On termination; Restructuring must be supported by tangible, documentary evidence - The Case of Harun v Watu Credit Limited [2025] KEELRC 2542 (KLR)

The Case of Harun v Watu Credit Limited [2025] KEELRC 2542 (KLR)

A. Contextualized Legal Summary:

In the recent decision of Harun v Watu Credit Limited [2025] KEELRC 2542 (KLR), the Employment and Labour Relations Court clarified the evidentiary threshold required when an employer relies on organizational restructuring as the basis for a redundancy.

The court emphasized that claims of restructuring must be substantiated with concrete evidence, not mere assertions or statements from management. In this case, the Respondent had terminated the Claimant’s employment citing redundancy, allegedly resulting from organizational restructuring. The Claimant had been informed that the business could no longer sustain his role. However, the court held that the Respondent had failed to provide sufficient proof to support this claim.

Specifically, the court found that the Respondent ought to have presented:

1.        Formal documentation evidencing that the Board of Management had passed a resolution to restructure the organization, and that such restructuring led directly to the elimination of the Claimant’s position; and

2.        An updated organizational structure (organogram) showing the changes made as part of the restructuring, and confirming that the Claimant’s position had indeed been rendered redundant.

In the absence of this evidence, the court held that the alleged restructure was unsubstantiated and concluded that the Respondent had failed to demonstrate a valid reason for the termination.

 

B. Detailed Legal Summary: 

1. Procedural Background:

The Claimant, Harun, instituted proceedings against the Respondent, Watu Credit Limited, contesting the termination of his employment on account of redundancy. He challenged both the substantive justification and the procedural fairness of the redundancy process.

2. Issues for Determination:

The key issues before the court were:

1.        Whether the Respondent's decision to terminate the Claimant’s employment on grounds of redundancy was genuine and justified.

2.        Whether the Respondent adhered to the procedural requirements under Kenyan employment law for declaring a position redundant.

3. Respondent’s Position:

The Respondent claimed that the termination arose from an organizational restructuring, necessitated by business needs. It alleged that the Claimant’s position was no longer sustainable and was abolished as part of this restructuring exercise.

4. Court’s Analysis and Findings:

a) Requirement for Substantive Justification:

The court emphasized that a redundancy must be based on real, verifiable reasons, and not on unsubstantiated assertions. A claim of restructuring, in particular, must be accompanied by:

• Formal board resolutions authorizing the restructuring;
• Evidence of actual changes within the organization, such as updated structures or job roles;
• Proof that the specific role affected (in this case, the Claimant’s position) was indeed rendered obsolete.

The court found that the Respondent failed to provide such evidence. No documentation was produced to demonstrate that:

• The Board had formally resolved to restructure;
• The Claimant’s position was genuinely abolished as a result of the restructure; or
• A new organizational structure had been implemented.

b) Absence of Organogram or Structural Evidence:

The court noted that an updated organogram showing how the company’s structure had changed was critical to establish that the Claimant’s position no longer existed. The Respondent failed to produce this, thereby undermining its claim of a genuine redundancy.

c) Mere Assertions Not Sufficient:

The court stressed that verbal or written statements by management, without accompanying documentary proof, are insufficient to justify redundancy. In this case, the explanations given to the Claimant were deemed to be mere assertions, lacking evidential backing.

5. Holding:

The court held that the Respondent did not prove that a genuine redundancy existed. The alleged restructuring was not substantiated, and the redundancy process was therefore both procedurally and substantively flawed.

6. Decision:

The termination of the Claimant’s employment was found to be unlawful and unfair. The court ruled in favor of the Claimant. (Remedies granted—such as compensation, reinstatement, or damages—were not provided in the summary you gave; please provide those details if you'd like them included.)

7. Legal Significance:

This case reaffirms the principle that for a redundancy to be lawful in Kenya:

• There must be genuine and demonstrable reasons;
• Employers must adhere to the procedural safeguards under the Employment Act;
• Restructuring must be supported by tangible, documentary evidence, including board resolutions and revised organizational charts.

The judgment underscores the court's increasing insistence on transparency and accountability in redundancy processes and sets a precedent for holding employers to higher standards of proof when alleging restructuring.

 

Disclaimer: This article is for informational purposes only and does not constitute legal advice.

