Cale Infrastructure Construction Co Ltd v Synoniem Company Ltd (Miscellaneous Civil Application E554 of 2024) [2025] KEHC 1485 (KLR) (Civ) (28 February 2025) (Ruling)

Key Facts

Issues

• The court determined that each party should bear its own costs of the application, as stated in the ruling.
• The court considered whether the arbitral award, particularly the award of general damages and the interest rate, conflicted with public policy under Section 35(2)(b)(ii) of the Arbitration Act.
• The court addressed whether the arbitrator had jurisdiction to arbitrate the dispute, given that the applicant did not raise the jurisdictional objection during arbitration proceedings as required by Section 17 of the Arbitration Act.

Holdings

• Each party shall bear its own costs on the application.
• The award of Kshs. 55,280/= is upheld, but interest to be applied shall be at court rates of 14% p.a. from the date of the award, 20/05/2024.
• The award of general damages in the sum of Kshs. 3,500,000/= is set aside.
• The Arbitrator had the requisite jurisdiction to arbitrate on the dispute between the parties.

Remedies

• The court upheld the award of special damages (Kshs. 55,280) but changed the interest rate from 15.88% to 14% p.a. from the date of the award (20/05/2024).
• The court ordered that each party shall bear its own costs on the application.

Monetary Damages

Legal Principles

• The court applied the principle of pacta sunt servanda to hold that the arbitration agreement, being a separate agreement from the lease contract, remains valid even if the lease contract is found void. This was based on Section 17 of the Arbitration Act and the decision in Synergy Industrial Credit Limited v Cape Holdings Limited [2020] KECA 208 (KLR).
• The court emphasized the need for a holistic reading of the Arbitration Act to ascertain the true legislative intent, as per the decision in Engineers Boards of Kenya v Jesse Waweru Wahome & 5 others [2015] KECA 1 (KLR).
• The court held that a party must raise jurisdictional objections during the arbitration proceedings under Section 17 of the Arbitration Act. Failure to do so constitutes waiver, as established in Kibuwa Leasing & Management Limited v Jadala Investments Limited & another [2023] KECA 895 (KLR).

Precedent Name

• Dharamshl v Karsan
• County Government of Nyeri v Eustace Gakui Gitonga
• Christ for all Nations v Apollo Insurance Co. Ltd
• Abdi Ali Dere v Firoz Husseing Tundal
• Kenya Tourist Development Corporation v Sundowner Lodge Limited
• Nyutu Agrovet Limited v Airtel Networks Kenya Limited
• Consolidated Bank Kenya Limited v Arch Kamau Njendu
• Kenya Tea Development Agency Limited v Savings Tea Brokers Limited
• Synergy Industrial Credit Limited v Cape Holdings Limited
• Kenya Shell Limited v Kobil Petroleum Limited
• Kibuwa Leasing & Management Limited v Jadala Investments Limited
• Engineers Boards of Kenya v Jesse Waweru Wahome
• Kenya Industrial Industries Ltd v Lee Enterprises Ltd
• Gachuhi & another v Evangelical Mission for Africa
• Dreamers Green House Limited v Agriculture and Food Authority

Cited Statute

Judge Name

Passage Text

• 49. In conclusion, we find that no jurisdictional issues or breach of the appellant's right to fair hearing were ever raised before the arbitrator pursuant to section 17(3) of the Act, raising such issues before the learned Judge pursuant to section 35(2) of the Act was an afterthought in vain and against the grain of clear statutory edicts from which the superior court cannot stray. Accordingly, that ground of appeal also fails.
• As a general rule general damages are not recoverable in cases of alleged breach of contract and that has been the settled position of law in our jurisdiction, and with good reason. In Dharamshl v Karsan[1974] EA 41, the former Court of Appeal held that general damages are not allowable in addition to quantified damages with Mustafa J.A expressing the view that such an award would amount to duplication