Legal Opinion on Enforcement of Arbitral Awards and Payment by Installments – Analysis of Masongo & Another v Riruta Gardens [2025] KEHC 10371 (KLR)

1. INTRODUCTION

This analysis is purposed to review and advise on the High Court ruling in Masongo & Another v Riruta Gardens [2025] KEHC 10371 (KLR), with particular reference to:

• The enforceability of arbitral awards within the 90-day window provided for setting aside; and
• The threshold for obtaining leave to satisfy arbitral awards through installment payments.

2. BACKGROUND

The applicants, Mr. and Mrs. Masongo, sought enforcement of an arbitral award delivered in their favor on 11 September 2024. The award arose from a sale agreement dispute between the applicants and Riruta Gardens.

Upon filing an application for enforcement under Section 36 of the Arbitration Act, the respondent (Riruta Gardens) raised a preliminary objection, asserting that enforcement was premature, as the 90-day window to apply for setting aside the award under Section 35(3) had not expired.

In the alternative, the respondent sought leave to settle the award (Kshs. 7,677,260) in 24 monthly installments, citing cash flow constraints and proposing an interest freeze from 11 October 2024.

The court issued its ruling on 17 July 2025.

3. ISSUES CONSIDERED

1. Whether an arbitral award can be enforced before the expiry of the 90-day window for setting aside under Section 35(3) of the Arbitration Act.
2. Whether a judgment-debtor can be granted leave to pay the arbitral award in installments, and what evidentiary standard must be met.

4. LEGAL FRAMEWORK

• Arbitration Act, 1995 (Revised 2010):
• Section 35(3) – 90-day window to apply for setting aside arbitral awards.
• Section 36 – Recognition and enforcement of domestic arbitral awards.
• Civil Procedure Rules, 2010:
• Order 21 Rule 12(1) – Court discretion to permit payment of judgment debts in installments.
• Case Law:
• Freight Forwarders Kenya Ltd v Elsek & Elsek (2012) – Criteria for installment payments.
• Keshavji Jethabhai & Bros Ltd v Saleh Abdulla (1959) – Good faith and financial disclosure are essential.

5. COURT’S FINDINGS AND ANALYSIS

a. Enforcement Before Expiry of Section 35(3) Window

The court rejected the respondent’s objection, holding that:

• Mere lapse of time under Section 35(3) does not bar enforcement unless an actual application to set aside is filed and pending.
• Since no such application had been made by Riruta Gardens, there was no legal impediment to the applicants’ enforcement application.

b. Request for Installment Payments

The court analyzed the respondent’s application under Order 21 Rule 12, and held:

• Discretion to allow installment payments must be exercised judicially and only upon sufficient cause being shown.
• The respondent did not provide financial records, audited accounts, or any documentation evidencing cash flow constraints.
• The court further noted that the respondent had not made any part payment of the award, undermining claims of good faith.
• As such, the court found no sufficient basis to grant the installment payment request.

6. CONCLUSION

The court:

• Recognized and adopted the arbitral award dated 11 September 2024 as a judgment of the court;
• Declined the respondent’s application to settle the amount in installments;
• Awarded costs of the application to the applicants.

7. LEGAL IMPLICATIONS FOR A  POTENTIAL CLIENT

a. Enforceability of Awards Within 90 Days

Your organization can proceed to enforce a domestic arbitral award immediately upon issuance, unless:

• The judgment debtor has filed a formal application to set aside the award under Section 35; or
• A court has issued a stay of enforcement.

There is no need to wait for the 90-day window to lapse, contrary to common misconception.

b. Installment Payment Proposals

If your organization is a judgment debtor and wishes to pay in installments, the court will only consider such requests if:

• There is full disclosure of financial incapacity (e.g., audited financial statements, bank statements);
• There is a demonstrated good faith effort (e.g., partial payment);
• The request is made promptly and transparently.

Absent these, such applications are unlikely to succeed.

c. For Future Arbitrations

Where XYZ Corporate Client is an award creditor, we recommend:

• Promptly applying to enforce the award without waiting for 90 days;
• Opposing installment payment proposals unless backed by credible documentation;
• Ensuring arbitration clauses remain enforceable and binding under Kenyan law.

8. RECOMMENDATION

Based on the court’s position in Masongo v Riruta Gardens, we advise the following:

1. Where your company is a beneficiary of a domestic arbitral award, proceed with enforcement immediately unless there is a stay or pending setting-aside application.
2. If facing enforcement, and desiring time to pay, ensure your installment proposal is:
• Supported by verifiable financial evidence;
• Presented in good faith with part payment;
• Reasonably structured and time-bound.
3. Strengthen your contracts to include enforceable arbitration clauses, and train relevant departments on the finality of arbitration outcomes under Kenyan law.

Yours sincerely,
Admin.

