanings, that meaning shall be taken which preserves the ordinary jurisdiction of the Court.”Consequently, the appellant urged us to reverse the Court of Appeal’s decision on this point and find that the High Court had jurisdiction to entertain its claim.
45.Jurisdiction is a fundamental issue in any case. As the late Justice Nyarangi observed in the case of Owners of Motor Vessel “Lillian S” v. Caltex Oil (Kenya) Ltd [1989] eKLR, a decision that has been adopted in literally all subsequent cases on the issue, “jurisdiction is everything….” Jurisdiction can never be equated with a procedural technicality.
46.Turning back, in the above context, the other major point the appellant took on is its contention that section 62 of the KPA Act is unconstitutional based on the provisions of article 165(3)(a) that “Subject to clause (5), the High Court shall have—(a) unlimited original jurisdiction in criminal and civil matters.” We have shown that Clause (5) excludes from the ambit of the High Court’s unlimited original jurisdiction matters reserved for the Supreme Court, the Environment and Land Court, the Employment and Labour Relations Court. In light of that fact, the appellant argues that article 165(3)(a) of the 2010 Constitution fundamentally altered the original jurisdiction of the High Court by outlawing any statutory provision or authority that purports to oust or restrict that jurisdiction. The appellant thus submitted that section 62 of the KPA Act is one such provision and urged us to accordingly declare it unconstitutional. In support of that submission, the appellant cited to us the persuasive High Court decisions in Multiserve Oasis Company Ltd v. Kenya Ports Authority, [2012] eKLR and Threeways Shipping Services (K) Limited v. Kenya Ports Authority and Another [2012] eKLR.
47.In the above context, it is common knowledge that the backlog of cases is an unsettling issue in our country. Some pending cases are as old as twenty and even thirty years. Even before the promulgation of the 2010 Constitution, arbitration had long been identified as one of the major ADR mechanisms. The objective behind the enactment of the Arbitration Act No. 4 of 1995, as is manifest from the Parliamentary Hansard Report of 20th July 1995, was to repeal the Arbitration Act of 1968 and enact a new legislation that adapts the UNCITRAL Model Law and thus entrench arbitration as an alternative dispute resolution mechanism in Kenya in accordance with international arbitration standards. We cannot detract from that.
48.We have no doubt that expeditious and efficient (with the input of experts) disposal of disputes like the one in this case was one of the objectives that informed the enactment of section 62 of the KPA Act and other similar provisions such as section 83(1) of the Kenya Railways Corporation Act; section 33 of the Kenya Airports Authority Act; section 29 of the Kenya Roads Act; and section 32 of Inter-Governmental Relations Act (IGRA).
49.Save for the Inter-Governmental Relations Act, all the others enactments preceded the promulgation of our 2010 Constitution. It is trite that by requiring courts to promote “alternative forms of dispute resolution including … arbitration”, article 159(2)(c) of the 2010 Constitution entrenches arbitration in our legal system. So the arbitration under section 62 of the KPA Act is therefore no aberration. It is a jurisdiction that has been given constitutional imprimatur. In the circumstances, contrary to the appellant’s contention, it cannot be ousted even by a broad interpretation of section 62 of the KPA Act read together with section 7 of the 6th Schedule to the Constitution which requires“All law in force immediately before the effective date … [to remain in force but] … be construed with the alterations, adaptations, qualifications and exceptions necessary to bring it into conformity with this Constitution.” Therefore, short of an amendment that deletes article 159(2)(c) of the Constitution, that jurisdiction is here to stay.
50.To the above extent, we agree with the respondent that the High Court maintains jurisdiction over the arbitrations under section 62 of the KPA Act, but for two reasons. One, arbitration awards are adopted by courts and enforced as court decrees—section 36(1) of the Arbitration Act. Secondly, arbitrations are quasi-judicial proceedings. As such, they are also subject to the supervisory jurisdiction of the High Court under article 165(6) of the Constitution. It follows therefore that, if the arbitration under section 62 of the KPA Act is not conducted in accordance with the law of the land, the aggrieved party still has recourse to the High Court for relief.
51.For these reasons, we affirm the Court of Appeal decision that section 62 of the KPA Act is not unconstitutional. It simply provides for ADR mechanism of arbitration reinforced by article 159(2)(c) of the Constitution. In stating so, we have only addressed one part of the question before us.
52.Despite our above finding, therefore, we must still settle the issue of the concurrent jurisdiction of the High Court under article 159(2)(c) and that conferred by article 165(3)(a). In the present case, the appellant, invoking the latter provision, went straight to the High Court seeking compensation for its lost goods. The respondent, acquiescing to the issue of jurisdiction, proceeded to file a defence, denied the claim and the matter went to full trial before Otieno J. A judgment in favour of the appellant was thereafter given, both on liability and quantum.
