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THE AWARD


Section 29 (3) to Section 34 (3)

Order 21Civil procedure rules, a judgment is required to acquire a particular format which is not the case with an award.  Order 21 is to effect that the court needs to set some facts, the decisions and reasons for decisions

Section 32 of the Arbitration Act which stipulates the formal requirements of an award provides that the award should be in writing, it must be signed by the arbitrator or arbitrators and it must be signed by all arbitrators in the event that there is more than one arbitrator, and if it is not signed by all of them, reasons must be stated for the omitted signatures.  There is a requirement under this Section that the reasons for the award should be stated unless the parties have agreed that a reasoned award will not be required. Or if an award is as a result of a settlement on agreed terms under Section 31. 

To meet the requirements as to reasons for the award, it is sufficient for the arbitrator to say that for example on issue Number A I find in favour of the claimant for the reasons that the evidence of Claimant A was more credible.

The other formal requirement is that the award should have a date and the place where the award is made.   The date is important as there is a time limit within which any party can apply to have a suit set aside Section 35.  The place is also significance   where there is an application for setting aside.  An award under this section may be set aside if the Arbitration Agreement is not valid under the law to which the parties have subjected it.  Section 35 (II) a.

The award must make it clear that due process was observed so there would perhaps be a recital to that award that will recite the agreement to arbitrate, it would state or refer to the document under which the tribunal was constituted, it would allude to the fact whether a hearing was conducted, and if no hearing was conducted whether it was by the agreement of the parties.  It would perhaps briefly state what the facts are, the issues in contention, the tribunal’s findings on those issues with the reasons and a summary of the award itself.

SECTION 35 - SETTING ASIDE AN AWARD - RECOURSE TO COURT AGAINST AN AWARD

When a party states that they were not heard

Section 26 - if a claimant fails to submit his statement of claim, the tribunal should terminate the proceedings.  If the Respondent fails to submit his statement of defence the tribunal shall continue with the proceedings, but there is nothing like a default judgment.   And if a party fails to appear after hearing or to produce evidence the tribunal may continue with the proceedings and make an award on the evidence that is before it.  It very well could be that a party has been given an opportunity to present their case but they have not presented their evidence and an award has been given.

What must be established is that the party or all the parties were afforded the opportunity to present their case, they have notice of the hearing etc.

John Adero v. Ulinzi Sacco H.C.C. 1879 of 1999 Milimani Commercial Court

In this case Justice Onyango Otieno as he then was allowed an application under Section 35 of the Arbitration Act on grounds that there was no evidence of Notice having been given in a matter which had proceeded before an Arbitrator ex-parte.  In taking that view, Justice Otieno said “one thing seems to be clear to me and that is that no evidence exists to confirm that the Applicant was aware of the Hearing Date.  The matter was heard ex parte and a decision made without the Applicant’s input.  It is now settled law that no one can be condemned unheard, the Applicant in this case was indeed condemned unheard and this was not proper.  He concludes by saying that the award is for that reason set aside and the matter remitted back to the same tribunal for a full hearing.

This ruling raises the question that if the High Court finds under Section 35 that an award should be set aside, what follows?  It invalidates the agreement of the parties.

If the award deals with a matter which was not in contemplation by not falling within the terms of the reference to arbitration.

HFCK V. Gitutho Associates & Another Civil App. 76 of 2000

In this case the Plaintiff applied to set aside an award under S. 35 (2) (a) (ii) on the basis that jurisdiction was exceeded, but on the facts of this case the Judge Justice Mbaluto dismissed the Application of the Plaintiff’s action and said
“that having carefully considered the evidence and the law applicable to the matter, I cannot see any justification for claiming that the award dealt with a dispute not contemplated by or not falling within the terms of the reference to arbitration nor for that matter can I see any basis for finding that the decisions of the Arbitrator are on matters beyond the scope of the reference.  He proceeded to dismiss the application.

