Supreme Court Jurisdiction to Hear and Determine an Appeal (against an Interlocutory Judgement by the COA): Kampala International University v Housing Finance Company Limited (Petition 34 (E035 of 2022) [2024] eKLR

This case concerns the jurisdiction of the Supreme Court of Kenya (SCOK) to hear and determine an appeal (against an interlocutory judgement by the Court of Appeal (COA)) and on the threshold for grant of leave to appeal to the COA (based on Section 35 of the Arbitration Act).

The brief facts of the case are that the Applicant wanted to construct a campus in Kitengela and had borrowed USD 15,000,000 from the Respondent but the Respondent managed to only raise USD 10,000,000. For the remainder, the Applicants sued but later they decided to take the matter to an Arbitration Tribunal where there were several claims and counterclaims but the Respondent's counterclaim succeeded wholly while the Applicants only succeeded in part.

The award was challenged before the High Court on grounds that it went against Section 13 of the Arbitration Act (hereafter 'the Act') due to nondisclosure of a relationship between the Arbitrator and the Respondent's counsel. However, the Respondent rebutted by stating that Section 14 of the Act requires such a matter to be addressed in the first instance at the tribunal (within 15 days after one becomes aware of the composition of the tribunal or the circumstances referred to in 13 (3), in writing... The jurisdiction of the tribunal can only be challenged at first instance under s.17 - (2) not later than the submission of the statement of defence, (3) beyond scope; raise as soon as the matter arises). The court ruled in the Respondent's favour.

At the court of Appeal, the Applicant/Appellant challenged the HC decision based on Section 35 of the Act which gives 4 grounds for challenging an arbitration award but it was argued that the Appellant failed to meet the threshold required for them to be granted the leave to appeal under Section 35 as settled in the Nyutu Agrovet Ltd v Airtel Networks Kenya Ltd; IArb-Ke (interested party) [2019] eKLR (No express right of appeal against the decision of HC emanating from Section 35 of the Act). It was argued that the grounds raised were not recognized in the Nyutu case and did not fall within the 4 corners of the Section. The appeal was dismissed.

At the SCOK, the Jurisdiction of the court was challenged by dint of Article 163(4)(a) and (b) (constitutional or public important matters), Section 15, 15A and 15B of the SC Act and the guiding principles to hear appeals from S. 35 of the Arbitration Act as put in Geo Chem Middle East v KBS [2020] eKLR. It was said that what was before the CoA was not a constitutional interpretation matter but a question on the threshold for the leave to appeal against a decision of the HC under S. 35 of the Act as established in the Nyutu Agrovet case and Synergy Industrial Credit v Cape Holdings Ltd [2019] eKLR.

An important argument was advanced by the Respondent that "mere allegations that a question of constitutional interpretation or application was involved without more does not automatically bring an appeal within Art 163(4)(a) of the Constitution." (Citing amount others, the Hasan Ali Joho case).

Second argument on declining to grant leave, the Respondents argued that there is no express right of appeal of an HC decision due to the principle of finality of an arbitral award and the leave should only be granted in limited circumstances. Thus, the argument was that noncompliance with s.17 of the Act is a waiver of the Applicant's rights.

HOLDING

On Jurisdiction

1. Citing TSC v KNUT and 3 Others [2015] eKLR: where the court is called upon to invoke jurisdiction under Article163 (4)(a) of the Constitution, it proceeds with the assumption that there exists a substantive determination of legal/constitutional questions before COA which the intending appellant seeks to impugn. This case was on whether the SCOK had jurisdiction to entertain an interlocutory application challenging COA's orders issued through the exercising of COA's discretion under Rule 5(2)(b) of the Court of Appeal Rules, 2010 - the SCOK held that it lacked jurisdiction there being neither an appeal nor an intended appeal pending before the SC.
2. Citing Basil Criticos v IEBC & 2 Others [2015] eKLR: this was similar to the TSC case and the SCOK stated that where an appeal is yet to be heard before the COA, an application contesting the discretion of the COA cannot be predicated upon Art 163 (4) (a) of the Constitution since the SC would have to look at the merits of the case and that exposes one of the parties to prejudice with the danger of leading to an unjust outcome. That includes an appeal against the COA declining to extend time.
3. Citing the Joho case & Paul Mungai Kimani & 2 Others v KAA & 3 Others [2021] eKLR: gave some exceptions of the principle concerning interference with the discretion of COA hence the SCOK could have jurisdiction in circumstances where the COA had made an interlocutory decision which in essence amounted to a substantive determination of a constitutional question that had been canvassed right from HC.
4. Citing Deynes Muriithi & 32 Others v LSK & Anor [2015] eKLR: another exception where the SCOK will handle a matter even if it is based on the discretion of the COA under Rule 5 (2) (b) is when the appellate court goes beyond the preservation of the substratum of the appeal and issues orders that are likely to occasion injustice to one of the parties. For example, in the Deynes case, the court ordered money due to one of the parties to be deposited in a certain account even before the matter was fully determined. Such has a preemptive effect.

In summary, the decision from the COA was interlocutory in nature and must conform to the above principles hence there is no jurisdiction.

On whether an appeal lies as of right to the COA against a decision of the HC under s.35 of the Arbitration Act

1. Citing Nyutu Agrovet's case: the case had settled with finality this issue by stating that the only time an appeal may be brought under this Section is when the HC has stepped outside the grounds set out in the said Section and thereby made a decision so grave, so manifestly wrong and which has completely closed the door of justice to either of the parties. Circumscribed and narrow jurisdiction - to be used sparingly where it is clearest that the COA should assume jurisdiction.
2. Citing Synergy case: not all cases are appealable. An intended appeal which is not anchored upon the 4 corners of s.35 of the Act shall not be admitted. In this regard, an intended appeal must demonstrate (or must be contending that) in arriving at its decision, the HC went out of s.35 of the Act for interfering with an arbitration award.

In summary

1. The SCOK agreed with the COA that any challenge to the arbitrator's tribunal on grounds of bias, ought to have been made during the arbitral proceedings in accordance with secs. 13, 14 &17 of the Act.
2. No constitutional issue was dealt with right from HC (Joho case) since the entire case was only concerned with the thresholds in the Nyutu and Synergy cases.
3. A mere claim by a party to the effect that its rights were violated by a superior court for whatever reason does not bring the intended appeal within the purview of Art 163 (4) (a) of the Constitution and this appeal does not fall under any of the above exceptions.
4. Citing Geo Chem Middle East v KEBS, the Nyutu and Synergy cases pronouncements- the COA cannot grant leave without interrogating the substance of the appeal. Hence, the appeal was dismissed.