53.Dissatisfied by that judgment, the respondent filed an appeal in the Court of Appeal and raised, for the first time, the issue of lack of jurisdiction by the High Court. The Court of Appeal, without addressing the merits of the High Court’s decision, invoked the said section 62 of the KPA Act and allowed the appeal on that issue alone. It however, completely misunderstood the jurisdiction under article 165(3) (a) in the present context.
54.We are aware that the above controversy is not new. In Safmarine Container N.V. of Antwerp v Kenya Ports Authority (supra), Mwera J. took the same position as the Court of Appeal in this matter. Ojwang J. (as he then was) in Multiserve Oasis Co. Ltd v Kenya Ports Authority (supra) on the other hand was categorical when he stated thus:“……it is clear that the new Constitution is today, the basis of the jurisdiction of the High Court; and it is not permissible to limit this jurisdiction on the basis of ordinary statutes not provided for within the terms of the Constitution.”
55.The Court of Appeal in Kenya Ports Authority v African Line Transport (supra) was however, of a contrary view and following Kenya Ports Authority v Kustron (Kenya) Limited, Civil Appeal No.315 of 2005 (unreported) made the curious pronouncement that the High Court’s jurisdiction was ousted by section 62 aforesaid and that "parties could not confer jurisdiction on the superior court.”
56.We have no doubt in our minds that any judicial pronouncement that purports to elevate a statutory provision conferring jurisdiction above the express provision of the Constitution is erroneous. We wish to state that section 62 of the KPA Act, though now succored by and anchored in article 159(2)(c) of the Constitution, cannot oust the jurisdiction conferred on the High Court expressly by article 165(3)(a). We thus agree with Ojwang J. (as he then was) when he stated in Threeways Shipping Services (K) Ltd v Kenya Ports Authority [2012] eKLR that “the law today is that the High Court has unlimited jurisdiction in all causes save in matters reserved by the Constitution itself to the Supreme Court, or to certain specialized courts. Consequently, the contention that, in the suit herein, s.62 of the Kenya Ports Authority Act has ousted the High Court’s jurisdiction is untenable”.
57.In concluding on this issue, it is trite that the question of jurisdiction, can be raised at any stage of the proceedings but we have shown that in the instant case, the Court of Appeal fell into error when it closed its eyes to an express constitutional jurisdiction and relied on another, conferred by a statute (as read with a general constitutional provision) to dismiss the appeal before it. Neither article 159(2)(c), on which section 62 is anchored nor article 165(3)(a) should be read so as to supersede the other and we have shown why. They are to be read together and understood to confer concurrent jurisdiction. To that extent, we agree with the appellant on the application of article 165(3)(a) to this case while also agreeing with the respondent that section 62 is not unconstitutional.
(iii) What remedy is available to the parties
58.The history of this matter bears repetition. The acts complained of, occurred in 2008. Both parties litigated at the High Court from 2009. Eleven (11) years later, the dispute remains alive. We have stated above that arbitration under section 62 is an option both parties should have taken but did not. The jurisdiction of settlement of civil disputes under article 165(3)(a) of the Constitution was however properly invoked but rejected by the respondent as an afterthought only because it lost the case before the High Court (Otieno J.)
59.The justice of the case would therefore lead us to one remedy: that the appeal ought to be allowed only to the extent that we hereby declare that, the respondent having, at the outset, not demanded compliance with section 62, the jurisdiction of the High Court was properly invoked. The consequence is that we must remit the appeal to the Court of Appeal to determine it on the merits of the liability and quantum of damages as against the respondent.
60.As regards costs, it is best that we exercise discretion and order that each party shall bear its costs.
F. Disposition
61.Flowing from our conclusions above, we make the following orders:(a)The petition of appeal dated November 3, 2017  is hereby allowed to the extent only that we hereby declare that the High Court properly exercised its jurisdiction when it heard and determined the dispute between the parties herein.(b)The judgment of the Court of Appeal dated September 29, 2016 is hereby set aside to the above extent only.(c)The appeal is hereby remitted to the Court of Appeal to determine the same on merit.(d)Each party shall bear its costs of the appeal
62.Orders accordingly.