MANDATORY NOTICE PRIOR TO NEGATIVE CREDIT LISTING UNDER KENYAN LAW

Under Regulation 26(1) of the Banking (Credit Reference Bureau) Regulations, 2020, all banks and financial institutions licensed by the Central Bank of Kenya (CBK) are legally required to issue a mandatory written notice of at least thirty (30) days to a customer prior to submitting any negative credit information to a licensed Credit Reference Bureau (CRB).

This notice must:

• Clearly inform the customer of the intended listing;
• Give them an opportunity to rectify, dispute, or make payment arrangements before adverse listing occurs;
• Be served and documented, with the burden on the reporting institution to prove that proper service of the notice was effected.

This regulation is not merely procedural—it is a statutory obligation, anchored in both financial consumer protection law and constitutional rights.

 Connection to the Constitution – Article 47: Right to Fair Administrative Action

The requirement for prior notice aligns directly with Article 47 of the Constitution of Kenya (2010), which guarantees every person the right to fair administrative action that is:

• Lawful,
• Reasonable, and
• Procedurally fair.

Listing a customer negatively on a CRB has serious consequences, including restricted access to credit, reputational harm, and even job-related issues in some sectors. As such, failure to provide notice before CRB listing amounts to unfair administrative action, and may be challenged through judicial review or complaints to the Central Bank.

Further Procedural Safeguards – Regulations 26(3) to 26(8):

These sub-regulations set out the rights of customers and the duties of banks/CRBs in the event of disputes or inaccuracies in credit reporting:

1. Right to Dispute: Customers can lodge a complaint with the CRB or the reporting institution if they believe the negative listing is inaccurate or unfair.
2. Obligation to Investigate: Upon receiving such a complaint, the CRB must, within 14 days, investigate and suspend the listing during this period.
3. Duty to Correct or Remove: If found inaccurate, the CRB must correct or remove the data and inform the customer accordingly.
4. Right to Notification: Customers must be informed of the outcome of the investigation and any action taken.

This system ensures transparency, accountability, and procedural fairness—principles that are key pillars of Kenya’s administrative law framework.

Legal Consequences for Non-Compliance

Banks or institutions that list customers without serving proper notice or fail to follow the dispute resolution procedures may be in violation of both the CRB Regulations and Article 47 of the Constitution. Affected customers may:

• File a complaint with the Central Bank of Kenya,
• Lodge a petition or judicial review application in the High Court, or
• File a claim for damages under constitutional or consumer protection law.

Summary

In summary, the requirement under Regulation 26(1) of the CRB Regulations, 2020 is not optional—it is a legally enforceable obligation that protects consumers from unfair credit reporting. This obligation is rooted in Kenya’s constitutional guarantee of fair administrative action (Article 47) and is further reinforced by the detailed procedures in Regulations 26(3) to 26(8), which promote accuracy, fairness, and due process in the credit reporting system.

 

Disclaimer: This article is for informational purposes only and does not constitute legal advice.

 

Analysis on Private Nuisance in Kenya – Neighbor Disputes Involving Throwing of Waste and Interference with Peaceful Enjoyment of Property

1. Introduction

This opinion addresses a private nuisance claim under Kenyan law, where a neighbor causes repeated interference by throwing dirt or waste into another's premises and thereby disrupts peace, damages property, and interferes with the enjoyment of land.

Such conduct falls squarely within the doctrine of private nuisance—an actionable tort in Kenyan law when there is substantial and unreasonable interference with another's property.

2. Legal Basis

A. Common Law Foundation

Kenyan law recognizes the tort of private nuisance through common law, as incorporated under:

• Judicature Act, Cap. 8, Section 3(1)(c) – which allows for the application of common law and equity.
• Case law precedent developed by Kenyan courts.

B. Constitutional Rights

• Article 40(1) – Protects the right to acquire and own property and not to be arbitrarily deprived of it.
• Article 42 – Guarantees the right to a clean and healthy environment.
• Article 70 – Provides enforcement mechanisms for environmental harm and damage.

These constitutional provisions support claims where property owners are unlawfully interfered with by neighboring actions.

3. Nature of the Nuisance

The scenario involves:

• Throwing of dirt, garbage, or waste into the complainant's compound.
• Damage to property (e.g. staining walls, soiling clothes on the line, clogging drainage).
• Disturbance of peace, health, and enjoyment of property.

This amounts to:

• Indirect interference (not physical trespass but through objects).
• Ongoing, intentional or negligent conduct.
• A substantial and unreasonable invasion of the plaintiff’s rights.

