CHALLENGES TO AWARDS WITH A FOCUS ON EAST AFRICAAisha AbdallahPartner at Anjarwalla & Khanna, Nairobi

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Introduction:- Geographical scope- Legislative background- Approaches to finality

Grounds for Setting Aside:- Time limits, Jurisdiction and Standing- Terms of reference, Public Policy, Errors

Appeal:- Express Limitations- Implied Right of Appeal

Talking points

Overview of Presentation

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Geographical scope and limitations

Different definitions of Eastern Africa

ranging between 10-20

countries

EAC - Burundi, Kenya, Rwanda,

Tanzania and Uganda covering

approx 1.8 mio sq kms & population 150

mio

Limited information on

Rwanda (no cases)

No information on Burundi (no

English translation of Act or cases)

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Legislative backgroundKenya Tanzania Uganda Rwanda

•The 1995 Arbitration Act, Cap 49 of the Laws of Kenya•Act applies to all international and domestic arbitration (S.2)•Uncitral model law

•The Arbitration Act, Cap 15 (2002 revised ed) of the Laws of Tanzania•Act applies to all disputes. However, land disputes not arbitrable under Lands Act, Cap 113.•Amends 1931 Act

•The Arbitration& Conciliation Act, Cap 4 amends older act, but no express repeal•Act applies to domestic and international arbitration and conciliation (S.1)•Uncitral model law

•Law No. 005/2008 of 14/02/2008 on Arbitration and Conciliation in Commercial Matters•Law applies to domestic and international commercial arbitration and conciliation (Art.1)•Subject to any other law, which excludes arbitration•Uncitral model law

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Approaches to FinalityKenya Tanzania Uganda Rwanda

• Award is final and binding and no recourse except in accordance with the Act -SS 10, 32A and 36

• Finality on relevant matters and findings of fact by arbitrator in relation to interim measures- S.7(2)

• No court shall intervene except as provided in the Act –S. 9

• Award is final and binding and no recourse available otherwise than in accordance with the Act-S.9

• Finality of matters ruled by the arbitrator in relation to interim measures -S.6

• Non intervention of the court save where provided by the Act (Art. 7)

• Awards, interim measure, preliminary order final and binding irrespective of country of issue (Art.50, Art. 21)

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Grounds for Setting AsideKenya Tanzania Uganda Rwanda

Part VI, S.35(2): a. Incapacity b. Invalid agreementc. Improper notice or

unable to present case

d. Dispute outside terms of reference

e. Improper composition of tribunal

f. Making of award induced by fraud, bribery, undue influence or corruption

g. Non-arbitrable dispute

h. Public policy

•Section 16:a. If arbitrator has

misconducted himself

b. If award is improperly procured

Section 34: a. Incapacity b. Invalid agreementc. Improper notice or

unable to present cased. Dispute outside terms of

referencee. Improper composition

of tribunalf. Award procured by

fraud, bribery, undue means or evident partiality or corruption in arbitrator(s)

g. Award not in accordance with Act

h. Non-arbitrable disputei. Public policy

• Art 47:a. Incapacity b. Invalid agreementc. Improper notice or

unable to present case

d. Dispute outside terms of reference

e. Improper composition of tribunal

f. Non arbitrable dispute

g. Public security

NB – No ground for fraud or corruption

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Various: Kenya (3 months), Rwanda (30 days) and Uganda (1 month). Tanzania ? Can apply to extend time:

Jamal v Shamji (2007) CA, Dar es Salaam – Application to extend time for petition to set aside. Judge instead remitted award to extend time for payment of award. CA said serious error. Should have dealt with application. No petition to remit. Remitted to HC to decide on application.

Time Limits

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Roko Construction Ltd v Mohammed (2013) CA, Kampala – Award 30-6-2009. Application by M to set aside Dec 2009 on basis no arbitration agreement. Successful and RC appealed. CA said challenge to jurisdiction should have been made under s16 within 30 days of ruling by arbitrator on PO. Not done. Time limit to set aside also 30 days. Both out of time and no application to extend. HC lacked jurisdiction to hear application and order to set aside a nullity. Also no appeal from ruling on set aside. Award binding. No costs awarded.

