In this update, we examine the decisions in Nyutu Agrovet Ltd v. Airtel Networks Kenya Ltd & Another (2019) (Nyutu case) and Synergy Industrial Credit Limited v. Cape Holdings Ltd (2019) delivered by the Supreme Court of Kenya on 6 December 2019. The two petitions before the Supreme Court raised one significant legal issue – whether a party can appeal a decision of the High Court arising from an application seeking to set aside an arbitral award under section 35 of the Arbitration Act.
In disagreeing with the Court of Appeal [on the Nyutu case], the Supreme Court held that there is a limited avenue for appeal only in exceptional circumstances. Regrettably, the Supreme Court did not go the extra mile to offer guidance on what in their view would constitute exceptional circumstances. The Supreme Court, however, clarified that not every decision of the High Court under section 35 is appealable to the Court of Appeal. The Supreme Court, in its judgments, suggested introduction of leave stage, which will act as a sieve.
The two judgments have significant impact within the arbitration industry. There is the concern that the two decisions negate some of the benefits of arbitration, such as the principle of finality in litigation tied with the belief that arbitration is one of the fastest methods of resolving disputes. While finality of awards is considered a critical component of the law of arbitration, there has unfortunately been an increase in challenges to awards on reasonably strong grounds. It follows that there are bound to be situations where it is necessary to appeal High Court decisions to the Court of Appeal. The upshot of all this is that parties now need to carefully consider whether to include arbitration clauses in their commercial agreements.
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