DATED AND DELIVERED AT NAIROBI THIS 7TH DAY OF FEBRUARY 2020………………………………………………D. K. MARAGA CHIEF JUSTICE & PRESIDENT OF THE SUPREME COURT……………………………………………… P. M. MWILUDEPUTY CHIEF JUSTICE & VICE PRESIDENT OF THE SUPREME COURT ………………………………………………M. K. IBRAHIM JUSTICE OF THE SUPREME COURT………………………………………………S. C. WANJALAJUSTICE OF THE SUPREME COURT………………………………………………NJOKI NDUNGUJUSTICE OF THE SUPREME COURTI certify that this is a true copy of the originalREGISTRAR,SUPREME COURT OF KENYA
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Cited documents 14

Judgment 9
1. Owners of the Motor Vessel “Lillian S" v Caltex Oil (Kenya) Ltd (Civil Appeal 50 of 1989) [1989] KECA 48 (KLR) (17 November 1989) (Judgment) Explained 783 citations
2. Kenya Ports Authority v Kustron (Kenya) Limited [2011] KECA 98 (KLR) Explained 39 citations
3. Judges and Magistrates Vetting Board & 2 others v Centre for Human Rights and Democracy & 11 others (Petition 13A, 14 & 15 of 2013 (Consolidated)) [2014] KESC 9 (KLR) (5 November 2014) (Judgment) Explained 38 citations
4. Adero Adero & another v Ulinzi Sacco Society Ltd [2002] KEHC 1174 (KLR) Explained 14 citations
5. Kenya Ports Authority v African Line Transport Co. Ltd [2014] KECA 688 (KLR) Explained 3 citations
6. SAFMARINE CONTAINER N.V OF ANTWERP v KENYA PORTS AUTHORITY [2012] KEHC 5015 (KLR) Explained 2 citations
7. THREEWAYS SHIPPING SERVICES(K) LIMITED V KENYA PORTS AUTHORITY [2012] KEHC 3729 (KLR) Explained 2 citations
8. MULTISERVE OASIS COMPANY LTD v KENYA PORTS AUTHORITY & another [2012] KEHC 5435 (KLR) Explained 1 citation
9. Redington (Uganda) Limited v Office of the Attorney General & another [2018] KEHC 9454 (KLR) Explained 1 citation
Act 5
1. Constitution of Kenya Interpreted 44784 citations
2. Arbitration Act Interpreted 1363 citations
3. Kenya Roads Act Interpreted 245 citations
4. Intergovernmental Relations Act Interpreted 150 citations
5. Kenya Airports Authority Act Interpreted 52 citations

Documents citing this one 13

Judgment 13
1. Dina Management Ltd v County Government of Mombasa & 5 others (Petition 8 (E010) of 2021) [2023] KESC 30 (KLR) (21 April 2023) (Judgment) Explained 119 citations
2. Kimani & 2 others v Kenya Airports Authority & 3 others (Petition 11 of 2019) [2021] KESC 43 (KLR) (16 July 2021) (Judgment) Explained 4 citations
3. Kamilinchui & 5 others v Kimbui & another (Miscellaneous Application E007 of 2023) [2024] KEELC 53 (KLR) (17 January 2024) (Ruling) Explained 1 citation
4. Autoports Freigh Terminals Limited & another v Kenya Ports Authority (Civil Case 5 & 6 of 2017 (Consolidated)) [2023] KEHC 22223 (KLR) (7 July 2023) (Ruling) Mentioned
5. Bin & 2 others v Kenya Revenue Authority & another (Civil Suit 18 of 2010) [2024] KEHC 5536 (KLR) (14 February 2024) (Judgment) Mentioned
6. Britam General Insurance Co. Kenya Limited v Raveco Hauliers Limited (Civil Appeal 22 of 2021) [2022] KEHC 10722 (KLR) (5 May 2022) (Judgment) Applied
7. Kenya Ports Authority v Base Titanium Ltd (Civil Appeal 132 of 2019) [2023] KECA 449 (KLR) (14 April 2023) (Judgment) Mentioned
8. Maworks Investment Company Limited v Mwilitsa (Civil Appeal E686 of 2022) [2024] KEHC 10525 (KLR) (3 September 2024) (Judgment) Applied
9. Maya Duty Free Limited v Kenya Airports Authority (Civil Case E182 of 2022) [2022] KEHC 13638 (KLR) (Civ) (7 October 2022) (Ruling) Mentioned
10. Okoiti v Kenya National Highways Authority (KENHA) & 4 others; Project Affected Persons (PAPS) Ad Hoc Committee (Interested Party) (Environment & Land Petition 11 of 2019) [2022] KEELC 2753 (KLR) (6 July 2022) (Ruling) Explained
Date Case Court Judges Outcome Appeal outcome
7 February 2020 Modern Holdings (EA) Ltd v Kenya Ports Authority (Petition 20 of 2017) [2020] KESC 53 (KLR) (7 February 2020) (Judgment) This judgment Supreme Court DK Maraga, MK Ibrahim, N Ndungu, PM Mwilu, SC Wanjala  
29 September 2017 ↳ Kenya Ports Authority v Modern Holdings [E.A] Limited [2017] KECA 293 (KLR) Court of Appeal K M'Inoti, MSA Makhandia, SP Ouko Allowed in part
29 September 2017 ↳ Civil Appeal No. 108 of 2016 None K M'Inoti, MS Asike-Makhandia, W Ouko Allowed in part