Express Kenya Limited v. Peter Titus Kanyago Civil App. 963 0f 2002

This was an application under Section 35 seeking to set aside an award in which the arbitral tribunal had granted the respondent an award of 5.4 million as a consultancy fee in terms of a consultancy services agreement.  The dispute in that respect did not stem or was not covered under the Arbitration Clause but the Arbitrator Found that the matters that the parties had agreed to refer to Arbitration under the Arbitration Agreement were “inextricably linked” to the matter stemming from the consultancy services agreement and proceeded to make the award of the 5.4 Million.  Whilst the arbitration agreement was contained in a share holders’ agreement which then Justice Ringera found to have been outside the scope of the arbitration agreement.

Ringera J. as he was then known arrived at the conclusion that the arbitrator had exceeded or gone outside the scope of the reference and set aside part of the award.

 The High Court may set aside an award if the High Court finds that the award is in conflict with public policy of Kenya

Christ for All Nations v. Appollo Insurance Civil Case 499 of 1999

An application under Section 35 to set aside an arbitral award on grounds that the award was in conflict with public policy.

Justice Ringera after reciting Section 35 (2) (b) went on to say as follows
“As far as I know the above provision has not received judicial interpretation in our courts.  He then goes to India and is guided by an Indian decision in the case of Renu Saghar Power Co. v. General Electric where the Indian Supreme Court identified 3 patterns of the operation of the doctrine of public policy.  In the field of enforcement and recognition of foreign arbitral awards.  Those 3 patterns he says are
1.                   That an award will not be given effect if it is contrary to the fundamental policy of the Indian Law i.e. if the award involves a violation of the Indian Laws on non-compliance with a court’s order;
2.                  If the enforcement of the award would be contrary to the interests of India and
3.                  If the award would be contrary to justice and morality.

He adopts these principles and then says
“I am persuaded by the logic of the Supreme Court of India and I take the view that although public policy is a most broad concept incapable of precise definition or that as the common law judges used to say, it is an unruly horse.  An award could be set aside under Section 35 (2) (b) of the Arbitration Act as being inconsistent with public policy of Kenya if it was shown that it was either
(i)                Inconsistent with the constitution or other laws of Kenya whether written or unwritten;
(ii)             Inimical to the national interests of Kenya,
(iii)           Contrary to Justice or morality.

In the latter category he gives an example of awards induced by corruption or fraud or awards founded on contracts contrary to public morals.

In the second category of national interests he gives examples of national defence and security, economic prosperity of Kenya and good diplomatic relations with friendly nations.  But he is quick to observe that that list is not inexhaustible.

Incapacity - ie. If the party entered into an agreement when they were insane, minors.

Composition - if the composition of the tribunal or the procedure did not accord with the agrs eement.    Where for instance parties have agreed that there will be a hearing and the tribunal departs from that agreement.

Where arbitration agreement provides for 3 arbitrators and the reference is determined by one.

Time Frame Section 35 (3)

Time frame within which the application must be made  - the award may not be made 3 months have elapsed from the date on which the party making that application had received the arbitral award or if a request had been made4 under section 36 from the date on which that request had been disposed of by the arbitral award.

Justice Onyango Otieno in the case of
APV Hall Equitorial Ltd V. Mistri Jagva Pagbat Civil App 39 1999 Milimani

In this matter an application to set aside an award under Section 35 was made after the expiry of the 3 months and the advocate for the applicant sought to argue or argued that the provisions of Section 35 (3) conferred a discretion on the court to admit an application to set aside.  Apparently the language used was that an application for setting aside an award may not and the judge ruled that the mere use of the word may in that section cannot be taken to mean that a party to arbitration proceedings can ignore that provision as to time limit with impunity.  In his view it is still a provision that must be complied with  and on compliance with it is clearly at the detriment of the party failing to comply and he then upheld the Respondent’s submissions that the application was incompetent having been made after 3 months.

Section 36b

Section 37 - essentially repeats the provisions of section 35 to a very large extent as it sets out the grounds for refusal to recognise an award being similar to the grounds under Section 35.

 
 
 

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