Such acts are actionable under private nuisance.

4. Key Elements of Private Nuisance (Applied to Scenario)

Element	Application to Scenario
a) Interference must be substantial	Repeated throwing of waste materially affects use/enjoyment of property.
b) Interference must be unreasonable	No reasonable justification exists for polluting or defiling another's premises.
c) Must affect the use/enjoyment of land	Soiling compound, property damage, emotional distress qualify.
d) Plaintiff must have interest in land	Must be the owner, tenant, or person in lawful possession.

5. Relevant Kenyan Case Law

✅ Gitiriku Wainaina v Kenafric Industries Ltd (2020) eKLR

• Facts: A residential property owner sued a neighboring factory for noise and other disturbances.
• Held: The court found substantial interference and awarded damages and injunctive relief.
• Relevance: Establishes that even indirect and repeated disturbances qualify as private nuisance.

✅ Kivuitu v Owalo (1986) KLR 400

• Facts: The defendant constructed a workshop in a residential area, causing noise and vibration.
• Held: Court ruled this was nuisance due to interference with peace and domestic comfort.
• Relevance: Supports a homeowner’s right to quiet enjoyment.

✅ M.C. Mehta v Union of India (AIR 1987 SC 1086) [Indian Case – Persuasive]

• Though not Kenyan, this case held that polluting activities affecting neighbors are actionable.
• Could be cited for its principle on neighbourhood pollution as nuisance.

6. Remedies Available

If a neighbor throws waste or dirt on your property, Kenyan law allows the following remedies:

Remedy	Description
✅ Injunction	Court order to restrain neighbor from continuing the act.
✅ Damages	Compensation for physical damage, emotional distress, or cleaning costs.
✅ Abatement	Limited self-help – e.g., cleaning up, erecting barriers (without trespassing).
✅ Environmental complaints	Under EMCA, one may file a complaint to NEMA or the County Government.

7. Procedure for Redress

1.        Issue a Demand Letter – Put the neighbor on notice.

2.        Document Evidence – Photos, videos, witness statements, police/NEMA reports.

3.        Engage a Lawyer – To file a suit in the Environment and Land Court (ELC).

4.        Seek Injunctive Relief – To stop the acts immediately.

5.        Claim General Damages – For discomfort, loss of peace, and cleanup costs.

8. Possible Defences and Rebuttals

Defence	Rebuttal
“It was accidental”	Repeated conduct implies intention or negligence.
“Plaintiff is overly sensitive”	Court uses ordinary person standard – reasonableness applies.
“No damage was done”	Nuisance does not require physical damage, just interference.

9. Conclusion

The consistent throwing of dirt, garbage, or waste onto a neighbor’s property in Kenya constitutes private nuisance and is actionable in law. Kenyan courts have affirmed that no person is allowed to unreasonably interfere with another’s right to enjoy their property peacefully.

10. Recommendations

• Attempt amicable resolution first (mediation or through Nyumba Kumi structures).
• If unresolved, send a legal notice and prepare to file suit in the Environment and Land Court.
• Collect photo/video evidence of the acts, document all incidents.
• Consider involving County Public Health Officers or NEMA.

✅ Summary

Legal Violation	✅ Private Nuisance
Jurisdiction	Environment & Land Court (ELC)
Key Rights Violated	Article 40 (Property), Article 42 (Clean Environment)
Remedies	Injunction, damages, abatement
Evidence Needed	Photos, videos, witnesses, reports

 

Disclaimer: This article is for informational purposes only and does not constitute legal advice.

 

Analysis of the Concept of Private Nuisance under Kenyan Law

1. Introduction

This legal opinion addresses the law of private nuisance in Kenya, particularly as it applies to neighbor disputes and interferences with the use and enjoyment of land. The opinion provides a thorough explanation of the legal concept, its elements, and how Kenyan courts have interpreted and applied it. Relevant case law and statutory provisions are cited to guide both legal practitioners and affected parties.

2. Definition of Private Nuisance

Private nuisance is a common law tort that protects an individual’s right to the quiet and peaceful enjoyment of their land. It refers to an unlawful, indirect, and substantial interference with the claimant’s use or enjoyment of land or of some right over or in connection with it.

Key elements under Kenyan law:

1.        Substantial interference – The interference must not be trivial; it must materially affect the claimant's enjoyment.