 

Whether the arbitral award dated 11 September 2024 should be recognized and enforced by the court under Section 36 of the Arbitration Act - The Case of Peter Nyaboga Masongo & Juliet Nyante Masongo v Riruta Gardens (Arbitration Cause No. E065 of 2024 [2025] KEHC 10371 (KLR)

Procedural History / Background

• The applicants filed a Chamber Summons dated 26 September 2024 seeking enforcement of an Arbitral Award dated 11 September 2024, which arose from a dispute related to a sale agreement dated 12 November 2018.
• The dispute had been referred to arbitration per Clause 12 of the sale agreement, and Mr. Dominic N. Mbigi, FCIArb, was appointed arbitrator by the Chartered Institute of Arbitrators (Kenya Branch).
• The arbitration was conducted under the Arbitration Act, 1995.
• The applicants sought:
1. Recognition and enforcement of the arbitral award;
2. Judgment in terms of the award; and
3. Costs of the application.

Facts of the Case

• The arbitral award was issued on 11 September 2024 in favor of the applicants.
• The respondent did not file an application to set aside the award under Section 35 of the Arbitration Act.
• The respondent objected to enforcement on the grounds that the statutory 90-day period to set aside the award had not yet lapsed (i.e., premature enforcement).
• Additionally, the respondent proposed to settle the award sum of Kshs. 7,677,260 in 24 equal monthly installments, requesting that interest be frozen from 11 October 2024.
• The applicants opposed the proposal, asserting that the respondent had not made any payment since the award and had not demonstrated willingness or capacity to pay.

Legal Issues for determination

1. Whether the arbitral award dated 11 September 2024 should be recognized and enforced by the court under Section 36 of the Arbitration Act.
2. Whether the court should allow the respondent to settle the award in installments as per their proposal.

Legal Principles / Statutory Provisions Applied

• Section 36(1) of the Arbitration Act: An arbitral award shall be recognized as binding and enforced by the court upon application.
• Section 36(3): Requires the applicant to produce the original or certified copy of the arbitral award and arbitration agreement.
• Section 35(3): A party may apply to set aside an award within 3 months (90 days) of receiving it.
• Order 21 Rule 12(1) of the Civil Procedure Rules: The court has discretion to allow judgment debts to be paid in installments for sufficient cause.

Court's Analysis

Issue 1: Enforceability of the Arbitral Award

• The court noted that although Section 35(3) provides a 90-day window to challenge an award, this does not create a moratorium or stay against enforcement under Section 36 unless a setting-aside application is actually filed.
• The court emphasized that the respondent had not filed any application to set aside the award or obtained any stay of enforcement.
• The court found that the applicants had fulfilled all requirements under Section 36, including attaching the arbitral award and the arbitration agreement.
• Therefore, there was no legal bar to enforcing the award.

Issue 2: Payment by Installments

• The court acknowledged its discretion under Order 21 Rule 12 to grant payment in installments but stressed that such discretion must be exercised judicially and not merely for convenience.
• The court referred to past precedents:
• Freight Forwarders Kenya Limited v Elsek & Elsek [2012] eKLR
• Keshavji Jethabhai & Bros Limited v Saleh Abdulla [1959] EA 260
• The key principle is that a party seeking installment payments must:
• Show good faith;
• Disclose full financial position;
• Show reasonable prospects of meeting the installment plan;
• Have partially paid or made efforts to pay.
• In this case, the respondent had not demonstrated any payment, nor did they produce financial statements or documents to support the installment request.
• The court therefore found no sufficient cause to justify the respondent’s request.

Court's Holding:

• The arbitral award dated 11 September 2024 is recognized and adopted as a judgment of the court under Section 36 of the Arbitration Act.
• The respondent’s request to pay in 24 monthly installments with frozen interest was denied.
• Costs of the application awarded to the applicants.

Significance of the Case

• Clarifies that enforcement of arbitral awards is not delayed merely because the 90-day setting aside period has not lapsed—unless an application to set aside is filed.
• Reinforces that courts will not permit installment payments without sufficient cause—mere proposals or assertions without supporting evidence are inadequate.
• Upholds the finality and enforceability of arbitral awards under Kenya’s Arbitration Act.
• Encourages good faith and compliance post-award rather than tactical delay by judgment debtors. 

Analysis: Summary Dismissal and Procedural Fairness under Section 41 of the Employment Act – A Case Review of Gogni Rajope Construction Co. Ltd & Another v Omondi [2025] KECA 161 (KLR)

In the landmark decision of Gogni Rajope Construction Company Limited & Another v Omondi [2025] KECA 161 (KLR), the Court of Appeal of Kenya provided important clarification on the procedural requirements surrounding summary dismissal under the Employment Act, 2007. Specifically, the Court interpreted the scope and application of Section 41, which outlines the procedural safeguards that must be observed before an employee can be dismissed on grounds of misconduct, poor performance, or incapacity.

The facts of the case reveal that the Respondent employee was accused of misconduct and was called into a meeting where he was questioned about the allegations. The employer argued that this meeting fulfilled the statutory requirement to afford the employee an opportunity to be heard before termination, as required under Section 41. However, the Court of Appeal found that this process was insufficient and procedurally deficient.