Anne Mumbi Hinga v Victoria Njoki Gathara (2009) CA Nbi –Award 1999. Leave to enforce under s36 in 2002. Application to stay execution and set aside in 2008 for improper notice of award. Dismissed and AMH appealed. CA unanimously dismissed as application way outside 3m time limit. HC did not have jurisdiction to hear application. Failure to serve any process after award not a ground to set aside under s35.

Late applications

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Tanzania National Roads Agency v Kundan Singh Construction (2012) HC, Nairobi- Contract for road works in Tanzania subject to arbitration. Award in favour of Agency and KS appealed under arbitration agreement to Stockolm Chamber of Commerce. Award by 2 out of 3 arbitrators. Agency applied to HC Mombasa to recognise and enforce. KS appealed award in Stockholm and applied to HC in Nbi to set aside the part of the award allowing counterclaim. Agency objected on basis Kenya lacked jurisdiction to set aside under s 35. Havelock held (applying Salumerica decision) that governing law was Tanzanian and law of arbitration was Sweden (albeit transcript of hearing showed it took place in France). Sweden had primary jurisdiction and application to set aside should have been made there. Kenya only had secondary jurisdiction under s37 to recognise and enforce. Application dismissed. Noted that s 35 covered both domestic and international awards (ie Kenya could set aside an international award if it was the arbitral seat).

Jurisdiction to set aside

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AG v Kilembe Mines Ltd & Uganda Gold Mining Ltd (2011) HC, Kampala – 1st Respondent was a private limited mining company wholly owned by Ugandan government. Disputed termination went to arbitration. 2 Respondents entered award by consent. AG applied under s34(2)(b) to set aside on grounds of public policy for breach of Public Enterprises Reform & Divestiture Act and against express instructions of Director of Privatisation Unit who swore supporting affidavit. 2nd Resp filed PO: AG not a party to arbitration so could not apply under s 35 and application filed 2 months after consent (time limit 1m). Judge noted that under s2 party included someone claiming under a party and there was a disagreement between AG and management of 1st Resp. Time began to run after Ministry of Finance (Privatisation Unit) received notice of award, which was 1 month after consent made. So application was filed in time. PO dismissed and application could proceed to hearing.

Standing

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Kenya Shell Ltd v Kobil Petroleum Ltd (2006) CA, Nbi – In 1990 Shell agreed to blend, supply and deliver lubricants to Kobil for resale. Cl 18 excluded liability for loss of profits except if caused by Shell’s negligence. Shell terminated 17-11-2000. Kobil obtained interim injunction for continuing supply pending arbitration and claimed $600m in loss of profits. Arbitration took 2 years with 10 witnesses and 2000 documents. Award by 3 arbitrators in favour of Kobil filed 6-2-2004. Shell applied under s35 to set aside award as outside terms of reference by going outside meaning of cl18. HC dismissed and refused leave to appeal. Shell applied to CA for leave. PO filed challenging right of appeal. CA majority held right to appeal. Noted that parties agreed issues in dispute including effect of s18 on claim. Arbitrators gave findings on the issues so no question of going outside terms. CA said public policy relevant to discretion. Public policy in favour of an end to litigation. Leave to appeal declined.

NB: This decision was later discussed and the CA departed from it in a later case, but the decision on the terms of reference remains good law.

Terms of Reference

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Public Policy

Christ For All Nations vs. Apollo Insurance Co. Ltd (2002) HC, Nbi– Repudiation of insurance policy extended to cover Zambia on basis extension was only third party cover. Award in favour of insured. Insurer applied to set aside on ground of public policy as industry would react very negatively and award contrary to justice. No Kenyan cases under s35 but grounds for refusal same as for setting aside. Public policy was broad concept incapable of precise definition: Inconsistent with Constitution or other laws; Against national interest (incl national defence and security, good diplomatic relations with friendly countries and economic prosperity) and Contrary to justice/morality (corruption, fraud or contract against public morals). No evidence re economic interests. Error of fact and/or law not breach of public policy. Public policy leans towards finality and parties must accept awards “warts and all”.