2.        Unreasonable interference – It must go beyond what a reasonable person is expected to tolerate.

3.        Connection to land – The claimant must have an interest in the land affected.

4.        Indirect interference – The nuisance is not a direct trespass but occurs indirectly, e.g., noise, odour, smoke, vibrations, or encroachment.

3. Legal Framework in Kenya

Private nuisance in Kenya is primarily grounded in common law, as adopted under Section 3(1)(c) of the Judicature Act (Cap. 8). This provision permits the application of doctrines of common law and equity, as modified by Kenyan statutes.

Constitutional Backing

• Article 40: Protects the right to property.
• Article 42: Grants every person the right to a clean and healthy environment.
• Article 70: Provides for enforcement mechanisms where the environment is harmed.

While these constitutional provisions primarily deal with environmental rights, they reinforce protection against nuisance that affects health, comfort, and property use.

Statutory Support

• The Environmental Management and Coordination Act (EMCA), 1999, complements private nuisance law in environmental matters. Section 3 provides a right to a clean and healthy environment and permits public interest litigation.

4. Judicial Interpretation in Kenya

Kenyan courts have adjudicated several disputes under the doctrine of private nuisance. The following are notable cases:

a) Gitiriku Wainaina v Kenafric Industries Ltd (2020) eKLR

Facts:
A homeowner sued a neighboring factory for generating excessive noise and vibrations that disrupted peaceful enjoyment of his home.

Holding:
The court held that the defendant's factory operations constituted private nuisance. The interference was substantial and unreasonable, even though the factory was lawfully operating.

Principles:

• Reasonable use of land does not excuse substantial interference with a neighbour’s rights.
• Economic benefit or prior use does not justify nuisance.

b) Gachui v Mothers Holdings Ltd (2013) eKLR

Facts:
Plaintiff resided near a nightclub that caused loud noise and disturbances late into the night.

Holding:
The court issued an injunction restraining the defendant from operating the club at night, noting that the plaintiff's right to quiet enjoyment outweighed the defendant's commercial interests.

Takeaway:
The court applied the “reasonable person” test and emphasized that even lawful activities can be considered nuisance if they interfere with residential enjoyment.

c) Kivuitu v Owalo (1986) KLR 400

Facts:
The defendant erected a noisy workshop in a residential area.

Holding:
The court ruled in favor of the plaintiff, stating that the activity was incompatible with the residential character of the area and therefore a private nuisance.

5. Tests for Determining Private Nuisance

Kenyan courts typically apply the following tests to determine whether a private nuisance exists:

1. Nature of the locality

What might be a nuisance in a quiet residential area may not be so in an industrial zone.

2. Duration and frequency

Temporary disturbances may not be actionable unless repeated or prolonged.

3. Sensitivity of the claimant

Courts apply an objective “ordinary person” standard. Exceptionally sensitive plaintiffs cannot claim nuisance for ordinary acts.

4. Public benefit vs. individual rights

Activities with public utility must be balanced against private harm (but do not necessarily defeat the claim).

6. Remedies Available in Private Nuisance

Kenyan law provides a range of remedies for private nuisance:

Remedy	Explanation
Damages	Compensation for discomfort, loss of amenity, or reduction in property value.
Injunction	Restraining order to stop the nuisance. Common in land-use cases.
Abatement	Self-help remedy to remove the nuisance (with care and legality).
Declaration	Court can issue a declaratory judgment affirming that nuisance exists.

Note: In Gachui, an injunction was issued. In Wainaina, both damages and injunctive relief were granted.

7. Defences to Private Nuisance

Some common defences raised in Kenyan nuisance cases include:

• Prescriptive right – Long-standing use may create a legal right if ongoing for 20+ years.
• Statutory authority – If activity is authorized by statute (though not absolute).
• Plaintiff’s sensitivity – No liability for nuisance affecting only hypersensitive users.
• Coming to the nuisance – Not a defence in Kenya. The fact that the plaintiff moved near an existing nuisance does not bar relief (Gachui case).

8. Emerging Issues in Kenyan Nuisance Law

As Kenya urbanizes and densifies, new forms of nuisance are emerging:

• Light pollution
• Invasion of privacy via drones or CCTV
• Air pollution from commercial kitchens
• Construction noise in residential zones

The courts are likely to evolve the doctrine further to reflect modern societal and technological challenges. This could involve aligning more closely with decisions like Fearn v Tate Gallery (UKSC, 2023), though Kenya has yet to recognize visual intrusion (overlooking) as nuisance.