The Court emphasized that Section 41 envisages a structured and fair disciplinary process, which cannot be reduced to an impromptu or informal meeting. It held that for the hearing to be compliant with statutory and constitutional standards of fairness, the employee must be:

1. Given adequate notice of the allegations,
2. Afforded reasonable time to prepare a defense, and
3. Allowed the opportunity to be accompanied by a fellow employee or union representative, as provided under the Act.

Furthermore, the Court stressed that the employer's failure to observe these procedural steps rendered the dismissal unfair, notwithstanding the substantive allegations of misconduct. In support of this conclusion, the Court referenced Section 45(2)(c) of the Employment Act, which requires that not only must there be a valid and fair reason for termination, but the process leading to the dismissal must also be fair.

This decision reinforces the principle that procedural fairness is a distinct and indispensable component of lawful termination. Even in cases of serious misconduct that might warrant summary dismissal, the employer is not exempt from following due process. The Court's position aligns with a broader constitutional commitment to fair administrative action, as enshrined under Article 47 of the Constitution of Kenya, 2010.

In academic terms, Gogni Rajope contributes to the growing jurisprudence emphasizing that substantive justification alone does not suffice in employment termination cases. The procedural dimension is equally critical in protecting employees from arbitrary or unfair dismissal and in ensuring adherence to the rule of law in employment relations.

 

Below is a detailed Case Brief: 

Case Brief: Gogni Rajope Construction Company Limited & Another v Omondi [2025] KECA 161 (KLR)

Parties:

• Appellants: Gogni Rajope Construction Company Limited & Another
• Respondent: Omondi

Procedural History:

The matter originated at the Employment and Labour Relations Court (ELRC), where the Respondent (employee) challenged his dismissal by the Appellants (employers) on grounds of unfair termination. The ELRC found in favor of the employee, holding that the dismissal violated the procedural requirements of the Employment Act. The employer appealed to the Court of Appeal, challenging the ELRC’s findings on both substantive and procedural grounds.

Facts:

The Respondent, an employee of the Appellants, was accused of misconduct. Following the allegations, he was summoned for a meeting during which he was questioned about the alleged misconduct. The employer did not issue prior written notice specifying the nature of the allegations, nor did they give the Respondent an opportunity to prepare a defense or be accompanied by a representative.

The Appellants argued that this meeting satisfied the requirements of Section 41 of the Employment Act, 2007, which mandates that an employee be given a chance to be heard before termination. They further asserted that the dismissal was substantively justified due to the alleged misconduct.

Legal Issues:

1. Whether the employer complied with the procedural requirements of Section 41 of the Employment Act prior to dismissing the employee.
2. Whether an impromptu meeting constitutes a fair disciplinary hearing under the law.
3. Whether the failure to follow the correct procedure renders an otherwise substantively justified dismissal unfair.

Relevant Law:

• Section 41, Employment Act, 2007:
  Requires that before terminating an employee on grounds of misconduct, poor performance, or physical incapacity, the employer must explain the reason for the intended termination in the presence of the employee and another person (such as a colleague or union representative), and give the employee an opportunity to respond.
• Section 45(2)(c), Employment Act, 2007:
  States that a termination is unfair if it is not conducted in accordance with fair procedure.
• Article 47, Constitution of Kenya (Fair Administrative Action):
  Guarantees every person the right to administrative action that is lawful, reasonable, and procedurally fair.

Holding (Decision):

The Court of Appeal upheld the ELRC’s decision and found that the Respondent’s termination was procedurally unfair. It held that Section 41 of the Employment Act requires more than an informal or impromptu meeting. The employee must be given adequate notice of the disciplinary hearing and a reasonable opportunity to prepare a defense.

The Court rejected the Appellants' argument that the casual meeting met the threshold of a fair hearing and emphasized that disciplinary processes must be substantive and structured, not ad hoc.

Ratio Decidendi (Legal Reasoning):

The Court reasoned that procedural fairness is not a mere formality—it is a mandatory safeguard intended to protect employees from arbitrary dismissal. The requirements of notice, disclosure of allegations, time to prepare, and the right to representation are fundamental components of a fair disciplinary process.

By failing to provide these procedural safeguards, the employer violated both statutory law (Sections 41 and 45 of the Employment Act) and constitutional principles (Article 47).

Even if the allegations of misconduct were valid, the lack of due process rendered the dismissal legally untenable.

Disposition:

• Appeal dismissed.
• The finding of unfair termination by the ELRC was upheld.
• The Respondent was entitled to the remedies awarded at the trial court (specific remedies not detailed in the excerpt).

Significance:

This case is significant for several reasons:

1. Clarifies the scope of Section 41 of the Employment Act by setting a high bar for what constitutes a procedurally fair hearing.
2. Reinforces the importance of due process in employment law, aligning statutory requirements with constitutional guarantees of fair administrative action.
3. Highlights that substantive justification alone does not cure procedural defects in termination processes.
4. Serves as a caution to employers to strictly comply with procedural requirements, especially in disciplinary actions involving summary dismissal.