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Kenya Shell Limited vs. Kobil Petroleum Limited – Public policy is an indeterminate principle or doctrine that is relevant to the exercise of the discretion as to the grant of leave to appeal. It is variable and must fluctuate with the circumstance of time. In this case, public interest is that there should be an end to litigation.

Public Policy contd…

14 Pan Africa Impex Uganda Ltd v Roko Construction Co. Ltd (2013) HC,

Kampala- Building contract for office block. Both parties paid deposit. PAI did not pay its share of balance of $49,868. Award dated 15-2-2010 by sole arbitrator. RC paid outstanding fees and filed on 18-5-2010. PAI applied to set aside on 3 grounds: 1. Award not delivered to both parties in breach of s31(8); 2. Arbitrator relied on evidence of Mr Nyanzi who was an unqualified surveyor (a criminal offence) 3. Decisions on law and findings of fact based on illegality so breach of public policy. Held that PAI should have applied to Court under s6 if fees excessive and did not do so. Arbitrator had lien on award for unpaid fees and entitled to refuse delivery of award. Arbitrator had taken into account lack of qualification and preferred the evidence of Ms Musisi, a qualified surveyor. Nyanzi’s role was to witness contract and that did not make it invalid. No illegality. No breach of public policy. Application dismissed.

Errors on face of record

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Limitations on AppealKenya Tanzania Uganda Rwanda

HC decisions on appointment, challenge, termination of mandate, withdrawal and jurisdiction of arbitral tribunal final

Domestic awards only: Appeal to the HC by prior agreement on points of law S.39(1)

Appeal from HC to CA by agreement of parties prior to delivery of award or if CA considers point of law of general importance which will substantially affects rights of parties grants leave S.39(3)

•No provisions on appeal

Appointing authorities decison on appointment, termination of mandate of arbitrator final.

HC decision on jurisdiction final

Application to determine or appeal to the HC by agreement of the parties on points of law S.38(1)

Appeal lies from HC to CA on point of law by agreement of the parties and with leave of the HC or CA

• Appeal or cessation of a case that is yet to be decided lies to the court on grounds similar to those for setting aside award in Rwanda (Art.47)

16 Roko Construction Co. Ltd v Mohammed (Ug)– Although s 34 did not expressly bar

appeal, when read in light with s 9 clear that no right of appeal under Act unless expressly conferred. No right to appeal against decision by High Court on an application to set aside under s34.

Nyutu Agrovet Ltd vs. Airtel Networks Ltd (2015) CA, Nairobi – Distribution agreement for phones terminated by Airtel. Cl 18.1 said award shall be final and binding on parties. Sole arbitrator awarded N $5.7m as general damages for negligence. Airtel applied to set aside as outside remit and against public policy. Set aside as outside remit and N granted leave to appeal. Airtel filed PO that no right to appeal per s10. N argued, inter alia, s10 unconstitutional as right to be heard fundamental. 5 Judge bench due to importance and previous conflicting decisions as to right to appeal. Unanimous decision striking out appeal. Art 159(2) Constitution encourages ADR incl arbitration. Parties freely chose arbitration with all attendant consequences. The Arbitration Act based on UNCITRAL where concept of finality key. Only exception was under s39 where parties to domestic award had agreed appeal on point of law. Not applicable.

Implied Right of Appeal?

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“Warts and all” approach applies in Kenya and Uganda, so no implied right of appeal.

Finality can mean no award at all! Public policy is a ground and also relevant to discretionary

powers. It is very wide and fluctuates with time. Hard to assess extent of common EAC approach in absence

of reported cases for Rwanda and Burundi

Talking points

BOTSWANABURUNDIETHIOPIAKENYAMALAWIMAURITIUSNIGERIARWANDASUDANTANZANIAUGANDAZAMBIA

Legal Notice: these materials are for training purposes only and do not constitute legal or other professional advice.

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