9. Conclusion

Private nuisance in Kenya remains a vital common law remedy that protects individuals against substantial and unreasonable interferences with land use. Kenyan courts have consistently upheld the right to quiet enjoyment and have shown willingness to restrain even lawful businesses when their operations harm neighbors. With growing urban complexity, the courts are likely to expand and refine the doctrine further.

10. Recommendations

• Landowners should consider zoning laws and environmental impact before commencing activities that may affect neighbors.
• Affected persons should document the nuisance (e.g., noise logs, photos, expert reports).
• Policy-makers may consider codifying nuisance standards to guide urban development.
• Courts may need to consider expanding the doctrine to include visual nuisance and digital intrusions in the future.

Key Authorities

• Gitiriku Wainaina v Kenafric Industries Ltd (2020) eKLR
• Gachui v Mothers Holdings Ltd (2013) eKLR
• Kivuitu v Owalo (1986) KLR 400
• The Constitution of Kenya, 2010 – Articles 40, 42, 70
• Judicature Act (Cap. 8) – Section 3(1)(c)
• EMCA, 1999 – Section 3

An Analysis on Private Nuisance and Interference with Enjoyment of Land in the Kenyan Context

Introduction

This commentary addresses the principle of private nuisance under Kenyan law, particularly in the context of neighbor disputes involving interference with the use and enjoyment of land. It considers both local and persuasive foreign jurisprudence, including the recent UK case of Fearn v Tate Gallery (2023) and the Kenyan case Gitiriku Wainaina v Kenafric (2020), to explore the scope and limits of liability in nuisance claims. The commentary also delves into relevant Kenyan statutes and doctrines to guide similar disputes.

1. Legal Definition of Private Nuisance

Private nuisance is defined as a continuous, unlawful and indirect interference with the use or enjoyment of land, or of some right over or in connection with it. The tort is concerned not with damage to the property per se, but with infringement of the right to enjoy one’s property peacefully.

Key Elements:

1. Unlawful Interference – the interference must be substantial and unreasonable.
2. Indirect Interference – usually involves noise, smell, smoke, vibration, or even encroaching tree roots or structures.
3. Actual Harm or Loss – the plaintiff must prove that the interference caused actual loss or discomfort.

2. Application in the Kenyan Legal Framework

Under Kenyan law, the tort of private nuisance is well recognised, though not codified. Courts have interpreted and applied the principles through common law and case precedent.

Relevant legal sources include:

• The Constitution of Kenya, 2010, particularly Article 40 (right to property) and Article 42 (right to a clean and healthy environment).
• The Environmental Management and Coordination Act (EMCA), 1999, which supports claims relating to environmental nuisance.
• Common law principles of tort, including English precedents where applicable.

3. Case Law Analysis

A. Kenyan Case Law

i. Gitiriku Wainaina v Kenafric (2020) [eKLR]

• Facts: The plaintiff, a residential property owner, sued a neighboring factory (Kenafric) for causing excessive noise, vibrations, and emissions which interfered with the enjoyment of his property.
• Holding: The court found in favor of the plaintiff, ruling that the factory’s operations constituted private nuisance, as they were substantial, continuous and unreasonable.
• Significance: This case reinforces that even lawful business operations can constitute nuisance when they interfere unreasonably with neighbors’ enjoyment of property.

ii. Gachui v Mothers Holdings Ltd (2013) eKLR

• A similar nuisance case where the court restrained a commercial entity from operating a noisy nightclub next to residential houses.
• Emphasised balancing the rights of both parties: the defendant’s right to carry out business vs. the plaintiff’s right to quiet enjoyment of their property.

B. Foreign (Persuasive) Jurisprudence

Fearn & Others v Board of Trustees of the Tate Gallery [2023] UKSC 4

• Facts: Residents of luxury flats adjacent to the Tate Modern Gallery sued for nuisance, alleging that the gallery’s viewing platform allowed visitors to look directly into their homes, violating their privacy.
• Holding: The UK Supreme Court ruled that this amounted to private nuisance through visual intrusion, marking a departure from the traditional limitation of nuisance to physical or sensory interferences.
• Significance: This case extends the scope of private nuisance to include overlooking, where it causes a substantial invasion of privacy, an important evolution of the tort in urban settings.

Implications for Kenya

While Kenyan courts have not yet adopted Fearn's principles on visual intrusion, it offers persuasive guidance as Kenya's urban areas become more densely populated and high-rise developments more common. The recognition of privacy as a dimension of property enjoyment aligns with Article 31 of the Constitution, which protects the right to privacy.

4. Standards of Reasonableness and Substantiality

The courts consider the following to determine if interference is unreasonable:

• Nature of the locality – residential vs industrial zones
• Time and duration of the interference
• Malice or intent of the defendant
• Sensitivity of the plaintiff – courts apply the “ordinary person” test
• Public interest vs individual rights – balancing test

As held in Gachui v Mothers Holdings Ltd, even a legally operating business must take care not to unreasonably interfere with others’ rights.

5. Remedies Available

Under Kenyan law, claimants in nuisance can pursue:

• Injunctions – to restrain the defendant from continuing the nuisance
• Damages – for loss of use, discomfort, or diminution in property value
• Abatement – self-help remedy (though must be exercised with caution)

In Gitiriku Wainaina, both damages and injunctive relief were granted, demonstrating courts' readiness to enforce rights against environmental and property nuisances.

6. Comparative Outlook and Recommendations

Kenyan courts are increasingly receptive to evolving standards of nuisance, particularly as urban expansion leads to more mixed-use zones. Future claims may involve novel forms of nuisance, such as:

• Light pollution
• Surveillance
• Construction-related nuisances
• Encroachments via drones or smart devices

To that end, courts may draw from Fearn and other foreign precedents to progressively interpret nuisance in line with constitutional values and environmental justice.

Conclusion

Private nuisance remains a viable cause of action in Kenya for property owners whose enjoyment of land is substantially and unreasonably interfered with. The courts balance competing rights and apply a test of reasonableness rooted in the common law and guided by constitutional and statutory principles. While Kenyan jurisprudence has developed a firm foundation for resolving such disputes, there is room for progressive interpretation, especially in light of persuasive decisions such as Fearn v Tate Gallery.

Recommendations

• Property developers, businesses, and urban planners should conduct Environmental and Social Impact Assessments (ESIAs) to preempt nuisance claims.
• Residents facing interference should document evidence (noise measurements, expert reports) to support claims of substantial nuisance.
• Legal practitioners should monitor comparative jurisprudence for evolving definitions of nuisance in line with constitutional rights.

 Key Authorities Cited

1. Gitiriku Wainaina v Kenafric Industries Ltd (2020) eKLR
2. Gachui v Mothers Holdings Ltd (2013) eKLR
3. Fearn & Others v Board of Trustees of the Tate Gallery [2023] UKSC 4
4. The Constitution of Kenya, 2010 – Articles 40, 42, 31
5. EMCA, 1999 

  

Disclaimer: This article is for informational purposes only and does not constitute legal advice.

LIMITED APPELLATE AVENUES UNDER SECTION 35 OF THE ARBITRATION ACT – SUPREME COURT REAFFIRMS JURISDICTIONAL THRESHOLDS

Introduction

In its decision delivered on 12th April 2024 in Kampala International University v. Housing Finance Company Limited, the Supreme Court of Kenya reaffirmed the principle that the right of appeal under Section 35 of the Arbitration Act (No. 4 of 1995) is tightly circumscribed. The decision reinforces the doctrine of finality in arbitration and reasserts the jurisdictional limits of appellate courts in matters arising from arbitral awards. This brief examines the legal background, factual matrix, procedural history, issues considered, and jurisprudential significance of the ruling within the context of Kenya’s arbitration framework.

Factual Background

The Appellant, Kampala International University (KIU), an educational institution headquartered in Uganda, undertook an expansion project in Kenya, intending to construct a campus in Kitengela. To facilitate the project, the Appellant sought and secured a loan facility of USD 15 million from the Respondent, Housing Finance Company Limited (HFCL).

While an initial tranche of USD 10 million was disbursed in January 2014, the Appellant contended that the remaining USD 5 million was not fully released, with only USD 1.3 million being disbursed, and the balance of USD 3.7 million being withheld without sufficient justification. Disputes also arose concerning alleged breach of contract and overcharging of interest.

By mutual agreement, the dispute was referred to arbitration, and Mr. Collins Namachanja was appointed as sole arbitrator. On 17th September 2019, the arbitrator issued a final award:

• The Appellant’s claims were largely dismissed, with nominal damages of USD 500,000 awarded.
• The Appellant succeeded in its claim for USD 549,762.54 for overcharged interest.
• The Respondent’s counterclaim succeeded in full, with KIU ordered to pay USD 12,767,508.33, plus compound interest at 9.5% p.a. from 16th January 2018.

Procedural History

Aggrieved by the arbitral outcome, the Appellant filed an application before the High Court seeking to set aside the award under Section 35 of the Arbitration Act, asserting, inter alia, that the award was illegal and void ab initio. The High Court dismissed the application and adopted the arbitral award as a judgment of the court.

Subsequently, the Appellant sought leave to appeal from the Court of Appeal, alongside a stay of execution and conservatory orders. The Court of Appeal declined to grant leave, holding that the Appellant had not met the threshold under Sections 35(2)(a) and 39 of the Arbitration Act, nor had it demonstrated any issue of public importance.

The Appellant then escalated the matter to the Supreme Court, challenging the jurisdiction of the lower courts and seeking to set aside the Court of Appeal’s refusal to grant leave.

Issues for Determination

The Supreme Court distilled the dispute into two primary issues:

1.        Whether the Supreme Court had jurisdiction to entertain the appeal.

2.        Whether the Appellant had met the threshold for grant of leave to appeal to the Court of Appeal.

Analysis and Determination

1. Jurisdiction of the Supreme Court

The Court reaffirmed that under Article 163(4) of the Constitution, its appellate jurisdiction is limited to matters involving constitutional interpretation or application, or where leave has been granted on the basis of matters of general public importance. It cited precedents including:

• Teachers Service Commission v. Kenya National Union of Teachers & 3 Others,
• Basil Criticos v. IEBC & 2 Others,
• Hassan Ali Joho v. Suleiman Said Shahbal,
• Deynes Muriithi & 32 Others v. LSK & Another.

The Court observed that where no constitutional issue has been raised or determined by the superior courts below, it has no jurisdiction to assume appellate authority. Mere dissatisfaction with outcomes or claims of injustice are insufficient to invoke its jurisdiction.

2. Threshold for Leave under Section 35

The Court reiterated its landmark decision in Nyutu Agrovet Ltd v. Airtel Networks Ltd & Another [2019] eKLR, which held that appeals from decisions under Section 35 of the Arbitration Act are not automatic. Such appeals lie only where the High Court, in setting aside or refusing to set aside an arbitral award, acts beyond the statutory grounds provided, resulting in a decision that is:

• manifestly erroneous,
• closes the door to justice, or
• contravenes public policy.

This position was upheld in the Synergy Industrial Credit Ltd v. Cape Holdings Ltd [2019] eKLR decision. The Court emphasized that leave must be sought and granted before an appeal can proceed from the High Court to the Court of Appeal under Section 35.

In the present case, the Appellant failed to demonstrate that the High Court had acted outside the statutory limits, nor did it establish that any constitutional or public interest issue was at stake. Consequently, the Court found that no appeal lay as of right, and it could not assume jurisdiction to challenge the denial of leave by the Court of Appeal.

Conclusion and Legal Implications

The Supreme Court dismissed the appeal, holding that there was no constitutional question or exceptional circumstance warranting its intervention. The Court reaffirmed the finality of arbitral awards, and the limited scope for appellate recourse under Kenya’s arbitration regime.

This decision is a critical reinforcement of:

• The doctrine of party autonomy in arbitration,
• The limited supervisory role of courts in arbitral proceedings, and
• The principle that judicial interference is only permissible in exceptional cases strictly defined by statute and precedent.

In effect, the ruling serves as a guiding precedent for lower courts and litigants alike, confirming that:

"Not every error of law or fact arising from arbitral proceedings gives rise to an appealable issue; rather, it is only where justice has been fundamentally denied that appellate intervention may be considered."

Key Authorities Cited

• Nyutu Agrovet Ltd v. Airtel Networks Kenya Ltd & Another [2019] eKLR
• Synergy Industrial Credit Ltd v. Cape Holdings Ltd [2019] eKLR
• Teachers Service Commission v. Kenya National Union of Teachers & 3 Others
• Deynes Muriithi & 32 Others v. Law Society of Kenya & Another
• Hassan Ali Joho v. Suleiman Said Shahbal

 Disclaimer: This article is for informational purposes only and does not constitute legal advice.